CLA-2 CO:R:C:G 086105 AJS
Mr. Irving W. Smith, Jr.
George R. Tuttle Law Offices
1331 Pennsylvania Avenue, N.W.
Suite 1200F
Washington, D.C. 20004
RE: Networking Interface Boards
Dear Mr. Smith:
Your letter of December 5, 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 are network interface boards
(NIBs). They are designed for either physical incorporation into
a personal computer (PC) or into other units of an automatic data
processing (ADP) system. NIBs are connectable to other PCs and
units (e.g., input units, output units, storage units and gateway
equipment) over a variety of local area network (LAN) media
including coaxial cables and twisted pair wire. The NIBs
convert, process and format data so that several data processing
machines are able to function as a single ADP system, known as a
LAN. A LAN is described as a system consisting of a set of nodes
(e.g., terminals, micro-computers, minicomputers, mainframes,
printers, hard disks, or work stations) that are interconnected
by a set of links (e.g., coaxial cable, twisted-pair wires or
fiber optic cable). McGraw-Hill Encyclopedia of Electronics and
Computers, (2nd ed. 1988), p. 505.
The NIBs allow PCs to off-load their interface
responsibilities so that they can instead concentrate on data
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processing. These interface responsibilities involve the
performance of two major functions. First, the NIBs receive
binary information from a PC and convert this into digital data
so that it can be used at other locations within the LAN.
Examples of this conversion are character format conversion and
file conversion. Once converted, this data is either formatted
separately or grouped into units of data known as packets. This
data is then transmitted to different locations within the LAN.
Once received by another NIB, the packets are converted into a
form usable by the destination device. In sum, the NIBs essent-
ially process, translate, convert and transmit data for use
within the LAN. The NIBs also perform such additional functions
as encoding/ decoding, LAN protocol implementation, temporary
memory storage, control logic for access to host computer, and
LAN processor local memory.
The NIBs themselves consist of various programmed chips
(including microprocessors), resistors, transistors and logic
devices which operate with the network transmission and protocol
software.
ISSUE:
Whether the articles in question are classifiable within
heading 8471, HTSUSA, which provides for ADP machines and units
thereof; or classifiable 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
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.
ADP machines are devices "which, by logically interrelated
operations performed in accordance with pre-established
instructions (programs), furnish data which can be used as such
or, in some cases, serve in turn as data for other data
processing operations." Explanatory Note (EN) 84.71(I); see also
Chapter 84, Note 5(A). NIBs clearly do not satisfy this
description. However, ADP machines may be in the form of a
system consisting of a variable number of separately-housed
units.
In order for an article to be classifiable as a separately-
housed unit of an ADP system it must satisfy the following
description:
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(a) It is connectable to the central processing unit (CPU)
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). Chapter 84,
Note 5(B).
The NIBs are connectable to the CPU of a PC as well as other
units of an ADP system. In addition, they are also specifically
designed to operate as part of an ADP system. However, they are
not a separately-housed unit but instead a networking board
suitable for physical incorporation into an ADP machine or unit
thereof.
You claim that NIBs are control or adapter units. EN 84.71
I(D)(4) states that control and adapter units effect the inter-
connection of the CPU to other digital data processing machines,
groups of input units, or output units. This category includes
channel to channel adapters used to connect two digital systems
to each other. Control units are described as intermediary
control devices which link peripheral units to the CPU. C.J. and
R.J. Sippl, Computer Dictionary and Handbook (Computer D & H),
(3rd ed. 1980), p. 115. Control units are used to interface
(i.e., interact or interconnect) computers and peripheral
devices. Myles E. Walsh, Understanding Computers: What Managers
Need to Know, (1981), p. 36. They contain the electronics which
control the operation of the peripheral devices. Id. p. 37.
Adapter units which are also referred to as display adapter
units, control the transmission of data, unit control
information, and the sequencing and synchronizing of the various
units. Computer D & H, p. 161. Channel adapters are devices
which permit connections between various data channels of
differing equipment. Id. p. 65. The NIBs in question do not
satisfy any of these descriptions, and therefore are not
classifiable as control or adapter units.
Subheading 8471.99.60, HTSUSA, provides for other units
suitable for physical incorporation into ADP machines or units
thereof. NIBs are units of an ADP system in that they are
connectable to the CPU of an ADP system and specifically designed
as part of such system. They are also physically incorporated
into an ADP machine or unit thereof, and involved in furthering
the data processing of these machines. Thus, NIBs are class-
ifiable within subheading 8471.99.60.
NIBs are not classifiable as an accessory of an ADP machine.
In order to be considered an accessory of an ADP machine, an
article must be designed to be mounted on the machine. EN 84.73.
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NIBs are designed to be mounted in an ADP machine or unit
thereof. Accessories covered by heading 8473 are interchangeable
parts or devices designed to be mounted on a machine to adapt it
for a particular operation, or to perform a particular service
relative to the main function of the machine, or to increase its
range of operations. EN 84.73. The NIBs do not satisfy this
description, and therefore they are not classifiable as an
accessory to an ADP machine.
Heading 8517, HTSUSA, provides for electrical apparatus for
line telephony or line telegraphy. EN 85.17 states that the
electrical apparatus of this heading encompass "apparatus for the
transmission between two points of speech or sound (or 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 fibers, combination
cable, etc.) circuit connecting the transmission station to the
receiving station."
NIBs partially involve the transmission of digital signals
over lines between different PCs and other units within a LAN.
However, this transmission function is a secondary function whose
purpose is to further data processing within a LAN. GRI 1
requires classification to be determined according to the terms
of the headings and relevant legal notes. In this instance, the
NIBs are most accurately described by the terms of heading 8471
because of their processing, translation and conversion
functions. They do more than transmit a signal by variation as
described in the ENs to heading 8517. Instead, they aid in the
performance of logically interrelated operations which furnish
data (i.e., automatic data processing) that can be used as such
or which serves as data for other data processing operations.
In HQ 083074 ( March __, 1990), Customs considered the
classification of devices called protocol converters. These
devices are similar to NIBs in that they provide translation,
processing and transmission functions for the networking of
different types of data processing machines. We ruled that these
devices were classifiable within the ADP machine heading under
the Tariff Schedules of the United States (TSUS) and not the
telephone and telegraph heading. While this decision is not
binding under the HTSUSA, Congress has indicated that prior TSUS
decisions should be considered instructive in interpreting the
HTSUSA. H. Rep. No. 100-576, 100th Cong., 2D Sess. 548 (1988) at
550. We consider this decision instructive in supporting the
classification of the articles in question within heading 8471.
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HOLDING:
The network interface boards in question are classifiable
within subheading 8471.99.60, HTSUSA, which provides for units
suitable for physical incorporation into ADP machines or units
thereof, duty free.
Sincerely,
Jerry Laderberg
Acting Director
Commercial Rulings Division