پنل‌های LED استادیوم با کنترلر: «واحد کارکردی» و مانیتور رایانه ۸۵۲۸.۵۲؛ پنل بدون کنترلر ۸۵۲۸.۵۹

OT:RR:CTF:EMAIN H329919 JRG/SKK

Center Director Electronics Center of Excellence and Expertise U.S. Customs and Border Protection 301 E. Ocean Blvd., Suite 1400 Long Beach, CA 90802 ATTN: Scott Titus, Import Specialist; Joseph Harris, Supervisory Import Specialist

Dear Center Director:

This is our decision regarding an Application for Further Review (AFR) of Protest No. 3901-22-127609, filed by counsel on behalf of ANC Sports Enterprises, LLC (Protestant). The Protest and AFR concern the classification under the Harmonized Tariff Schedule of the United States (HTSUS) of LED panels and LED display units. The AFR was forwarded to this office for consideration.

On June 10, 2024, a meeting was held with Protestant via Microsoft Teams. On October 21, 2024, Protestant filed a supplemental submission to address issues raised in the meeting. The supplemental submission’s arguments and attachments are considered below.

The subject merchandise was imported in 47 different entries, each containing a different configuration of LED panels, controller/processors, receiver cards, convertor cards, conversion cards, cables, and associated installation components. When fully assembled, the subject articles create a large LED display unit, comprised of multiple LED panels, used as signage lighting in public venues, such as sports arenas, transit hubs, entertainment venues, and retail destinations. The LED display unit does not contain any television tuners or TV reception capabilities. The individual LED panels are equipped with Ethernet inputs that connect to controller/processors using CAT5 cables. The display unit’s controllers and processors are combined into one component, the MCTRL660, which both converts signals received from a source, such as an ADP, into digital signals that are transmitted to the LED panels and controls various functions of the video displayed on the panels. In Protestant’s supplemental filing, it notes the LED panels are capable of running programs and displaying data/images via the Ethernet connection, however, additional programming or software from the MCTRL660 assists with the display of data/images.

Within each MCTRL660, the controller component manages the LED Display Unit’s display settings. Specifically, it controls the general appearance and image uniformity, switches between different sources, adjusts the aspect ratio of the content, configures the layout, and adds overlays to the content displayed. The MCTRL660’s processor component processes video signals and then distributes those signals to multiple displays to create a large, seamless image. The processor also fits to the configuration of the LED Display Unit and accounts for the resolution, aspect ratio, and orientation of each display, adjusting the content accordingly. Each MCTRL660 has four outputs, each capable of supporting 650,000 pixels, which allows it to run over 1,000 panels, depending on each panel’s pixel count.

The subject merchandise was entered between June 8, 2021, and February 15, 2022, heading 8525, specifically subheading 8525.52.00, HTSUS (2021 and 2022), which provides for, in pertinent part, “[O]ther monitors: Capable of directly connecting to and designed for use with an automatic data processing machine of heading 8471.” The subject merchandise was then liquidated on June 3, 2022, under subheading 8525.59.33, HTSUS, which provides for, in pertinent part, “[O]ther monitors: Other.” As products of China, the subject merchandise was subject to additional ad valorem duties at a rate of 7.5% pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, and subheading 9903.88.15, HTSUS.

On October 20, 2022, Protestant filed the instant Protest and AFR. Protestant argues the subject merchandise is properly classified under subheading 8525.52, HTSUS.

Whether the subject LED panels and LED display units are properly classified under subheading 8528.52, HTSUS, as “[O]ther monitors: capable of directly connecting to and designed for use with an automatic data processing machine of heading 8471” or under subheading 8528.59, HTSUS, as “[O]ther monitors: Other.”

