Slip Op. 10-20
UNITED STATES COURT OF INTERNATIONAL TRADE

____________________________________ 

### B EN 

### Q A MERICA 

### C ORPORATION , : Plaintiff , : v. : Court No. 05-00637 

### T HE 

### U NITED 

### S TATES , : Defendant . :

____________________________________ [Plaintiff’s motion for summary judgment is denied; Defendant’s cross-motion is granted.] Dated: March 1, 2010 Adduci, Mastriani & Schaumberg, L.L.P. (V. James Adduci II , Harvey B. Fox , Munford Page Hall, II , and Paul G. Hegland ), for Plaintiff. Tony West , Assistant Attorney General; Barbara S. Williams , Attorney in Charge, International Trade Field Office, Commercial L itigation Branch, Civil Division, U.S. Department of Justice (Mikki Cottet ); Beth C. Brotman , Office of the Assistant Chief Counsel, International Trade Litigation, Bureau of Customs and Border Pr otection, U.S. Department of Homeland Security, Of Counsel; for Defendant. OPINION RIDGWAY, Judge: In this action, Plaintiff BenQ America Corporation challenges the decision of the Bureau of Customs and Border Protection denying BenQ’s protest concerning the tariff classification of certain liquid crystal display (“LCD”) monitors imported from the People’s Republic of China in mid-May
2004. 1

1 The Bureau of Customs and Border Protection – part of the U.S. Department of Homeland Security – is commonly known as U.S. Customs a nd Border Protection. The agency is referred to as “Customs” herein.Court No. 05-00637 Page 2

The Government maintains that Customs prope rly classified the merchandise at issue – DellTM 2001FP Flat Panel Color Monitors – as “video monitors” unde r heading 8528 of the Harmonized Tariff Schedule of the United States (“ HTSUS”), assessing duties at the rate of five percent ad valorem

. See generally Defendant’s Memorandum in Opposition to Plaintiff’s Motion for Summary Judgment and in Support of Defendant’s Cross-Motion for Summary Judgment (“Def.’s Brief”); Reply to Plaintiff’s O pposition to Defendant’s Cross-Motion for Summary Judgment (“Def.’s Reply Brief”); see also Heading 8528, HTSUS (2004). 2 BenQ contends that the monitors instead shoul d have been classified as display units for automatic data processing (“ADP”) mach ines under HTSUS heading 8471, duty-free. See generally Plaintiff’s Memorandum of Law in Support of Motion for Summary Judgment (“Pl.’s Brief”); Plaintiff’s Memorandum of Law in Response to Defendant’s Opposition to Plaintiff’s Motion for Summary Judgment and Cross-Motion for Summary Judgment (“Pl.’s Reply Brief”); see also Heading 8471, HTSUS. This action, which has been designated a test case pursuant to USCIT Rule 84, is before the Court on cross-motions for summary judgment. Jurisdiction lies under 28 U.S.C. § 1581(a) (2000). 3 As discussed below, Customs properly classified the imported merchandise as video monitors under HTSUS heading 8528. Accordingly, BenQ’s motion for summary judgment must be denied, and the Government’s cross-motion granted.

2 Except as otherwise indicated, all citations herein are to the 2004 edition of the HTSUS.

3 All statutory citations herein (other than citations to the HTSUS) are to the 2000 edition of the United States Code.Court No. 05-00637 Page 3

I. Background The imported merchandise – DellTM 2001FP Flat Pa nel Color Monitors – are flat panel LCD (liquid crystal display) monitors, with screen s measuring 20.1 inches on the diagonal, which were manufactured for DellTM by BenQ Corporation (a Taiwanese company of which Plaintiff BenQ America was a part). See DellTM 2001FP Flat Panel Color Monitor User’s Guide (Pl.’s Exh. 16) at 16-4, 16-50; Pl.’s Brief at 9, 23; see also id . at 1, 6; Def.’s Brief at 2-3. 4 According to a study commissioned by BenQ, whic h surveyed purchasers of the monitor at issue (and a somewhat earlier model), “[a] very la rge majority (86.6 percent) of survey respondents . . . purchas[ed] the monitors . . . for use principa lly as a display unit for co mputer uses,” and “[a]n overwhelming majority (more than 99 percent of survey respondents) ” were using the monitors with a computer. See Pl.’s Brief at 1-2, 18-19, 20, 24, 27, 29; Pl .’s Reply Brief at 3, 5, 6, 13-15, 24, 25- 26; but see Def.’s Brief at 19-20, 23, 24-25; Def.’s Reply Brief at 4-14. 5

4 BenQ touts DellTM as “the number one supplier of personal computer systems worldwide.” See Pl.’s Brief at 25. But, as the Government points out (and BenQ concedes), DellTM also sells LCD and plasma televisions, as well as a wide range of other electronics. See Def.’s Brief at 2; Pl.’s Brief at 25.

