Classification of certain monitors; Application for Further Review of Protest No. 2720-04-100567

HQ H008548 January 12, 2010 CLA-2:OT:RR:CTF:TCM H008548 IOR CATEGORY: Classification TARIFF NO: 8528.21.70, HTSUS Port Director U.S. Customs and Border Protection 11099 South La Cienega Blvd. Los Angeles, CA 90045 Attn: Angelina Cano, IS RE: Classification of certain monitors; Application for Further Review of Protest No. 2720-04-100567 Dear Port Director: This is in response to the Application for Further Review (“AFR”) of Protest No. 2720-04-100567 filed on December 14, 2004, on behalf of NEC-Mitsubishi Electronics Display of America, Inc. (“NEC”). The Protest covers ten entries made from August 26, 2003 through December 16, 2003, and concerns the classification of the NEC LCD 4000 monitors (also referred to as “display units” in the protest submission). FACTS: The LCD 4000 is a 40” monitor. The specifications provided indicate the LCD 4000 has RGB connectors (DVI-D x1, analog D-sub, and Analog BNC) as well as video connectors (Composite RCA or S-video and Component BNC). According to the specifications the LCD 4000 also supports NTSC/PAL and HDTV resolution. The LCD 4000 has a native resolution of 1280 x 768 pixels with a pixel pitch of .68 mm for high brightness and high contrast to optimize onscreen text, images and computer generated video graphics. The marketing literature submitted in conjunction with the protest and AFR indicates that the LCD 4000 is designed for display applications such as retail signage, display of information at airports, financial exchanges, public information kiosks, and conference rooms. The merchandise was entered under heading 8471, HTSUS, and you liquidated the monitors under heading 8528, HTSUS, as video monitors. ISSUE: Whether the LCD 4000 monitors are classified in heading 8471, HTSUS as automatic data processing (“ADP”) units, or in heading 8528, HTSUS, as video monitors? LAW AND ANALYSIS: Initially, we note that the matter protested is protestable under 19 U.S.C. §1514(a)(2) as a decision on classification. This protest was timely filed within 90 days of the liquidation of the subject entries, for entries made prior to December 18, 2004, in accordance with 19 U.S.C. §1514(c)(3). Further Review is properly accorded to the protest pursuant to 19 C.F.R. § 174.24(b) because the decision against which the protest was filed is alleged to involve questions of law or fact which have not been ruled upon by the Commissioner of Customs or his designee or by the Customs courts. Specifically, the question of the classification of similar monitors with video capability was an issue of first impression at the time the protest was filed. The 2003 HTSUS headings under consideration are as follows: 8471 Automatic data processing machines and units thereof…: 8528 ….video monitors and video projectors: In order to be classified under heading 8528, HTSUS, the monitor must be capable of displaying video signals. See HQ 966487, dated August 27, 2003. To be classified as an ADP unit in heading 8471, HTSUS, the monitor must meet the terms of Legal Note 5 to Chapter 84, HTSUS, which provides, in relevant part: (B) Automatic data processing machines may be in the form of systems consisting of a variable number of separate units. Subject to paragraph (E) below, a unit is to be regarded as being a part of a complete system if it meets all the following conditions: It is of a kind solely or principally used in an automatic data processing system; It is connectable to the central processing unit either directly or through one or more other units; and It is able to accept or deliver data in a form (codes or signals) which can be used by the system. ….(E) Machines performing a specific function other than data processing and incorporating or working in conjunction with an automatic data processing machine are to be classified in the headings appropriate to their respective functions or, failing that, in residual headings. With respect to the application of Note 5(E) to Chapter 84, HTSUS, in EN 84.71(D), it is explained that: An apparatus can only be classified in this heading as a unit of an automatic data processing system if it: (i) Performs a data processing function; (ii) Meets the criteria set out in Note 5 (B) to this Chapter, including the introductory paragraph of that Note; and (iii) Is not excluded by the provisions of Note 5 (E) to this Chapter. Therefore, an apparatus can meet all of the criteria of Note 5 (B), yet may still be precluded from classification as a unit of an ADP system by Note 5(E), if it performs a specific function other than data processing. The Protestant asserts that the resolution of the displays “optimizes on-screen text” and that is the primary reason to purchase the units “which are currently used for corporate presentations, classrooms/lectures where the on-screen text is crucial, museums, and retail environments.” The Protestant also states that “one clear use of these large screen LCD units is at airports to display the constantly changing arrival and departure data.” The accompanying literature submitted supports such use of the LCD 4000 units. The Protestant asserts that the LCD 4000 should be classified in heading 8471, HTSUS, by the application of GRI 3(b), on the basis that the subject monitors with ancillary video capability have the essential character of Automatic Data Processing (“ADP”) output units. In the submission, the Protestant has provided argument substantiating that the actual use and principal use of the monitors is as ADP monitor as opposed to video monitors, including cost, sales information, and expectations of ultimate purchasers. U.S. Customs and Border Protection (“CBP”) has previously issued rulings classifying similar LCD monitors, without video capability, used for displays in retail environments, airports and other public buildings, and other digital information displays. See HQ 966487, dated August 27, 2003, and HQ 964848, dated May 2, 2001. CBP determined that the monitors used for digital signage are precluded from classification in heading 8471, HTSUS, by Note 5(E) to Chapter 84. In HQ W967537, dated November 8, 2006, Note 5(E) was found to preclude classification in heading 8471, HTSUS of 42, 50 and 61 inch plasma displays used for digital signage, with video capability. As the LCD 4000 is used for digital signage, under the 2003 HTSUS, it is precluded by Chapter 84, Note 5(E) from classification in heading 8471. Because the LCD 4000 has video capability, it is classifiable in heading 8528, as a video monitor by application of GRI 1. The subject monitors are described in heading 8528, HTSUS as “video monitors” and are classified in subheading 8528.21.70, HTSUS, as “[r]eception apparatus for television, whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus; video monitors and video projectors: Video monitors: Color: With a flat panel screen: Other: Other.” Because the LCD 4000 is classified in accordance with GRI 1, by application of Chapter 84, Note 5(E), we do not reach GRI 3(b) for an essential character analysis. HOLDING: By application of GRI 1, the NEC LCD 4000 is classified in heading 8528, specifically in subheading 8528.21.7001, HTSUSA, as “[r]eception apparatus for television, whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus; video monitors and video projectors: Video monitors: Color: With a flat panel screen: Other: Other” with a column one, general duty rate of 5% ad valorem. The protest should be DENIED in full. In accordance with the Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution. Sincerely, Myles B. Harmon, Director Commercial and Trade Facilitation Division