CLA-2 OT:RR:CTF:TCM H071899 GC

Mr. Lawrence M. Friedman, Esq.
Barnes, Richardson and Colburn
303 East Wacker Drive, Suite 1020
Chicago, Illinois 60601

RE: Request for reconsideration of HQ H049555; Tariff classification of LCD Modules; NY M82094 and HQ 966487 revoked by operation of law

Dear Mr. Friedman:

This is in response to your letter, on behalf of your client, Optrex America, Inc., (Optrex), dated July 30, 2009, in which you requested reconsideration of Headquarters Rulings Letter (HQ) H049555, dated April 13, 2009. Specifically, you request reconsideration on the tariff classification of “T” prefix liquid crystal display (LCD) modules addressed therein. In reaching this decision, we reviewed the product samples and schematics included with the original submission for HQ H049555 in addition to the content of supplemental submissions, sent via electronic mail on February 22, 2012, February 23, 2012, and February 27, 2012. Likewise, we considered the substance of our discussion held via teleconference on February 2, 2013, and the follow-up written submission that you provided to us on April 15, 2013.

FACTS:

The “T” prefix modules subject to HQ H049555 are identified as thin-film transistor (TFT) LCD graphic displays for monitors of various types.

Model T-51440GL070H-FW-AF is a 7 inch, 480 x 234 color display for automobile entertainment systems. It is composed of a TFT cell, driver integrated circuits (ICs), a timing controller IC, a backlight unit, an inverter DC/DC converter, and a video circuit. It is not capable of amplifying a signal on its own. Further, the module contains no audio circuitry and, therefore, does not perform any audio amplification or related functions.

Model T51863D150J-FW-A-AA is a 15 inch, 1024 x 768 XGA color display, and is used for monitors in aviation and marine application. It is composed of an LCD panel, driver ICs, control circuit, and backlight unit. The inverter for the backlight is not included. Color images are displayed by applying 6 bit or 8 bit digital data.

Model T-55336D175J-FW-A-AAN is a 17.5 inch, 1280 x 768 WXGA color display for monitors used in medical and aviation applications. It is composed of a TFT cell, driver ICs, a control circuit, a backlight unit, and a DC/DC converter. You note in your reconsideration request that the module is not capable of receiving, amplifying, or processing a signal on its own. Further, the module contains no audio circuitry, and is thus not capable of performing audio amplication or related functions.

ISSUE:

Whether the instant “T” prefix LCD modules are classified under subheading 9013.80.70, as “flat panel displays other than for articles of heading 8528, except subheading 8528.51 or 8528.60”, or under subheading 9013.80.90, as “other” devices, appliances and instruments?

LAW AND ANALYSIS:

The classification of merchandise under the HTSUS is governed by the General Rules of Interpretation ("GRIs"). GRI 1 provides, in part, that "for legal purposes, classification shall be determined according to terms of the headings and any relative section or chapter notes…" In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs may then be applied in order.

The Harmonized Commodity Description and Coding System Explanatory Notes (ENs), though not dispositive or legally binding, provide commentary on the scope of each heading of the HTSUS, and are the official interpretation of the Harmonized System at the international level. CBP believes the ENs should always be consulted. See T.D. 89-90, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).

There is no dispute that the instant “T” prefix LCD modules are classified under heading 9013, HTSUS. See Sharp Microelectronics Technology, Inc. v. United States, 932 F.Supp. 1499 (Ct. Int’l. Trade 1996), aff’d, 122 F.3d 1446 (Fed. Cir. 1997). See also HQ 959175, dated November 25, 1996. Accordingly, the case is controlled by GRI 6, which states the following:

For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and related subheading notes and, mutatis mutandis, to the above rules, on the understanding that only subheadings at the same level are comparable. For the purposes of this rule, the relative section, chapter and subchapter notes also apply, unless the context otherwise requires.

The HTSUS provisions under consideration are as follows:

9013 Liquid crystal devices not constituting articles provided for more specifically in other headings; lasers, other than laser diodes; other optical appliances and instruments, not specified or included elsewhere in this chapter; parts and accessories thereof: 9013.80 Other devices, appliances and instruments: 9013.80.70 Flat panel displays other than for articles of heading 8528, except subheadings 8528.51 or 8528.61 … * * * 9013.80.90 Other …

It is not in dispute that HQ H049555 correctly states that there is insufficient evidence in the record to establish that the instant LCD modules are for use with ADP monitors of subheadings 8528.51 or 8528.61. Accordingly, the issue herein is whether the instant modules are of a kind used for items other than monitors of heading 8528, HTSUS.

Regarding the scope of subheading 9013.80.70, HTSUS, you express concern in your latest submission whether CBP’s interpretation in HQ H049555 goes beyond the requirements of the statutory language at issue. Specifically, you cite to Clarendon Marketing, Inc. v. United States, 21 C.I.T. 59 (1997), affirmed by Clarendon Marketing, Inc. v. United States, 144 F.3d 1464 (Fed. Cir. 1998) (Clarendon) in support of the proposition that “…exclusionary or limiting language in a tariff provision may not be read to create an ‘actual use provision’”.

In Clarendon, the Court of International Trade and the U.S. Court of Appeals for the Federal Circruit interepreted the scope of subheading 2710.00.25, HTSUS (1989), which provided for “[n]apthas (except motor fuel or motor fuel blending stock)”. Per Additional U.S. Note 4 to Chapter 27, HTSUS, the exclusionary language of the provision involved, “except motor fuel or motor fuel blending stock”, is an “actual use” provision provision governed by Additional U.S. Rule of Interpretration 1(b), HTSUS. Id. 144 F.3d at 1467. Accordingly, the Court pointed out that absent proof of an actual use as a blending stock or primary use as a motor fuel, the subject merchandise would be considered “napthas” of subheading 2710.00.25, HTSUS (1989). Id. 144 F.3d at 1469.