5 The Government attacks the methodology of BenQ’s survey as “skewed.” See Def.’s Brief at 19 n.11, 24-25; Def.’s Reply Brie f at 5. Specifically, the Govern ment argues that the results ofthe survey are wholly unreliable, given asserted flaws including “sample design” and “a high nonresponse rate which was unaddressed by any follow-up.” See Def.’s Reply Brief at 5-14. The Government objects to the report of the “inde pendent expert” engaged by BenQ to conduct the survey, and requests that the report “be stricken fr om the record or disreg arded by [the] Court.” See Def.’s Brief at 19 n.10. In light of the rationale herein and the disposition below, there is no need to consider either BenQ’s survey or the Government’s objections thereto. Even assuming the validity of its survey, BenQ cannot prevail.Court No. 05-00637 Page 4

As imported, however, each monitor is equipped with four separate inputs: (1) an analog RGB connector (also called the “D-sub 15” conn ector); (2) a digital video interface (“DVI-D”) connector; (3) a separate video (“S-video”) connector; and (4) a composite video connector. See DellTM 2001FP Flat Panel Color Monitor User’s Guide (Pl.’s Exh. 16) at 16-15, 16-18, 16-30, 16-51, 16-53 to 16-56; see also Pl.’s Brief at 1, 9; Def.’s Brief at 3. The analog RGB and DVI-D inputs are connections for a personal computer. See Pl.’s Brief at 9; Def.’s Brief at 3. On the other hand, the S-video and composite video inputs are conn ections for use with video devices including DVD players and VCRs, as well as game consol es (such as Xbox and PlayStation®3). See Pl.’s Brief at 9; Def.’s Brief at 3, 6, 22, 25. 6 Thus, as designed, manufactured, and imported, the monitors at issue are equipped to receive signals from both computers a nd other non-computer devices. See Pl.’s Brief at 1, 2, 9; Pl.’s Reply Brief at 16-18, 24-25; Def.’s Brief at 3. The monitors even in clude 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. See Def.’s Brief at 3; DellTM 2001FP Flat Panel Color Monitor User’s Guide (Pl.’s Exh. 16) at 16-39 to 16-40. In short, BenQ and the Government agree that the monitors here are “multi-media monitors,” which are “designed to function as” and have “t he physical characteristics of both an ADP system

6 The monitors also include a 4 port USB 2.0 hub, to allow for the connection of digital cameras, and other devices. See , e.g. , DellTM 2001FP Flat Panel Color Monitor User’s Guide (Pl.’s Exh. 16) at 16-56 to 16-57 (discussing USB hub); Def.’s Brief at 3. According to the Government, the monitors “can even be attached to a television cable box.” See id . at 25. In addition, while the monitors are imported with a stand for desk top us e, each monitor also includes a flat panel mount, which allows the monitor to be mounted on a wall. See id . at 3.Court No. 05-00637 Page 5

monitor and a video monitor.” See Pl.’s Brief at 9; Def.’s Brief at 12; see also Pl.’s Reply Brief at 1-2, 7-9, 12; Def.’s Brief at 3, 6; Def.’s Reply Brief at 4. Asserting that the “principal function” of the imported merchandise is “ as a computer monitor,” BenQ contends that the merchandise should be classified under HTSUS heading 8471 (“Automatic data processing machines and units th ereof”), duty-free, as BenQ claimed at the time of importation. See , e.g. , Pl.’s Brief at 1-2, 18-19, 30; Pl.’s Reply Brief at 1, 26. 7 In contrast, the Government maintains that Customs correctly classified the monitors under heading 8528 (“Reception apparatus for television . . .; video monitors and video projectors: Video monitors”), dutiable at the rate of five percent ad valorem , and that Customs’ denial of BenQ’s protest should therefore be sustained. See , e.g. , Def.’s Brief at 1, 4, 6, 8, 29; Def.’s Reply Brief at 1, 15. 8

II. Standard of Review Customs classification decisions are reviewed de novo , through a two-step analysis. See 28 U.S.C. § 2640; Faus Group, Inc. v. United States , 581 F.3d 1369, 1371-72 (Fed. Cir. 2009). The first step of the analysis addresses the proper m eaning of the relevant tariff provisions, which is a question of law. The second step involves determin ing whether the merchandise at issue falls within a particular tariff provision as construed. See id . ( citing Orlando Food Corp. v. United States , 140

7 Specifically, BenQ claims that the monitors at issue should properly be classified under HTSUS subheading 8471.60.45, which covers “Automatic data processing machines and units thereof; . . . . : Input or output units . . . : Other: Display units: Other: Other.” See Pl.’s Brief at 1, 29-30; Pl.’s Reply Brief at 1, 26; Subheading 8471.60.45, HTSUS.

8 Specifically, Customs classified the mon itors at issue under HTSUS subh eading 8528.21.70, which covers “Reception apparatus for television, . . . ; video monitors . . . : Video monitors: Color: With a flat panel screen: Other: Other.” See Def.’s Brief at 1, 4; Subheading 8528.21.70, HTSUS.Court No. 05-00637 Page 6

