CLA-2 CO:R:C:M 955907 MBR
Ms. Susan Kohn Ross
Ross & Associates
5777 West Century Blvd.
Suite 520
Los Angeles, CA 90045-5659
RE: Reconsideration of NY 869010; "TROLI" Module; ADP Unit;
Control or Adapter Unit; HQ 951331; HQ 952659
Dear Ms. Ross:
This is in response to your letter of February 14, 1994, on
behalf of Pulse Engineering, Inc., requesting reconsideration of
NY 869010, dated December 18, 1991, issued by the Area Director of
Customs, New York Seaport, to a Customs broker on behalf of Pulse
Engineering, Inc., regarding the classification of the "TROLI"
Module for Local Area Networking ("LAN"), under the Harmonized
Tariff Schedule of the United States (HTSUS).
FACTS:
The "TROLI" Module (Token Ring Optimized Interface) is a
module that is mounted on a Network Interface Board "NIB" to
provide an analog connection between a Texas Instruments
COMMprocessor and the connector used to transmit and receive
encoded signals over either 150 Ohm standard twisted pair ("STP")
cable or 100 Ohm UTP cable. The TROLI module performs the major
portion of the local area networking ("LAN") interface board and
facilitates the encoding and decoding of information moving to and
from the personal computer ("PC"). Pursuant to section 625, Tariff
Act of 1930 (19 U.S.C. 1625), as amended by section 623 of Title
VI (Customs Modernization) of the North American Free Trade
Agreement Implementation Act, Pub. L. No. 103-182, 107 Stat. 2057,
2186 (1933)(hereinafter "section 625"), notice of the proposed
revocation of NY 869010 was published June 1, 1994, in the Customs
Bulletin, Volume 28, Number 22. No comments were received. Our
decision in this matter is set forth below.
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ISSUE:
What is the classification of the "TROLI" Module, under the
HTSUS?
LAW AND ANALYSIS:
NY 869010, dated December 18, 1991, held that the instant
TROLI modules were classified in subheading 8517.82.00, HTSUS,
which provides for telegraphic apparatus.
Since the HTSUS came into effect there has been a great deal
of controversy regarding the classification of LAN boards.
However, there is no clear classification guidance from either the
HTSUS or the Harmonized Commodity Description and Coding System
Explanatory Notes (ENs), primarily due to the technological
advancements in this area.
However, in HQ 951331, dated September 18, 1992, (as modified
by HQ 952659, dated October 7, 1992), we cited Legal Note 5(B) to
chapter 84, HTSUS, which 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).
We agree that the TROLI Modules are essential to the ADP
systems with which they are integrated because they process and
format the data of the computers they serve.
In HQ 951331 we also cited the Harmonized Commodity
Description and Coding System Explanatory Notes (ENs), pages 1299-
1300, which 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.
It is our opinion that rather than "processing" being the
principal function of such Local Area Network ("LAN") and Wide Area
Network ("WAN") equipment, their principal function is, in fact,
to effectuate interconnection of the CPU unit to other units or ADP
machines, thereby serving "control" and "adaption" functions. In
HQ 951331 it was our opinion that the LAN equipment did not have
the essential character of control or adapter units because of its
processing capabilities. However, it has come to our attention
that the LAN equipment's processing capabilities are designed
principally to perform the control and adaption functions, as
described by the ENs.
HOLDING:
The instant TROLI Modules are 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. NY 869010, dated December 18,
1991, is revoked.
In accordance with section 625, this ruling will become
effective 60 days after publication in the Customs Bulletin.
Publication of rulings or decisions pursuant to section 625 does
not constitute a change of practice or position in accordance with
section 177.10(c)(1), Customs Regulations (19 CFR 177.10(c)(1)).
Sincerely,
John Durant, Director