CLA-2 RR:CR:GC 964605 GOB

Mr. Damon V. Pike
Deloitte & Touche LLP
191 Peachtree Street, Suite 1500
Atlanta, GA 30303-1921

RE: LCD projectors; NY C83603 revoked

Dear Mr. Pike:

This is with respect to New York Ruling Letter (“NY”) C83603, issued to you on behalf of Digital Projection, Inc. by the Customs National Commodity Specialist Division, New York, on January 26, 1998. In that ruling, certain liquid crystal display (“LCD”) projectors were classified under subheading 8471.60.30, Harmonized Tariff Schedule of the United States (“HTSUS”). We have reviewed that classification and have determined that it is incorrect. This ruling sets forth the correct classification.

Pursuant to section 625(c), Tariff Act of 1930 (19 U.S.C. 1625(c)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act, Pub. L. 103-182, 107 Stat. 2057, 2186 (1993), notice of the proposed revocation of NY E83603 was published in the Customs Bulletin on November 15, 2000. No comments were received in response to that notice.

FACTS:

The LCD projectors were described as follows in NY C83603:

The merchandise under consideration involves LCD digital display projectors which are known as the 2v (2500 lumens), the 4dv (3500 lumens), and the 5dv (5000 lumens) LCD digital display projectors. These digital projectors are designed to convert computer or video sources to a digital format with a luminance uniformity and ANSI brightness in excess of 2500 ANSI lumens.

When the source format is input via a cable connection to these LCD digital display projectors, the image content is analyzed through high rate digital sampling using a resizing engine. The engine reproduces the image content using the maximum resolution for each of the three “Digital Micromirror Devices” (DMDs); one for each of the three primary colors of red, green, and blue. Each DMD has a visual display diagonal of approximately three-quarters to one and one quarter of an inch. Next, a high powered miniature light source is focused on the three DMDs via beam forming and light splitting optics. After each DMD modulates and reflects these light sources, the three images are optically recombined and projected through a single lens to produce a stable and definitely converged full color image on the screen.

The models 2v, 4dv and 5 dv digital projectors utilize varying ANSI lumens output, and feature varying digital resolution capability. The 2v (2500 lumens) and 4dv (3500 lumens) models have a maximum display resolution capability of 848 by 600 pixels. The 5dv (5000) lumens can display up to 1024 by 768 pixels. Three configurable inputs accept all major source formats from composite video through XGA.

Marketing information provided with respect to the projectors provides as follows:

Perfectly suited for entertainment, business, education, simulation, religion, command and control or staging and rental environments ...

Technical specifications for the projectors include:

Input Specification: 3 independently configurable inputs – selectable via remote control. BNC connectors. 525/60, 625/50, PAL, NTSC, SECAM, VGA, SVGA, XGA & MAC Auto Select.

ISSUE:

Are the above-described LCD projectors provided for in heading 8471, HTSUS, as automatic data processing units, or in heading 8528, HTSUS, as video projectors?

LAW AND ANALYSIS:

Classification under the HTSUS is made in accordance with the General Rules of Interpretation (“GRI’s”). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule 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 GRI may then be applied.

The Harmonized Commodity Description and Coding System Explanatory Notes (“EN’s”) constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the EN’s provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80.

The HTSUS provisions under consideration are as follows:

Heading 8471:

Automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data, not elsewhere specified or included[.]

Heading 8528:

Reception apparatus for television, whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus; video monitors and video projectors[.]

Legal Note 3 to Section XVI, HTSUS, provides:

Unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines adapted for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function.

The EN to Legal Note 3 to Section XVI, HTSUS (EN (VI)), provides in pertinent part:

Where it is not possible to determine the principal function, and where, as provided in Note 3 to the Section, the context does not otherwise require, it is necessary to apply General Interpretive Rule 3 (c) …

Customs has reconsidered the uses of projectors and the evidentiary requirements of Legal Note 3 to Section XVI. The courts have provided factors, which are indicative but not conclusive, to apply when determining whether merchandise falls within a particular class or kind. They include: general physical characteristics, expectation of the ultimate purchaser, channels of trade, environment of sale (accompanying accessories, manner of advertisement and display), use in the same manner as merchandise which defines the class, economic practicality of so using the merchandise, and recognition in the trade of such use. See U.S. v. Carborundum Co., 63 CCPA 98, 102, 536 F. 2d 373, 377 (1976), cert denied, 429 U.S. 979 (1976); Lenox Collections v. U.S., 19 CIT 345, 347 (1995); Kraft, Inc. v. U.S., 16 CIT 483, 489 (1992); and G. Heileman Brewing Co. v. U.S., 14 CIT 614, 620 (1990).

Legal Note 3 to Section XVI does not resolve the classification at issue because the projectors are composite machines and satisfactory documentary evidence has not been submitted with respect to the principal function of the projectors. As a result, we are now of the view that the projectors cannot be classified based upon GRI 1. GRI 2 is not applicable here. GRI 3 provides as follows:

When, by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:

The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.

Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.

When goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.

EN (VIII) for GRI 3(b) provides:

The factor which determines essential character will vary as between different kinds of goods. It may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods.

At GRI 3(a), neither of the two competing headings provides a more specific description than the other. Pursuant to GRI 3(b), the projectors are composite goods. There is no essential character for the projectors because both the video and automatic data processing functions are equally important. Accordingly, we proceed to GRI 3(c), i.e., the goods shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.

Pursuant to GRI 3(c), we determine that the projectors are provided for in heading 8528, HTSUS. They are classified in subheading 8528.30.66, HTSUS as: “Video projectors: Color: With a flat panel screen: Other: With a video display diagonal not exceeding 34.29 cm.”

Our determination is consistent with a recent decision on similar merchandise published in the World Customs Organization (“WCO”) Compendium of Classification Opinions on the Harmonized Commodity Description and Coding System where the classification of a projector which received signals from an automatic data processing machine and a video source and whose principal function could not be determined was based upon GRI 3(c). See Opinion No. 8528.30/1 of the WCO Compendium of Classification Opinions, Amending Supplement No. 24 (August 1999). As stated in T.D. 89-80, decisions in the Compendium of Classification Opinions should be treated in the same manner as the EN’s, i.e., while neither legally binding nor dispositive, the they provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. T.D. 89-80 further states that EN’s and decisions in the Compendium of Classification Opinions “should receive considerable weight.”

This determination is consistent with our determinations in HQ 964043 dated July 25, 2000, and HQ 964159 dated July 25, 2000. In those rulings we classified LCD projectors in heading 8528, HTSUS, based upon GRI 3(c) where there was no satisfactory documentary evidence with respect to the principal function of the projectors. See also HQ 960282 dated October 22, 1998, and HQ 960354 dated October 22, 1998, where we classified monitors in heading 8528 based upon GRI 3(c).

HOLDING:

The LCD projectors are provided for in heading 8528, HTSUS, and are classified in subheading 8528.30.66, HTSUS, as “Video projectors: Color: With a flat panel screen: Other: With a video display diagonal not exceeding 34.29 cm.”

EFFECT ON OTHER RULINGS:

NY C83603 is revoked. In accordance with 19 U.S.C. 1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.

Sincerely,

John Durant, Director
Commercial Rulings Division