F.3d 1437, 1439 (Fed. Cir. 1998)). Under USCIT Rule 56, summary judgment is appr opriate where “there is no genuine issue as to any material fact” and the moving party is entitled to judgment as a matter of law. See USCIT R. 56(c). Summary judgment is thus appropriate in a customs classification case if there is no genuine dispute of material fact (because the nature of the merchandise at issue is not in question), such that the decision on the classification of th e merchandise turns solely on the proper meaning and scope of the relevant tariff provisions. See Faus Group , 581 F.3d at 1371-72. In the present case, the parties disagree as to the meaning and scope of the tariff provisions at issue. They are, however, in agreement as to the nature of the imported merchandise. Accordingly, in the absence of any dispute of material fact, this matter is ripe for summary judgment.
III. Analysis The tariff classification of all merchandise imported into the United States is governed by the General Rules of Interpretation (“GRIs”), wh ich provide a framework for classification under the HTSUS, and are to be applied in numerical order. See BASF Corp. v. United States , 482 F.3d 1324, 1325-26 (Fed. Cir. 2007); 19 U.S.C. § 1202. 9 Under GRI 1, a classification analysis must

9 The HTSUS consists of the Ge neral Notes, the General Rules of Interpretation (“GRIs”), the Additional U.S. Rules of Interpretation (“ ARIs”), and Sections I to XXII of the HTSUS (including Chapters 1 to 99, together with all S ection Notes and Chapter Notes, article provisions, and tariff and other treatment accorded ther eto), as well as the Chemical Appendix. See BASF Corp. , 482 F.3d at 1325-26; Libas, Ltd. v. United States , 193 F.3d 1361, 1364 (Fed. Cir. 1999) (noting that the HTSUS “is indeed a statute but is not published physically in the United States Code”) ( citing 19 U.S.C. § 1202).Court No. 05-00637 Page 7

begin with the language of the headings, and any re levant Section and Chapter Notes, to determine whether the merchandise at issue is classi fiable under a particul ar tariff provision. See Avenues in Leather, Inc. v. United States , 423 F.3d 1326, 1333 (Fed. Cir. 2005). The first step in a classification analysis is thus to construe the terms of the headings of the HTSUS, together with any pertinent Section a nd Chapter Notes (which are statutory law), to determine whether they require a specific classification. See Avenues in Leather , 423 F.3d at 1333 (explaining that Section Notes and Chapter Notes “are not optional interpretive rules, but are statutory law, codified at 19 U.S.C. § 1202”) (internal quotation marks omitted); Degussa Corp. v. United States , 508 F.3d 1044, 1047 (Fed. Cir. 2007) (stating that “[t]he section and chapter notes are integral parts of the HTSUS, and have the same legal force as the text of the headings.”). The Explanatory Notes to the Harmonized Commodity Description and Coding System (“Explanatory Notes”) are similarly instructive, and further illuminate the scope and meaning of tariff terms. See generally World Customs Organization, Harmonized Commodity Description and Coding System (3d ed. 2002). 10 The Explanatory Notes are the official interpretation of the Harmonized Commodity Description and Coding System (on which the HTSUS is based), as set forth by the World Customs Organization (the same body which drafts the international nomenclature). See Rocknel Fastener, Inc. v. United States , 267 F.3d 1354, 1360 (Fed. Cir. 2001) (noting that Explanatory Notes are “prepared by the World Customs organization to accompany the international harmonized schedule”). As Congre ss has recognized, the Explanatory Notes “provide

10 All citations to the Explanatory Notes herein are to those in place as of the date of importation of the monitors at issue.Court No. 05-00637 Page 8

a commentary on the scope of each heading of th e Harmonized System a nd are thus useful in ascertaining the classification of merchandise under the system.” H.R. Conf. Rep. No. 576, 100 th Cong., 2d Sess. 549 (1988), reprinted in 1988 U.S.C.C.A.N. 1547, 1582; see also Guidance for Interpretation of Harmonized System, 54 Fe d. Reg. 35,127, 35,128 (Aug. 23, 1989) (noting that the Explanatory Notes provide a commentary on the scope of each heading of the HTSUS, and are the official interpretation of the Harmonized System at the international level). Accordingly, although the Explanatory Notes “ do not constitute controlling legislative history,” they serve a critical function as an interpretative supplement to the HTSUS, and “are intended to clarify the scope of HTSUS [provisions ], and to offer guidance in interpreting [those provisions].” See Mita Copystar Am. v. United States , 21 F.3d 1079, 1082 (Fed. Cir. 1994) (citation omitted). The Explanatory Notes are thus hi ghly authoritative – “persuasive” and “‘generally indicative of the proper interpretation of a tariff provision.’” Agfa Corp. v. United States , 520 F.3d 1326, 1329-30 (Fed. Cir. 2008) ( quoting Degussa Corp. , 508 F.3d at 1047 (citation omitted)). Relying largely on Section XVI Note 3 of th e HTSUS, BenQ insists that “the fundamental issue in this case” is “the principal function of th e imported merchandise, that of a computer monitor or of a video monitor.” See Pl.’s Reply Brief at 10; see also Pl.’s Brief at 1, 17. As set forth below, however, under Chapter 84 Note 5 (read in tandem w ith the relevant Explanatory Notes), the pivotal issue is instead whether the imported merchandise can “perform[ ] a specific function other than data processing” – or, stated differently, whethe r the monitors “are capable of accepting a signal onlyfrom the central processing unit [“CPU”]” of a computer (or whether they can also accept noncomputer signals). See Note 5(E) to Chapter 84, HTSUS; Explanatory Notes to Heading 8471,Court No. 05-00637 Page 9

