CIT Classifies LCD Monitors With Video as "Video Monitors", Not ADP Units
In a test case, BenQ America Corporation, v. U.S., the Court of International Trade agreed with Customs, ruling that certain liquid crystal display monitors with a video interface are properly classified under Harmonized Tariff Schedule subheading 8528.21.70 as video monitors at 5% ad valorem.
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BenQ had argued that while the LCD monitors had video capacity, their "principal function" was as a computer monitor, and therefore should have been classified as display units for automatic data processing (ADP) machines under HTS Heading 8471, duty free.
(The imported merchandise-Dell2001FP Flat Panel Color Monitors-are flat panel LCD monitors, with screens measuring 20.1 inches on the diagonal, which were manufactured for Dell by BenQ Corporation (a Taiwanese company of which BenQ America was a part). As imported, each monitor is equipped with four separate inputs: (1) an analog RGB connector; (2) a digital video interface (DVI-D) connector; (3) a separate video (S-Video) connector; and (4) a composite video connector.1)
BenQ supported its position by referencing the Explanatory Notes to HTS Heading 8528, which state that "video monitors of this heading should not be confused with the display units of automatic data processing machines described in the Explanatory Note to HTS Heading 8471", supported their argument that their monitors were display units of ADP machines, and they should be excluded from classification in HTS Heading 8528.
BenQ also invoked Note 3 to Section XVI of the HTS, contending that their monitors were machines designed for the purpose of performing two or more complimentary or alternative functions, therefore they should be classified under HTS Heading 8471, in accordance with their "principal function," which according to BenQ, was as a monitor for a computer or ADP machine.
The CIT stated that these monitors perform a specific function other than data processing, and Note 5(E) to Chapter 84, which states that "If a unit performs a specific function other than data processing, it is to be classified in the heading appropriate to that function," effectively excludes classification under HTS Heading 8471. The Explanatory Notes to HTS Heading 8471 similarly emphasize the point that classification under HTS Heading 8471 cannot occur if the unit is excluded by the provision of Note 5(E).
The CIT added that BenQ's reliance on Section Note 3 was misplaced, as this is a rule of general application, whereas Note 5 in Chapter 84 and the relevant Explanatory Notes, clearly state that the pivotal issue to be decided is whether these monitors were capable of accepting a signal only from the central processing unit of the computer or whether they can also accept non-computer signals.
The CIT ruled that these monitors cannot be classified as display "units" of automatic data processing machines" under HTS Heading 8471, and since it was undisputed that the monitors were video monitors, they should be classified under the broad eo nomine HTS Heading 8528, specifically, under HTS subheading 8528.21.70, as "Reception apparatus for television; video monitors" at 5% ad valorem.
1BenQ designed and manufactured the monitors at issue to receive signals from both computers and other non-computer devices. The monitors included a "picture-in-picture" feature, allowing a user to split the monitor's screen and simultaneously display, for example, both a movie and data from a personal computer. Both parties agreed that the monitors were "multi-media monitors" designed to function as, and have the physical characteristics of, both an ADP system monitor and a video monitor.
Slip Op 10-20 (dated 03/01/10) available at http://www.cit.uscourts.gov/slip_op/Slip_op10/10-20.pdf