CLA-2 CO:R:C:G 083611 AJS
Mr. Preston T. Scott
Fenwick, Davis & West
1920 N Street, N.W.
Suite 650
Washington, D.C. 20036
RE: Line Drives and Datasets
Dear Mr. Scott:
Your letter of February 3, 1989, requesting a tariff
classification under the Harmonized Tariff Schedule of the United
States Annotated (HTSUSA), has been referred to this office for
reply.
FACTS:
The articles in question consist of seven models of the
Micom Micro 400 series.
Model M400MP is an asynchronous (i.e., data transmission in
an irregular fashion) line drive that operates over in-house
customer-owned twisted pair cable to transmit data in digital
form without modulation between a computer and a terminal over
distances ranging from a few hundred feet to a few miles. This
model operates at data rates ranging from 0 to 19,200 bps, and
supports both full- and half-duplex modes over either one or two
pairs of wires.
Model M401 is an asynchronous local dataset designed
specifically for short haul digital transmission. This model is
designed to transmit data in digital form without modulation
between a computer and terminal over distances ranging up to a
few miles (ordinarily within a single building or local complex
of buildings). The M401 can also be used as a line drive over
in-house customer-owned twisted pair cables.
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Model M420MP is a synchronous (i.e., data transmission in a
continuous stream) line drive designed specifically for short-
haul digital data transmission without modulation between a
computer and a terminal over distances ranging from a few hundred
feet to a few miles. This model operates at data rates ranging
from 1200 to 19,200 bps on 2- or 4-wire privately owned metallic
circuits. The M420MP can be arranged in system network
configurations of point-to-point or multi-point on 2-wire half-
duplex or 4-wire full-duplex links.
Model M421 is a synchronous local dataset designed
specifically for short-haul digital data transmission between a
computer and a terminal. This model is designed to transmit data
in digital form without modulation between a computer and a
terminal over distances ranging up to a few miles (ordinarily
within a single building or local complex of buildings).
Model M430 DTE/DCE is an extremely compact asynchronous line
driver designed for point-to-point full duplex operation over in-
house twisted pair cable to transmit data in digital form without
modulation between a computer and a terminal over distances
ranging from a few hundred feet to a few miles. This model
requires no external power and no EIA interface cable, and
operates as both DCE and DTE devices.
Model M431 DTE/DCE is an asynchronous mini-local dataset
designed for operation up to 9600 bps over 4-wire private line
metallic circuits to transmit data in digital form without
modulation between a computer and a terminal ranging from a few
hundred feet to a few miles (ordinarily within a single building
or local complex of buildings).
Models M4400MP, M4401, M4420, and M4421 are racked mounted
card module versions of Models M400MP, M401, M420MP, and M421
which allow installation of up to 16 cards of any such model in a
Model 4000 rack-mount chassis.
ISSUE:
Whether the line drives and datasets in question are
classifiable within heading 8471, HTSUSA, which provides for
automatic data processing (ADP) machines and units thereof; or
within heading 8517, HTSUSA, which provides for electrical
apparatus for line telephony or line telegraphy.
LAW AND ANALYSIS:
Classification of merchandise under the HTSUSA is governed
by the General Rules of Interpretation (GRI's). GRI 1 provides
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that classification is determined first in accordance with the
terms of the headings of the tariff and any relative section or
chapter notes.
Heading 8471 provides for ADP machines and units thereof.
An ADP machine may be in the form of a system consisting of a
variable number of separately housed units. Chapter 84, Note
5(B). In order to be a unit of an ADP system, an article must be
connectable to the central processing unit (CPU) and specifically
designed as part of an ADP system. The line drives and datasets
in question do not satisfy this description. They are designed
to amplify and transmit digital signals over a line. This
function does not necessarily involve data processing within the
meaning of heading 8471.
You claim that the articles in question are units of an ADP
system and therefore classifiable as a part or accessory of an
ADP machine. Note 5(B) defines a unit of an ADP system (e.g.,
input, output, or storage units) which are classifiable within
heading 8471. Parts and accessories of ADP machines are
classifiable within heading 8473. This heading does not mention
and is not related to the description of a unit of an ADP system
in Note 5(B). Therefore, a comparison of the terms "parts and
accessories" of an ADP machine and "units" of an ADP system is
not possible under the HTSUSA.
Heading 8517, HTSUSA, provides for electrical apparatus for
line telephony or line telegraphy. EN 85.17 states that
electrical apparatus of this heading encompass "apparatus for
the transmission between two points of speech or other sounds (or
of symbols representing written messages, images or other data),
by variation of an electric current or of an optical wave flowing
in a metallic or dielectric (copper, optical fibres, combination
cable, etc.) circuit connecting the transmitting station to the
receiving station. Furthermore, this heading covers all such
electrical apparatus designed for this purpose, including the
special apparatus used for carrier-current line systems. EN
85.17. The articles in question solely involve data transmission
between two points by variation of a signal.
The submitted literature states that line drives and
datasets are specifically designed for short-haul data
transmission, which may be over telephone company private line
metallic circuits. In addition, line drives and data sets are
compared to and even called modems in some instances. This
literature leads to the conclusion that line drives and data sets
are basically substitutes for the more expensive and complex
modems used during short-haul data transmission. This information
supplied by your client supports the classification of line
drives and datasets within heading 8517 along with modems, and
not within heading 8471 as ADP machines or units thereof.