HTSUS, at (I)(D) (emphasis added). The imported monitors are thus classified under HTSUS heading 8528 under a straightforward GRI 1 analysis.
A. HTSUS Heading 8528
Customs classified the merchandise at issue under HTSUS heading 8528, a broad e o nomine provision covering “Reception apparatus for television, whether or not incorp orating radiobroadcast receivers or sound or video reco rding or reproducing apparatus; video monitors and video projectors: Video monitors .” See Heading 8528, HTSUS (emphases added). 1 1 BenQ candidly concedes that
the monitors are “capable of connection to a video source as video monitors.” S ee Pl.’s Brief at 2.
As noted above, however, BenQ contends that

– notwithstandin g their video capability – these monitors are used with computers by the vast majority of pur chasers, and are therefore properly classifiabl e under HTSUS heading 8471, which covers “ A utomatic data processing machines and units thereof ; magnetic or optical reade rs, machines for transcribing data onto data media in coded form and machines for processing such data, not elsewhere specified or included.”
See , e.g. , Pl.’s Brief at 2-3; Headi ng 8471, HTSUS (emphasis added).
In an effort to support its claimed classification, BenQ highlights the Explanatory Notes to heading 8528, which state that “[v]ideo monitors of this heading [i.e., heading 8528] should not be confused with the display units of automatic data processing machines described in the Explanatory

11 An eo nomine tariff provision is one that describes the covered merchandise by name, rather than by use. See BASF Corp. , 482 F.3d at 1326 & n.2. An eo nomine provision ordinarily includes all forms of the named article. See Carl Zeiss, Inc. v. United States , 195 F.3d 1375, 1379 (Fed. Cir. 1999) (citation omitted).Court No. 05-00637 Page 10

Note to heading 84.71.” S ee Pl.’s Brief at 16; Explanatory Notes to Heading 8528, HTSUS, at (6); see also Pl.’s Reply Brief at 21. The Explanatory Notes further underscore that heading 8528 “excludes, inter alia , (a) Display units of a utomatic data processing machines, whether or not presented separately (h eading 84.71).” S ee Pl.’s Brief at 16-17; Explanatory Notes to Heading 8528,
HTSUS. Contrary to BenQ’s claims, analysis of the Notes to Chapter 84, read in pari materia with the relevant Explanatory Notes, makes it clear that the monitors at issue cannot be classified as “units” of automatic data processing machines under heading 8471. See section III.B, infra

. Accordingly, the Explanatory Notes to heading 8528 do not exclude these monitors; and, indeed, as “video monitors,” they are properly classified thereunder.
B. HTSUS Heading 8471 Invoking Note 3 to Section XVI of the HTSUS, 12 BenQ contends that the monitors here are “machines designed for the purpose of performing two or more complimentary or alternative functions,” and therefore must be classified under HTSUS heading 8471, in accordance with their “principal function” – which, according to BenQ, is “serving as a monitor for a computer or an automatic data processing machine (ADP).” See Pl.’s Brief at 1-3, 14-22 (discussing Section XVI, Note 3); id . at 1-2, 18-19 (discussing “principal function” of monitors at issue); Pl.’s Reply Brief at 2-4, 7-13, 15-16, 22-23, 25-26 (dis cussing Section XVI, Note 3); id . at 3, 15 (discussing “principal function” of monitors at issue). As explained below, however, BenQ’s reliance on

12 Both Chapter 84 and Chapter 85 (and, thus , both heading 8471 heading 8528) are within Section XVI of the HTSUS.Court No. 05-00637 Page 11

Section Note 3 is misplaced. Section XVI Note 3 is prefaced with an expr ess proviso – “[u]nless the context otherwise requires . . . .”: Unless the context otherwise requires , composite machines consisting of two or more machines fitted together to form a whole and other machines designed 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. Note 3 to Section XVI, HTSUS (emphasis adde d). The terms of HT SUS heading 8471 and the detailed, mandatory statutory criteria set forth in the relevant Chapter Notes governing classification as a “unit” of an ADP machine (discussed immedi ately below) plainly constitute a “context [which] otherwise requires,” overriding the general, de fault rule in Note 3 to Section XVI. See Def.’s Brief at 7, 12-13, 23-24 (explaining that “[t]he term s of Heading 8471 and the mandatory statutory requirements for classification as a ‘unit’ of an automatic data processing machine constitute the context which nullifies the applicability of Section XVI Note 3 here”); Def.’s Reply Brief at 2 n.1 (stating that “Note 3 . . . simply does not apply”). 13 In short, to the extent that the provisions conf lict, the rule of general application set forth in Section XVI Note 3 has no relevance here, because it yields to the terms of heading 8471, and, more

13 BenQ asserts that its interpretation of Secti on XVI Note 3 is necessary to avoid rendering that provision “inoperative or superfluous.” See Pl.’s Reply Brief at 12-1 3. To the contrary, the holding here is limited specifically to the implicati ons of Section XVI Note 3 (or lack thereof) for the classification of “automatic data processing m achines” and “units” of such machines pursuant to HTSUS heading 8471 and Note 5 to Chapter 84. The holding here thus says nothing about the implications of Section XVI Note 3 for the classification of “composite machines . . . and other machines designed for the purpose of performing two or more complementary or alternative functions” in general.Court No. 05-00637 Page 12

specifically, to Note 5 to Chapter 84 (which deals exclusively with merchandise classified under heading 8471 as “automatic data processing machines” and “units” thereof). Cf . Mitsubishi Int’l Corp. v. United States , 182 F.3d 884, 886 (Fed. Cir. 1999) (cons truing tariff provision preceded by proviso similar to that here, which stated that tariff provision applied “[i]n the absence of special language or context which otherwise requires”). 14

