CLA-2 CO:R:C:M 952627 MBR
Annette Smith
Intertrans Corporation
322 East Grand Avenue
South San Francisco, CA 94080
RE: Revocation of HQ 089597; Themis Computer; TSVME 551 68020
Dual-Port Ethernet Controller; TSVME 541 X.25 Communication
Board; Local Area Network; Wide Area Network; Recorded Media;
HQ 951331; HQ 952659
Dear Ms. Smith:
On September 5, 1991, we issued HQ 089597 to you regarding the
classification of Local Area Network apparatus imported by Themis
Computer, under the Harmonized Tariff Schedule of the United States
(HTSUS).
Subsequently, due to our ongoing research and analysis, we
have reconsidered the classification of automatic data processing
machine (ADP) networking equipment. See HQ 951331, dated September
18, 1992, as modified by HQ 952659, dated October 7, 1992.
FACTS:
The submitted literature states that the "TSVME 551 68020
Dual-Port Ethernet Controller" is an intelligent, single board
interface between a VMEbus host system and two ETHERNET Networks.
ETHERNET connections are operated at their maximum rate by the tri-
bus architecture, the 5 port 1 megabyte shared memory, and a VME
Fast Transfer Module. A "powerful" 16 MHz 68020 processor can
support high level protocols and management of data migration
control without being disturbed by the two ETHERNET controllers.
The TSVME 541 (X.25 Communication Board) Intelligent Serial
Communications (ISCC) board is a VMEbus-compatible (Versa Module
Europe) double Eurocard (revision C) with intelligent serial line
controller capability. The onboard controller circuit provides
management of two independent multiprotocol serial lines.
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ISSUE:
Whether the TSVME 541 X.25 Communication Board and the TSVME
551 68020 Dual-Port Ethernet Controller are classifiable under
heading 8471, HTSUS, which provides for "[a]utomatic data
processing machines," or under heading 8517, HTSUSA, which provides
for "[e]lectrical apparatus for line telephony or telegraphy"?
LAW AND ANALYSIS:
The General Rules of Interpretation (GRI's) to the HTSUSA
govern the classification of goods in the tariff schedule. GRI 1
states, in pertinent part:
...classification shall be determined according to the terms
of the headings and any relative section or chapter notes...
Legal Note 5(B) to chapter 84, HTSUS, provides guidance
regarding units of automatic data processing machines. It states:
Automatic data processing machines may be in the form of
systems consisting of a variable number of separately housed
units. A unit is to be regarded as being a part of the
complete system if it meets all of the following conditions:
(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 (it
must, in particular, unless it is a power supply unit,
be able to accept or deliver data in a form (code or
signals) which can be used by the system).
It has been asserted that networking systems such as the
"TSVME 551 68020 Dual-Port Ethernet Controller" ("Ethernet
Controller") and the "X.25 Communication Board" are essential to
the ADP systems they are connected to because they process and
format the data of the computers they serve. We now agree. See
HQ 951331, dated September 18, 1992, as modified by HQ 952659,
dated October 7, 1992.
It is also important to note that the ENs, page 1299-1300,
describe separately presented ADP units as follows:
This heading also covers separately presented constituent
units of data processing systems. Constituent units are those
defined in Parts (A) and (B) above as being parts of a
complete system.
Apart from central processing units and input and output
units, examples of such units include:
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(4) Control and adaptor units such as those to 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.
This category includes channel to channel adapters
used to connect two digital systems to each other.
(5) Signal Converting units. At input, these enable an
external signal to be understood by the machine, while
at output, they convert the output signals that result
from the processing carried out by the machine into
signals which can be used externally.
The "Ethernet Controller" and the "X.25 Communication Board"
LAN and WAN (Wide Area Network) systems do in fact effectuate
interconnection of the CPU unit to other units or ADP machines,
thereby serving control and adaption functions, as well as
performing signal conversion. Thus, classification is appropriate
in subheading 8471.99.15, HTSUS, which provides for ADP control or
adapter units.
Our diligent research and analysis of this issue has been
continually ongoing. Therefore, we have learned more about this
merchandise, its functions, and its geometrically progressive
technological developments.
Therefore, based on the new information acquired, and in an
effort to expeditiously and accurately address this classification
issue, we have reconsidered our position. It is now our conclusion
that the data processing features of control and adaption do in
fact represent the principal function of the this merchandise,
directing classification 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 "TSVME 551 68020 Dual-Port Ethernet Controller" ("Ethernet
Controller") and the "X.25 Communication Board" LAN and WAN
merchandise is properly classifiable under 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."
The rate of duty is Free.
The recorded media (Software) for this system remains
classifiable under subheading 8524.90.40, HTSUSA, which provides
for: "[r]ecords, tapes and other recorded media for sound or other
similarly recorded phenomena...: [o]ther: [o]ther."
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EFFECT ON OTHER RULINGS:
For the reasons stated above, HQ 089597, dated September 5,
1991, is revoked under authority of section 177.9(d), Customs
Regulations.
Sincerely,
John Durant, Director
Commercial Rulings Division
ATTACHMENT: HQ 951331
HQ 952659