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You argue that the articles in question do not satisfy the
description of articles classifiable within heading 8517. Your
conclusion is based on the assertion that line drives and
datasets do not vary a current or wave when transmitting a
signal. Instead, you state that they amplify a signal so that it
can be transmitted from a computer to a terminal. Both Customs
and the Customs Court have previously stated that a device which
amplifies a signal does vary that signal, and such a device is
classifiable within the provision for electrical telegraph and
telephone apparatus.
Customs has previously stated that telecommunications
equipment, both in a common and commercial sense, encompasses the
transfer of sound, written information, video information, and
data, as well as combinations thereof. (HQ 554295, January 15,
1987). This ruling also stated that there has been "a continuing
recognition by Congress that, regardless of distance (i.e.,
"long-haul" or "local area") or type of signal (i.e., analog or
digital), all transmission of information via an electromagnetic
signal is, for tariff purposes, within the telephone and
telegraph category . . . " Id p. 7. Transmission equipment
involves the forwarding of electromagnetic signals over wire or
cable. Id p.5. Examples of this equipment "include amplifiers,
repeaters . . ." Id. Line drives and datasets transmit data in
the manner described above and fall within the realm of tele-
communications equipment.
The Customs Court, the forerunner of the Court of
International Trade, has held that the amplification of a voice
signal for transmission from one point to another by means of a
wire is a function classifiable within the provision for
electrical telegraph and telephone apparatus. Fanon Electronic
Industries, Inc. v. United States (Fanon), 65 Cust. Ct. 542,
544, (1970). This provision is the predecessor of heading 8517.
In Fanon, the court specifically rejected the argument that an
article which amplifies a signal cannot be classified as
telephonic apparatus. Id at 544. Furthermore, the Court also
rejected the assertion that the limited transmission of a signal
of only 150 feet removed the article from classification as
telephonic apparatus. Id at 545. If the amplification and
transmission of a voice signal over a wire is a function of
telephonic apparatus, certainly the amplification and
transmission of a digital signal over a line is a function of
telegraphic apparatus. In addition, the Court stated that the
intent of Congress in enacting the provision for electrical
telegraph and telephone apparatus was to encompass all
communications equipment by wire within that provision. Id at
546. The articles in question involve communication by wire and
Congressional intent requires their classification within the
heading for electrical telegraph and telephone apparatus.
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These decisions are not binding on Customs, but Congress has
indicated that earlier decisions under the TSUS must not be
disregarded in applying the HTSUSA. The conference report to the
Omnibus Trade Bill of 1988, states that "on a case by case basis
prior decisions should be considered instructive in interpreting
the HTS[USA], particularly where the nomenclature previously
interpreted in those decisions remains unchanged and no
dissimilar interpretation is required by the text of the
HTS[USA]." (emphasis added) H. Rep. No. 100-576, 100th Cong.,
2D Sess. 548 (1988) at 550, reprinted in 1988 U.S. CODE CONG. &
ADMIN. NEWS 1581-83. We consider the previously discussed ruling
and case most instructive in resolving the classification of the
articles in question.
You claim that our reliance upon Fanon and HQ 554295 would
lead to an artificial classification rationalized under an
antiquated tariff schedule which is neither designed nor intended
for present day application. The HTSUSA was adopted in 1988 as
part of the 1988 Omnibus Trade Bill and can certainly not be
considered antiquated. The text of heading 8517 is substantially
the same as the TSUS text dealt with in Fanon. Furthermore, the
statement from HQ 554295 that "all transmission of information
via an electromagnetic signal is, for tariff purposes, within the
telephone and telegraph category" is basically restated within EN
85.17 by the use of the phrase "this heading [8517] covers all
such electrical apparatus designed for this purpose [line
telephony or line telegraphy]." Thus, the classification of line
drives within heading 8517 is not an artificial classification
rationalized under an antiquated tariff schedule but a
classification based on long held principles restated in a
recently adopted tariff schedule.
Subheading 8517.82.00, HTSUSA, provides for telegraphic
apparatus. EN 85.17(II) describes telegraphic apparatus as
devices "designed for converting texts or images into appropriate
electrical impulses, for transmitting those impulses, and at the
receiving end, receiving these impulses and converting them
either into conventional symbols or indications representing the
text, or into the text or image itself." Telegraphic apparatus
therefore involve conversion, transmission, reception and then
conversion again of signals representing converted non-voice type
information (e.g., text and data). Line drives and datasets
amplify and transmit such a signal from a computer to a terminal.
This transmission function furthers communication as it is
described in heading 8517, and not automatic data processing as
it is described in heading 8471. Therefore, the articles in
question are classifiable as telegraphic apparatus.
You claim that line drives do not modulate an electrical
impulse, and therefore they are excluded from classification as
telegraphic apparatus. Modulation or conversion of signals is
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not necessarily required in all aspects of transmission or
reception of digital signals. Certain devices may be solely
involved in the transmission or reception of digital signals.
Thus, the fact that the articles in question are only involved in
the transmission of digital signals is enough to bring them
within the scope of the telegraphic apparatus subheading. To
rule otherwise would exclude all equipment which solely transmits
digital signals from this heading. This result would violate the
intent of Congress, as enunciated in Fanon and reaffirmed by
Customs in HQ 554295 and the HTSUSA, to classify all communi-
cation equipment within the heading for electrical telegraph and
telephonic apparatus.
HOLDING:
The line drives and datasets in question are classifiable
within subheading 8517.82.00, HTSUSA, which provides for
telegraphic apparatus dutiable at the rate of 4.7 percent ad
valorem.
Sincerely,
Jerry Laderberg
Acting Director
Commercial Rulings Division