14 Customs issued no ruling letter in this case. See Pl.’s Brief at 3, 4. Nor are there any other Customs rulings specifically addressing the DellTM 2001FP Flat Panel Color Monitor. Id

. Nevertheless, although (as explained above) the Gove rnment here argues that Section XVI Note 3 has no application to this case, and although the Gove rnment further states th at Customs did not base its classification in this case on that Note ( see Def.’s Reply Brief at 15), the Government requests that – in the event that Section XVI Note 3 is determined to be relevant – Customs’ position on the classification of the monitors at issue be accorded Skidmore deference. See Def.’s Brief at 7, 26-28; Def.’s Reply Brief at 2 n.1; United States v. Mead Corp. , 533 U.S. 218, 219-20 (2001); Skidmore v. Swift & Co. , 323 U.S. 134 (1944). According to th e Government, Customs’ position on the classification of “multimedia monitors” and the c onstruction of the relevant statutory provisions is set forth in HQ 966270 (June 3, 2003), HQ 963314 (July 30, 2001), HQ 962677 (Sept. 23, 1999), HQ 967013 (Oct. 27, 2004), and HQ 960282 (Oct. 22, 1998). See Def.’s Brief at 26. BenQ vigorously disputes the Government’s claim to Skidmore deference. See generally Pl.’s Brief at 3, 4-9; Pl.’s Repl y Brief at 21-22. BenQ argues, inter alia , that the monitors classified in the rulings cited by the Government were of diffe rent sizes; that Customs’ use of a “class or kind” analysis in the rulings is inconsistent with the agency’s reliance on S ection XVI Note 3; that Customs’ rulings have been inconsistent in ascertaining “principal function” by applying the Carborundum factors (which are traditionally used to determine “principal use ” under Additional U.S. Rule of Interpretation (“ARI”) 1(a)); and that, ultimately, Customs’ rulings have failed to determine the “principal function” of the monitors there at issue, and have resorted to GRI 3(c) to classify the monitors under the heading last in numerical order among the headings that equally merit consideration. See , e.g. , Pl.’s Brief at 3, 4-9; Pl.’s Repl y Brief at 21-22; United States v. Carborundum Co. , 536 F.2d 373, 376 (1976). The conclusion that Section XVI Note 3 has no relevance to the classification of the merchandise at issue (outlined above) obviates any need to reach either the Government’s claim to Skidmore deference or BenQ’s arguments in opposition.Court No. 05-00637 Page 13

In support of its claim that the monitors’ “principal function” compels their classification under heading 8471, BenQ also relies on Note 5 to Chapter 84. See , e.g. , Pl.’s Brief at 15-16; see also Pl.’s Reply Brief at 10. 15 But – like its reading of Note 3 to Section XVI – BenQ’s reading of Note 5 to Chapter 84 is fundamentally flawed. Read in pari materia , the terms of the heading and the Chapter Notes to Chapter 84 effectively exclude monitors such as those at issue here from the scope of heading 8471. In its entirety, Note 5 to Chapter 84 reads: (A) For purposes of heading 8471, the expression “ automated data processing machines ” means: (a) Digital machines, capable of (1) storing the processing program or programs and at least the data immediately necessary for execution of the program; (2) being freely programmed in accordance with th e requirements of the user; (3) performing arithmetical computations specified by the user; and, (4) executing, without human intervention, a processing program which requires them to modify their

15 Note 5 to Chapter 84 actually refers to “principal [ ] use[ ],” rather than “principal function” (the term used in Section XVI Note 3). See Note 5(B)(a) to Chapter 84, HTSUS; Note 3 to Section XVI, HTSUS. The Government maintains that, as such, Chapter 84 Note 5(B)(a) is governed by ARI 1(a), and requires that BenQ demonstrate both (1) the class or kind of merchandise to which the monitors at issue belong, and (2) the principal use of that class or kind of merchandise at or immediate prior to the date these monitors were imported. See Def.’s Brief at 15- 17; Def.’s Reply Brief at 3-4. BenQ disputes the Government’s assertion that BenQ is required to establish the “principal use” of the monitors pursuant to ARI 1(a). See Pl.’s Brief at 12-14; Pl.’ s Reply Brief at 2-4, 10-13. But, arguing in the alternative, BenQ essentially s eeks to recast its “principal function” evidence as evidence of “principal use,” using the Carborundum factors. See Pl.’s Brief at 19-29; Pl.’s Reply Brief at 4-6, 23-26. The Government, in turn, challenges the adequacy of BenQ’s showing. See Def.’s Brief at 18-20, 24; De f.’s Reply Brief at 4. In light of the rationale and disposition here, there is no need to reach any of these issues.Court No. 05-00637 Page 14

execution, by logical decision during the processing run; (b) Analog machines capable of simulating mathematical models and comprising at least: analog elements, control elements and programming elements; (c) Hybrid machines consisting of either a digital machine with analog elements or an analog m achine with digital elements. (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 of the following conditions: (a) It is of a kind solely or prin cipally used in an automatic data processing system ; (b) It is connectable to the centr al processing unit either directly or through one or more other units; and (c) It is able to accept or deliver data in a form (codes or signals) which can be used by the system. (C) Separately presented units of an auto matic data processing machine are to be classified in heading 8471. (D) Printers, keyboards, X-Y coordinate input devices [ e.g. , computer mice] and disk storage units [ i.e. , disk drives] which satisfy the conditions of paragraphs (B)(b) and (B)(c) above, are in all cases to be classified as units of heading 8471. (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. Note 5 to Chapter 84, HTSUS (first emphasis in the original). 16