Turning to the instant matter, if the phrase “[f]lat panel displays other than for articles of heading 8528” were considered an actual use provision, Additional U.S. Rule of Interpretation 1(b), HTSUS, would require an affirmative showing that flat panels displays are not installed into monitors of heading 8528, HTSUS, within three years of entry in order to be classified in subheading 9013.80.70, HTSUS. This does not represent a proper reading of the legal text. The instant phrase indicates that products of a class or kind used with items other than certain monitors of heading 8528, HTSUS, are included within the subheading. This requires an examination of the scope of heading 8528, HTSUS. In HQ H049555, we stated the following:

Prior to the 2007 HTSUS, heading 8528 provided, in pertinent part, for “Video monitors and video projectors.” To be classified as a video monitor, CBP required that a device be capable of accepting NTSC signals or displaying video signals. See HQ 966487, dated August 27, 2003. However, the HTSUS was amended pursuant to title 19 United States Code, Section 3005, to reflect changes recommended by the World Customs Organization. The proclaimed changes are effective for goods entered or withdrawn from warehouse for consumption on or after February 3, 2007. See Presidential Proclamation 8097, 72 FR 453, Volume 72, No. 2 (January 4, 2007). The revised text of heading 8528, HTSUS, which provides, in pertinent part, for “Monitors and projectors, not incorporating television reception apparatus,” is broader in scope and includes both video monitors and ADP monitors.

The broader scope of heading 8528, HTSUS, resulting from the 2007 HTSUS changes referenced above, affects the classification of LCD modules in that the scope of subheading 9013.80.70, HTSUS, as it relates to “flat panel displays other than for articles of heading 8528” became narrower. In other words, since heading 8528, HTSUS, now covers a wider array of monitors, there is a smaller universe of flat panel displays falling under the class or kind used with merchandise other than monitors of heading 8528, HTSUS.

In your reconsideration request, you point to three rulings in which CBP classified similar merchandise under subheading 9013.80.70, HTSUS. Specifically, you referenced New York Ruling Letter (NY) K83242, dated March 4, 2004, where CBP classified the Nokia Image Frame Viewers, which were photo frame devices that were designed to be positioned on shelves in order to display photographs taken by digital cameras. The second ruling cited in your reconsideration request was NY M82094, dated May 3, 2006, which pertained to two active matrix LCD modules. You argue that Model NL3224BC35-20, a 5.5 inch TFT color LCD module, is analogous to the instant merchandise. It was designed to be used in point-of-sale terminals, computerized cash registers, and medical equipment. Lastly, you point to Headquarters Ruling Letter (HQ) 966487, dated August 27, 2003, which pertained to two configurations of an LCD module “…intended for use as interactive advertising displays in various retail centers, banks, theaters, public buildings, etc.”

We note that the instant flat panel LCD modules are components to be installed into other devices after importation. Consequently, they are distinguishable from the Image Frame Viewers subject to NY K83242, which were finished products. Regarding NY M82094 and HQ 966487, the broader scope of heading 8528, HTSUS, resulting from the 2007 HTSUS changes referenced above means that the items into which LCD modules subject to NY M82094 and HQ 966487 are installed would now be considered monitors of heading 8528, HTSUS. Thus, NY M82094 and HQ 966487 are revoked by operation of law, as the merchandise subject to those rulings is now properly classified under subheading 9013.80.90, HTSUS.

With respect to the instant merchandise, the fact that the subject flat panel LCD modules are incapable of receiving, amplifying or processing a video signals at the time of entry indicates only that they are not classified under heading 8528, HTSUS, as monitors. However, the absence of such capabilities does not constitute evidence that they have been fabricated or engineered to be used for something other than a monitor of heading 8528, HTSUS. To the contrary, LCD modules imported in such condition are indistinguishable from the LCD screens featured in monitors. To that end, even though the aviation and marine equipment, in-car and in-flight entertainment systems, or medical equipment into which the subject LCD modules are ultimately installed are not themselves monitors described by heading 8528, HTSUS, or EN 85.28, they are surely flat panel displays of a kind for monitors of heading 8528, HTSUS. In fact such LCD flat panel displays are described in EN 85.28. Consequently, the instant TFT LCD modules are not for articles other than monitors of heading 8528, HTSUS, and thus are properly classified under subheading 9013.80.90, HTSUS.

HOLDING:

By application of GRIs 1 and 6, the “T” prefix TFT graphic display modules, models T-51440GL070H-FW-AF, T-51863D150J-FW-A-AA, and T-55336D175J-FW-A-AAN, are classified in heading 9013, specifically in subheading 9013.80.90, HTSUS, which provides for “Liquid crystal devices not constituting articles provided for more specifically in other headings; lasers, other than laser diodes; other optical appliances and instruments, not specified or included elsewhere in this chapter; parts and accessories thereof: Other devices, appliances and instruments: Other.” The 2009 column one, general rate of duty is 4.5 percent ad valorem. Duty rates are provided for convenience only and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov/tata/hts/.

EFFECT ON OTHER RULINGS:

HQ H049555, dated April 13, 2009, is hereby AFFIRMED. NY M82094, dated May 3, 2006, and HQ 966487, dated August 27, 2003, are considered revoked by operation of law.


Sincerely,

Myles B. Harmon, Director
Commercial and Trade Facilitation Division