A decision on classification and the rate and amount of duties chargeable is a protestable matter under 19 U.S.C. §1514(a)(2). The subject Protest was timely filed on October 20, 2022, within 180 days of liquidation, pursuant to 19 U.S.C. §1514(c)(3). Protestant seeks further review of the subject Protest pursuant to § 174.24(a) of Title 19 of the Code of Federal Regulations (19 C.F.R. §174.24(a)-(b)), alleging that the decisions against which the Protest is filed are inconsistent with U.S. Customs and Border Protection (CBP) rulings on substantially similar merchandise. Specifically, Protestant cites to New York Ruling Letter (NY) N238570, dated March 4, 2013, where CBP classified a large format flat panel display monitor which consisted of “LED panels, screen interface processor(s), and various cables and connectors used in assembling the display” as a functional unit, pursuant to Note 4 to Section XVI, HTSUS, under subheading 8528.59.31, HTSUS (2013), which provided for, “[f]lat panel display devices designed for use with an automatic data processing machine, as defined in additional U.S. note 13 to chapter 85.” [Footnote 1: U.S. Note 13 to Chapter 85, HTSUS (2013), provided: For the purposes of subheadings 8528.59.21 and 8528.59.31, the term "flat panel display devices designed for use with an automatic data processing machine" refers to monitors that have as a purpose operation with an automatic data processing (ADP) machine of heading 8471, such monitors being able to display signals or data from an ADP machine in a form that meets the requirements of the user. Such monitors need not be shown to be solely or principally for use with an ADP machine and may also be capable of displaying signals or data from devices other than ADP machines.]

Classification of goods under the HTSUS is governed by the General Rules of Interpretation (GRI). GRI 1 provides that classification is determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. If 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 2 through 6 may then be applied in order. Under GRI 6, the classification of goods in the subheadings of a heading is determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to GRIs 1 through 5.

The 2021 and 2022 HTSUS provisions at issue follow:

Other monitors:

Legal Note 4 to Section XVI (Chapters 84 - 85) provides:

Where a machine (including a combination of machines) consists of individual components (whether separate or interconnected by piping, by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or Chapter 85, then the whole falls to be classified in the heading appropriate to that function.

The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of the headings. It is CBP’s practice to follow, whenever possible, the terms of the ENs when interpreting the HTSUS. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).

The ENs to heading 8528, HTSUS, provides, in pertinent part:

This group includes monitors which are capable of accepting a signal from the central processing unit of an automatic data processing machine and provide a graphical presentation of the data processed. These monitors are distinguishable from other types of monitors (see (B) below) and from television receivers.

The monitors of this group may be characterised by the following features :

This group includes monitors which are capable of receiving signals when connected directly to the video camera or recorder by means of composite video, s-video or co-axial cables, so that all the radio-frequency circuits are eliminated. They are typically used by television companies or for closed-circuit television (airports, railway stations, factories, hospitals, etc.). They can, moreover, have separate inputs for red (R), green(G) and blue (B), or be coded in accordance with a particular standard (NTSC, SECAM, PAL, D-MAC, etc.). For reception of coded signals, the monitor must be equipped with a decoding device covering (the separation of) the R, G and B signals. They are not fitted with connectors characteristic of data processing systems, and they do not incorporate tilt, swivel and height adjusting mechanisms, glare-free surfaces, flicker-free display, and other ergonomic design characteristics to facilitate prolonged periods of viewing at close proximity to the monitor. They do not incorporate a channel selector or video tuner.

The EN to Legal Note 4 to Section XVI, HTSUS, provides:

This Note applies when a machine (including a combination of machines) consists of separate components which are intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or, more frequently, Chapter 85. The whole then falls to be classified in the heading appropriate to that function, whether the various components (for convenience or other reasons) remain separate or are interconnected by piping (carrying air, compressed gas, oil, etc.), by devices used to transmit power, by electric cables or by other devices.

For the purposes of this Note, the expression “intended to contribute together to a clearly defined function” covers only machines and combinations of machines essential to the performance of the function specific to the functional unit as a whole, and thus excludes machines or appliances fulfilling auxiliary functions and which do not contribute to the function of the whole.

The Court of International Trade (“CIT”) provided a definition for the term “monitor” as, “a machine that receives data from an external source and then processes.” Prysm, Inc. v. United States, 2019 Ct. Intl. Trade LEXIS 150 at *17 (Nov. 26, 2019).

Further, in CBP Headquarters Ruling Letter (HQ) H049555, dated April 13, 2009, CBP states, “to be classified as a monitor under heading 85.28, a device must be capable of accepting, processing, and transmitting a video or an ADP signal.”

It is clear that the LED panels, which were imported in every entry, satisfy the definitions provided in Prysm, 2019 Ct. Intl. Trade LEXIS 150 at *17, and HQ H049555, making them “monitors” under heading 8528, HTSUS. As such, the principal issue arises at the six-digit level, namely whether the LED panels are “capable of directly connecting to and designed for use with” an ADP under subheading 8528.52, HTSUS.