16 BenQ devotes one section of its opening brief to simply quoting the text of various tariff provisions. Among the provisions quoted there is Chapter 84 Note 7, which provides that “[a]Court No. 05-00637 Page 15

In brief, as quoted above, Note 5 to Chapte r 84 is specifically addressed exclusively to HTSUS heading 8471. Note 5(A) de fines the term “automatic data processing machines,” as that term is used in heading 8471. See Note 5(A) to Chapter 84. Note 5(B) – the heart of BenQ’s case – explains that an ADP machine may be a “system” consisting of multiple different individual “units”; and, more importantly for BenQ’s purposes, Note 5(B) defines the scope of the term “unit” of an ADP system, including, inter alia , a requirement that the merchandise be “of a kind . . . principally used in an automatic data processing system.” See Note 5(B) to Chapter 84 (emphasis added). The effect of Note 5(C) is to make units of an ADP machine classifiable under 8471 even if they are “[s]eparately presented” ( i.e. , even if the units are not imported as part of a system as a whole). See Note 5(C) to Chapter 84. Note 5(D) underscores that certain common computer peripherals ( e.g. , printers, keyboards, computer mice, and disk drives) are “in all cases” to be classified under heading 8471, provided that they are “connectable to the central processing unit” and that they are “able to accept or deliver data in a form (codes or signals) which can be used by the system.” See Note 5(D) to Chapter 84. In effect, the common computer peripherals listed in Note 5(D) are classifiable under heading 8471 even if they do not satisfy the requirements of Note

machine which is used for more than one purpose is , for the purposes of classification, to be treated as if its principal purpose were its sole purpose.” See Pl.’s Brief at 10 (captioned “The Relevant Tariff Provisions”) ( quoting Note 7 to Chapter 84, HTSUS). Bu t BenQ makes no other reference to the provision in its briefs. In any event, that general provision has no relevance here, in light of the specific principles set forth in Chapter 84 Note 5, which deal exclusively with merchandise classified under heading 8471 as “automatic data processing machines” and “units” thereof. Certainly nothing in Chapter 84 Note 7 requires cl assification of the merchandise at issue under heading 8471.Court No. 05-00637 Page 16

5(B)(a) ( i.e. , even if they are not “solely or principally used” in an ADP system). 17 Significantly, monitors are not among the common computer peripherals listed in Note 5(D) which are (essentially) “in all cases” to be classified under heading 8471. Note 5(D) thus evinces the clear intent of the drafters (and Congress) that not all monitors capable of functioning as computer monitors would be classifiable under head ing 8471. And, finally, Note 5(E) provides, inter alia , that if an ADP machine (including a unit thereof) 18 performs a specific function other than data processing, it is “to be classified in the heading[] appropriate to [its] respective function[] or, failing that, in [a] residual heading[].” See Note 5(E) to Chapter 84, HTSUS. Thus, under Note 5(E), for example, where (as here) a “unit” is designed in such a way as to permit it to perform a specific function other tha n, or in addition to, data processing – or where, for example, the addition of a certain “unit” to an ADP system would enable that system to perform functions other than data processing – then it is to be classified “in the heading[] appropriate to [its] respective function[] or, failing that, in [a] residual heading[].” See Note 5(E) to Chapter 84,
HTSUS. 19

17 In addition, unlike Chapter 84 Note 5(B), Note 5(D) also does not expr essly cross-reference Note 5(E). Compare Note 5(B) to Chapter 84, HTSUS and Note 5(E) to Chapter 84, HTSUS.

18 See Explanatory Notes to Heading 8471, HTSUS, at (I)(D) (“Separately Presented Units”), discussed infra

.
19 Although the monitors here are capable of “w orking in conjunction with an automatic data processing machine,” they are also indisputab ly capable of performing a non-ADP function (a function that is completely separate from, and co mpletely independent of, a computer system). See Note 5(E) to Chapter 84, HTSUS.Court No. 05-00637 Page 17

BenQ argues, at some length, that the monito rs here are – in the wo rds of Note 5(B)(a) – “principally used in an automatic data processing system.” See , e.g. , Pl.’s Brief at 1-2, 18-19; Pl.’s Reply Brief at 3, 15; Note 5(B)(a) to Ch apter 84, HTSUS. However, while it is necessary to classification under heading 8471 that the monitors be “of a kind solely or principally used in an automatic data processing system,” that showing is not sufficient

