CIT Sends Classification Case on Printed Circuit Boards for A/V Equipment to Trial
A case on the classification of printed circuit board assemblies used in audio-visual transmission equipment will go to trial, after the Court of International Trade on Dec. 22 found it could not determine whether PCBAs imported by Plexus are principally used for televisions and dutiable at 2.9%, or principally used for other devices, including computers and smartphones, and duty free.
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Plexus had imported the PCBAs for incorporation into encoders, multiplexers and re-multiplexers designed by Harmonic. Encoders compress audio and video digital data so they occupy less space in storage and less bandwidth in transmission. Multiplexers and re-multiplexers combine encoded output data from multiple sources into a single stream for transmission. The PCBAs at issue in the case were imported between 2010 and 2012.
CBP classified the PCBAs in subheadings 8529.90.13 and 8529.90.83, both of which cover parts of television apparatus of heading 8525. The duty rates for those subheadings are both 2.9%. Plexus protested, arguing they should have instead been classified in heading 8517 alongside apparatus for the transmission or reception of voice, images or other data, and more specifically in subheading 8517.70.00 for parts, which is duty free.
Under U.S. Note 2(b) to Section XVI, within which chapter 85 is found, PCBAs are classified with the machine where they are principally used. So classification of the PCBAs imported by Plexus hinged on the classification of the encoders, multiplexers and re-multiplexers, CIT said. The note also says that goods equally suitable for use principally with goods of headings 8517 and 8525 are to be classified in heading 8517.
On the other hand, heading 8517 excludes goods of heading 8525, so if the encoders, multiplexers and re-multiplexers were principally used for television equipment, then the PCBAs must be classified in heading 8525, CIT said.
The trade court found itself unable to determine the principal use of the encoders, multiplexers and re-multiplexers, and said the case must go to trial. While a report submitted to the court by Plexus said that the output from the equipment can eventually be listened to and watched on smartphones, personal computers or other devices, including in the form of videoconferencing, that same expert said he did not know specifically how the encoders, multiplexers and re-multiplexers that used Plexus’s PCBAs are used.
On the other hand, the government argued that, at least between 2010 and 2012, the use for the Harmonic encoders, multiplexers and re-multiplexers was in television transmission, and Harmonic’s vice president testified that TV service providers are Harmonic’s main customers.
CIT ordered Plexus and the government to propose a schedule for going to trial, as well as a trial date no later than March 1, 2021.
(Plexus Corp. v. U.S., Slip Op. 20-188, CIT # 13-00343, dated 12/22/20, Judge Reif. Attorneys: Myron Barlow of Barlow & Company for plaintiff Plexus Corp.; Beverly Farrell for defendant U.S. government.)