CLA-2 CO:R:C:M 952623
Mr. S. Richard Shostak
Stein Shostak Shostak & O'Hara
3580 Wilshire Boulevard, Suite 1240
Los Angeles, CA 90010-2597
RE: Modification of HQ 950410; Ethernet Adapter; Units Suitable
for Physical Incorporation Into Automatic Data Processing
machines or Units Thereof; HQ 951331; HQ 952659
Dear Mr. Shostak:
On March 23, 1992, we issued HQ 950410 to you regarding the
classification of the Teradata Corporation Relational Database
Processors and the Ethernet Adapters, under the Harmonized Tariff
Schedule of the United States (HTSUS).
However, in HQ 951331, dated September 18, 1992, as modified
by HQ 952659, dated October 7, 1992, we reconsidered the
classification of Local Area Network (LAN) interfaces and adapters.
Therefore, it is necessary to modify your case accordingly.
FACTS:
The Teradata DBC/1012 is a high performance, fault-tolerant
computer system optimized for relational database management. This
microprocessor-based system is expandable in small modules of
processing and storage capacity. The minimum configuration
includes a processor subsystem and a storage subsystem, providing
up to 24 MIPS (millions of instructions per second) of processing
capacity and up to 19 gigabytes of storage capacity, depending on
options. The system can be expanded to more than 3 BIPS (billions
of instructions per second) and nearly 5 terabytes of data storage,
all operating as a single system with a single image.
The submitted literature states that the DBC/1012 integrates
three types of processors: Interface Processors (IFPs), Access
Module Processors (AMPs), and Communications Processors (COPs).
The IFP provides connection to mainframe hosts; the AMP manipulates
the database, accesses Disk Storage Units (DSUs) and prepares the
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data results; the COP provides connection to a local area network,
enabling user access from minicomputers, workstations and personal
computers.
Technical personnel at Teradata have stated that the Ethernet
Adapter is assembled onto the communications processor board and
incorporated into that ADP unit.
ISSUE:
Whether the DBC/1012 relational database processors and
Ethernet adapters are classified within heading 8517, HTSUS, as
"Electrical apparatus for line telephony or telegraphy, including
such apparatus for carrier-current line systems; parts thereof...",
or within heading 8471, HTSUS, as "Automatic data processing
machines and units thereof...."
LAW AND ANALYSIS:
The classification of merchandise under the HTSUS is governed
by the General Rules of Interpretation (GRI's). GRI 1 states in
part:
for legal purposes, classification shall be determined
according to the terms of the headings and any relative
section or chapter notes...
The competing headings in the instant case are headings 8517
and 8471, HTSUS. These headings describe:
8517 Electrical apparatus for line telephony
or telegraphy, including such apparatus for
carrier-current line systems; parts thereof...
8517.40.70 Other apparatus, for carrier-current line
systems: Other: Telegraphic
* * * * * * * * * * * * *
8471 Automatic data processing machines and units
thereof...Other
8471.99.15 Other: Control or adapter units
Our analysis of the classification of the IFPs, COPs, and AMPs
remains the same.
Chapter 84, Legal Note 5, HTSUS, defines the term "automatic
data processing machines" for the purposes of heading 8471, HTSUS.
Chapter 84, Note 5(A)(a) states that "automatic data processing
machines" includes:
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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 the 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 execution, by logical decision during the
processing run..."
Legal Note 5(b) further provides that ADP machines may be in
the form of systems consisting of a variable number of separately
housed units. A unit must meet the following requirements to be
regarded as part of a complete system:
(a) It is connectable to the central processing unit either
directly or through one or more other units; and
(b) It is specifically designed as part of such a system.
HQ 089828, dated December 3, 1991, and HQ 085666, dated
November 8, 1989, held that certain communications controllers
imported by IBM and Fujitsu America, respectively, were
classifiable under subheading 8471.99.15, HTSUSA, which provides
for automatic data processing machines and units thereof, other
control or adapter units. You argue that the instant IFPs, AMPs,
and COPs, are similar, and therefore, should be similarly
classifiable. We agree. The Teradata DBC/1012 Data Base Computer
System is essentially a high capacity, highly diverse, front end
processor. This system has taken over certain processing functions
originally performed by the CPU of an ADP system. The result is
that the main frame host computer spends less time servicing the
database and the network and CPU resources are available for more
application processing.
The Harmonized Commodity Description and Coding System
Explanatory Notes (ENs) to heading 8471, HTSUS, defines "control
or adapter units" as follows:
[Units which] effect interconnection of the central
processing unit to other digital data processing
machines, or to groups of input or output units which may
comprise visual display units, remote terminals, etc.
The DBC/1012 provides interconnection of the CPU (host
computer) to other ADP units (storage units and remote terminals).
Therefore, it is properly classifiable within subheading
8471.99.15, HTSUS, which provides for: "[a]utomatic data processing
machines and units thereof...: [o]ther: [o]ther: [c]ontrol or
adapter units."
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Customs has consistently held that the most important factor
to be considered when classifying merchandise such as this, is
whether the merchandise is principally used for the processing of
data (heading 8471, HTSUS), or for the transmission of data between
two points (heading 8517, HTSUS). The DBC/1012 Data Base Computer
is designed specifically for applications involving complex queries
utilizing a large data base. Thus, the instant merchandise is
found to be principally designed and used for the processing of
data.
Pursuant to GRI 2(a) regarding incomplete or unfinished
articles, we find that a substantially complete importation has the
essential character of the complete or finished article and is
classifiable as such. When separately imported, each of the COPs,
AMPs, and IFPs, have the essential character of a control or
adapter unit, and would all remain classifiable in subheading
8471.99.15, HTSUS.
In HQ 950410, we held that any separately imported Ethernet
Adapters would be classifiable in subheading 8517.40.70, HTSUS.
However, pursuant to our analysis in HQ 951331, as modified by HQ
952659, it is now Customs position that the principal function of
Ethernet Adapters is that which is encompassed by data processing.
Therefore they are properly classifiable in subheading 8471.99.15,
HTSUS, which provides for: "[a]utomatic data processing machines
and units thereof: [o]ther: [o]ther: [c]ontrol or adapter units."
HOLDING:
The Teradata Data Base Computer System model DBC/1012, which
integrates Interface Processors (IFPs), Access Module Processors
(AMPs), and Communications Processors (COPs), is classifiable in
subheading 8471.99.15, HTSUS, which provides for: "[a]utomatic data
processing machines and units thereof...: [o]ther: [o]ther:
[c]ontrol or adapter units," when imported together as a system.
When separately imported, the IFPs, AMPs, and COPs remain
classifiable in 8471.99.15, HTSUS.
The Ethernet Adapters, separately imported, would be
classifiable in subheading 8471.99.15, HTSUS, which provides for:
"[a]utomatic data processing machines and units thereof...:
[o]ther: [o]ther: [c]ontrol or adapter units."
EFFECT ON OTHER RULINGS:
For the reasons stated above, HQ 950410, dated March 23, 1992,
is modified to the extent of the classification of the Ethernet
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Adapters, which are now classifiable in subheading 8471.99.15,
HTSUS. HQ 950410 is modified under authority of Section 177.9(d),
Customs Regulations.
Sincerely,
John Durant, Director
Commercial Rulings Division
ATTACHMENT: HQ 952659
HQ 951331