While each LED panel may be able to directly connect to an ADP machine via its Ethernet inputs, they are not designed for use with an ADP without an accompanying MCTRL660 functioning as a processor/controller. The subject LED panels are designed to be connected in a system, with the MCTRL660s being the intermediary between the panels and an ADP. Without the MCTRL660, the LED panels cannot adequately convert signals transmitted from an ADP and a user could not manage the LED panel’s display settings, including the general appearance and image uniformity, or account for the resolution, aspect ratio, and orientation of each display. Protestant also concedes in its original submission that “without the processors, cables, connectors, and converters that connect to the LED display panel, the LED display panels have no use.”

The conclusion that the subject LED panels are not “designed for use” with an ADP is supported by CBP’s prior rulings. For instance, in NY N283562, dated March 3, 2017, found that the monitors at issue (Sharp 4K Ultra-HD LED Display system) were properly classified under subheading 8528.52 in part because “such monitors being able to display signals or data directly from an ADP machine in a form that meets the requirements of the user.” Without the additional programming/software provided by the MCTRL660s, the LED panels cannot display signals or data directly from an ADP machine “in a form that meets the requirements of the user” because of the importance of the MCTRL660 in the functioning of the system. Therefore, the LED panels entered without the MTCTRL660s cannot be classified under subheading 8528.52, HTSUS and, consequently, are classified under subheading 8528.59, HTSUS.

Regarding those entries that include both LED panels and MCTRL660s, the panels and controller/processors “contribute together to a clearly defined function,” namely displaying images from an ADP, and, consequently, are a functional unit under Legal Note 4 to Section XVI, HTSUS. The ENs to Legal Note 4 to Section XVI, HTSUS, support this conclusion. Both the LED panel and the MCTRL660 are “essential to the performance of the function specific to the functional unit as a whole” because the LED panel needs the controller/processor in order to satisfy the requirement of being “designed for use” with an ADP. As such, it is important that the MCTRL660s possess the necessary capabilities to properly function with the LED panels in each entry. If the MCTRL660s did not have the controlling/processing abilities to manage the number of LED panels imported, the merchandise would not be a functional unit because the entry would not contain the articles “essential to the performance specific to the functional unit as a whole.” ENs to heading 8528, HTSUS.

NY N328363, dated October 17, 2022, and NY N238570, cited supra, also support classification of the LED panel/MCTRL660 systems under subheading 8528.52, HTSUS. In NY N328363, a display controller, multiple display cabinets, cables, and a set up kit were imported together and classified under subheading 8528.52, HTSUS, because they functioned as a system to “receive data from an external source, and then process and convert that data into physical output commands to display an image.” The LED panel/MCTRL660 system functions similarly to the merchandise classified in NY N328363 and NY N238570. Therefore, the LED panels entered with a MCTRL660 are classified under subheading 8528.52, HTSUS, pursuant to Legal Note 4 to Section XVI, HTSUS.

By application of GRIs 1 (Note 4 to Section XVI) and 6, the LED panels imported with MCTRL660 controller/processors are properly classified under heading 8528, specifically under subheading 8528.52.00, HTSUS, which provides for “Monitors and projectors, not incorporating television reception apparatus; reception apparatus for television, whether or not incorporating radio-broadcast receivers or sound or video recording or reproducing apparatus: Other monitors: Capable of directly connecting to and designed for use with an automatic data processing machine of heading 8471.” The general, column one rate of duty is Free.

By application of GRIs 1 and 6, the LED panels imported without a MCTRL660 controller/processor are to be classified under heading 8528, HTSUS, specifically under subheading 8528.59.33, HTSUS, which provides for “Monitors and projectors, not incorporating television reception apparatus; reception apparatus for television, whether or not incorporating radio-broadcast receivers or sound or video recording or reproducing apparatus: Other monitors: Other: Color: With a flat panel screen: Other: Other.” The general, column one rate of duty is 5%.

Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the U.S. International Trade Commission’s website at http://www.usitc.gov.

You are instructed to notify the Protestant of this decision no later than 60 days from the date of this decision. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to this notification. Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel and the public on the Customs Rulings Online Search System (CROSS) at https://rulings.cbp.gov/, or other methods of public distribution.

Sincerely, for Yuliya A. Gulis, Director Commercial and Trade Facilitation Division