. As quoted above, Note 5(B) includes an express limitation: “ Subject to paragraph ( E ) [ i.e. , Note 5(E)] below . . . ” See Note 5(E) to Chapter 84 (emphasis added). In other words, even if the merchandise here satisfies the criteria set forth in Note 5(B)(a), (b), and (c) (as BenQ contends that these monitors do), the merchandise nevertheless is not classifiable under heading 8471 as units of ADP machines if the merchandise is excluded from that heading by Note 5(E). As discussed above, BenQ failed to appreci ate the significance of the proviso in Section XVI
Note 3

– “Unless the context otherwise requires

. . . .” S ee Note 3 to Section XVI, HTSUS. So, too, BenQ similarly fails to appreciate the signifi cance of the proviso in Note 5(B) to Chapter 84 – “Subject to paragraph (E) below

. . . .” S ee Note 5(B) to Chapter 84, HTSUS. BenQ ignores the limiting effect of Note 5(E), which is not only (like Note 5(B)) a distinct and integral subpart of Note 5, but is – in addition – expressly cross-referenced and incorporated into Note 5(B), on which BenQ heavily relies. 20

20 BenQ fails to acknowledge either the independe nt existence of Chapter 84 Note 5(E) or its incorporation by reference into Chapter 84 Note 5(B). See , e.g. , Pl.’s Brief at 15-16 (arguing that merchandise at issue satisfies subparagraphs (a), (b), and (c) of Note 5(B) to Chapter 84, but ignoring Note 5(B)’s introductory proviso, “[s]ubject to paragraph (E) below . . . ”); Pl.’s Reply Brief at 13 (same). It necessarily follows that BenQ never addresses Chapter 84 Note 5(E), much less explains the significance of Note 5(E) in the context of the rela ted Explanatory Notes to headingCourt No. 05-00637 Page 18

It is undisputed that the monitors at issue are “capable of connection to a video source as video monitors,” and thus can “perform[ ] a sp ecific function other than data processing.” See Pl.’s Brief at 2; Note 5(E) to Chapter 84, HTSUS. And, because the monitors “perform[ ] a specific function other than data processing,” Note 5(E) to Chapter 84 effectively excludes them from classification under heading 8471, and mandates their classification under “the heading[] appropriate to their respective function[] . . . .” – even assu ming that the monitors are “of a kind . . . principally used in an automatic data processing system,” as BenQ claims. See Notes 5(B)(a) & 5(E) to Chapter 84, HTSUS. This result is confirmed by the relevant Explan atory Notes, which eliminate any conceivable doubt, both as to the interrelationship and signifi cance of the various paragraphs of Note 5 to Chapter 84 and as to the outcome in this case. Paraphrasing and elucidating Note 5(E) to Chapter 84, the Explanatory Notes to HTSUS heading 8471 state flatly and unequivocally: If [ a ] unit performs a specific function other than data processing , it is to be classified in the heading appropriate to that function or, failing that, in a residual heading (see Note 5(E) to this Chapter [ i.e. , Chapter 84]). Explanatory Notes to Heading 8471, HTSUS, at (I)(D ) (“Separately Presented Units”) (emphasis added). The Explanatory Notes similarly emphasize the point that, to be classified under heading 8471, it is not enough that a unit satisfy the criteria set fo rth in Note 5(B)(a), (b), and (c); in addition, the unit also must not be “excluded by the provisions of Note 5(E) to this Chapter [ i.e. , Chapter 84]).” See Explanatory Notes to Heading 8471, HTSUS, at (I)(D).

8471, discussed below.Court No. 05-00637 Page 19

Finally, and most explicitly, the Explanatory Notes to heading 8471 expressly address “display units of [ADP] machines,” and painstaki ngly differentiate such display units (which are classified under heading 8471) from “video monitors and television receivers of heading 85.28,” crystallizing the bright line distinction between “display units” that accept signals only from a computer versus those that accept signals from other devices as well: Among the constituent units included [under heading 8471] are display units of automatic data processing machines which provide a graphical presentation of the data processed. They differ from the video monitors and television receivers of heading 85

. 28 in several ways, including the following: (1) Display units of automatic data processing machines are capable of accepting a signal only from the central processing unit of an automatic data processing machine . . . . Explanatory Notes to Heading 8471, HTSUS, at (I)(D) (fir st emphasis in the original). Here – as in Agfa – to the extent that “the language of [the] h eading [as well as the language of the Chapter Notes] might allow for some ambiguity, the Explanatory Notes to [the heading] do not”: [The Explanatory Notes] directly address the issue under consideration here. . . . It is hard to imagine a more definitive statement on the matter before [the court]. The exact goods at issue are specifically descri bed and excluded from [the heading under consideration], and the reader is specifically directed to [a different heading], the heading under which Customs has classified the merchandise. Agfa Corp. , 520 F.3d at 1330. As noted above, BenQ candidly concedes that “the imported merchandise is equipped with connectors that enable it to accept signals from either an ADP machine or a video source.” See Pl.’s Reply Brief at 17. The monitors thus do not satis fy the specifications for “display units” of ADP machines set forth in paragraph (1) quoted immediately above. Under these circumstances, it isCourt No. 05-00637 Page 20

therefore of no moment whether – as BenQ claims – the monitors here “conform[] to the specifications of ‘units’ of ADP machines describe d in paragraphs (2)-(5) of the Explanatory Notes for heading 8471.” See Pl.’s Reply Brief at 19; see generally id . at 16-21 (analyzing extent to which monitors at issue meet the specific individual criteria (1)-(5) outlined in Explanatory Notes to Heading 8471, HTSUS, at (I)(D)). 21 In the words of paragraph (1) of the Expl anatory Notes to heading 8471 (at (I)(D)), which must be read in pari materia with Chapter 84 Notes 5(B) and (E), the monitors here are not “capable of accepting a signal only from the central processing unit of an automatic data processing machine.”

21 Turning a blind eye to the critical word “only” in criterion (1) ( i.e. , the requirement that display units classifiable under heading 8471 be “capable of accepting a signal only from the central processing unit of an automatic data processing machine”), BenQ states unequivocally at one point in its briefing that “the imported merchandise conf orms to the characteristics of display units of ADP machines as described in paragraphs (1)-(5) of the Explanatory Notes for heading 8471.” See Pl.’s Reply Brief at 20-21; Explanatory Notes to Heading 8471, HTSUS, at (I)(D) (emphasis added). As explained above, however, that statement is pa tently false, as even BenQ itself elsewhere concedes. See , e.g. , Pl.’s Reply Brief at 19 (arguing that the monitors here “conform[] to the specifications of ‘units’ of ADP machines described in paragraphs ( 2 )-( 5 ) of the Explanatory Notes for heading 8471”) (emphasis added); id . at 24 (referring to “the physical characteristics of displays of heading 8471, described in the Explanatory Notes of heading 8471, most of which are shared by the imported merchandise”) (emphasis added). As the bar was recently reminded, such statemen ts are inconsistent with the obligations of counsel under USCIT Rule 11(b), which provides th at an attorney’s signature on court papers certifies, among other things, that each of “the claims, defenses, a nd other legal contentions” therein “are warranted by existing law” (or a non-frivolous argument for the extension or modification of the law), and that all “factual contentions have evidentiary support.” USCIT Rule 11(b). “Inherent in that certification is the assertion that the existing law, as well as the facts of record, have been stated ‘accurately and correctly.’” See Diamond Sawblades Mfgrs.’ Coalition v. United States , 34 CIT ____, ____, 2010 WL 517477 * 5 (2010) ( quoting Precision Specialty Metals, Inc. v. United States , 315 F.3d 1346, 1356 (Fed. Cir. 2003)).Court No. 05-00637 Page 21

See Explanatory Notes to Heading 8471, HTSUS, at (I)(D) (emphasis added); Notes 5(B) & (E) to Chapter 84, HTSUS. Because they can “perform[ ] a specific function other than data processing,” the monitors at issue cannot be classified as disp lay “units” of “automatic data processing machines” under heading 8471 of the HTSUS. See Note 5(E) to Chapter 84, HTSUS. 22

C. Classification of the Subject Merchandise As discussed above, the imported monitors cannot be classified as display “units” of “automatic data processing machines” under HTSUS heading 8471. See section III.B, supra . By the same token, it is undisputed that the monitors are video monitors. See section III.A, supra . As such, they are classifiable as “video monitors” under the broad eo nomine heading 8528, and thus were properly classified thereunder. See section III.A, supra . All that remains now is to ascertain the proper subheading. Customs classified the monitors under subheading 8528.21.70, which covers “Reception apparatus for television, . . . ; video monitors . . . : Video monitors: Color: With a flat panel screen: Other: Other.” See Subheading 8528.21.70, HTSUS. Here, ther e is no claim by BenQ that some other subheading of heading 8528 more specifi cally describes the imported merchandise. An

22 As of 2007, HTSUS heading 8528 was amended to cover all monitors “[o]f a kind solely or principally used in an automatic data processing system of heading 8471.” See Subheading 8528.41.00, HTSU S (2007) (covering “ . . . Cathode-ray tube monitors: Of a kind solely or principally used in an automatic data pro cessing system of heading 8471”); Subheading 8528.51.00, HTSUS (2007) (covering “. . . Other monitors: Of a kind solely or principally used in an automatic data processing system of heading 8471”).Court No. 05-00637 Page 22

independent review of the potential subheadings conf irms that, in fact, ther e is none. The monitors were thus properly classified under subheading 8528.21.70 of the HTSUS.

IV. Conclusion For all the reasons set forth above, the DellTM 2001FP Flat Panel Color Monitors at issue were properly classified as “video monitors” under subheading 8528.21.70 of the HTSUS. Plaintiff’s motion for summary judgment must therefore be denied, and Defendant’s cross-motion must be granted. Judgment will enter accordingly.

__________________________________ Delissa A. Ridgway Judge Decided: March 1, 2010 New York, New York

### ERRATA

BenQ America Corporation v. The United States , Court No. 05-00637, Slip Op. 10-20, dated March 1, 2010.
Page 7: In the penultimate line of the main body of text, replace “World Customs organization” with “World Customs Organization” Page 10: In footnote 12, replace “heading 8471 heading 8528” with “heading 8471 and heading 8528” Page 12: In the last line of the second paragraph of footnote 14, replace “(1976)” with “(C.C.P.A. 1976)” Page 13: In the penultimate line of the first paragraph of footnote 15, replace “immediate” with “immediately”

March 10, 2010