CLA-2 CO:R:C:M 087984 MBR
Steven W. Baker, Esq.
Bellsey and Baker
100 California Street, Suite 670
San Francisco, CA 94111
RE: Reconsideration of Headquarters Ruling Letter 085404, dated
July 20, 1990; Mobile Radio Data terminals; communications
systems; transmission apparatus for radiotelegraphy;
automatic data processing machines and units thereof;
input/output units; unfinished or incomplete goods; Section
XVI, Note 3; Chapter 84, Note 5; Chapter 84, Note 7;
Additional U.S. Rule of Interpretation 1(a); separately
housed unit; Explanatory Note 84.71; Explanatory Note 85.25;
principal function; principal purpose
Dear Mr. Baker:
This is in response to your September 21, 1990, request for
the reconsideration of Headquarters Ruling Letter 085404 ("HQ
085404"), dated July 20, 1990. This ruling concerned the
classification of certain Mobile Radio Data Terminals imported by
Mobile Data International, Inc. ("MDI"). Since the issuance of
HQ 085404 MDI has been acquired by Motorola Canada Ltd. and is
operated as a division thereof. MDI Systems, Inc., a United
States company and wholly owned subsidiary of Motorola, Inc. in
the United States will likely be absorbed and operated by its
parent in the United States. The completed and contemplated
acquisitions among these companies require that this ruling be
effective with regard to Mobile Data International, MDI Systems,
Motorola of Canada, Ltd., and Motorola, Inc.
FACTS:
The articles in question are described as Mobile Radio Data
Terminals ("MDTS"). The MDTs are part of various communications
systems. This equipment enables field personnel to transmit and
receive information from their remote position to a headquarters
or base office by the use of a radio link. The MDTs are used by
an organization's field personnel, and are of both the mobile
(mounted in the vehicle) and portable (carried with the person)
varieties. The units have a number of different applications
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including public safety agencies such as the police, fire and
ambulance departments; courier pick-up and delivery; electrical
and gas utilities; taxis; and companies with field sales and
repair staff.
Incoming messages initiated by the field personnel on the
MDTs are received by the modulator of the mobile radio for
transmission over the radio link. A simple modification of the
radio equipment allows the MDT to bypass the bandwidth-limiting
audio circuitry, thus requiring that the data signal be injected
directly into the modulator. The signal is received at a base
radio site. The digital message is reconstructed by a
radio/data interface. This interface may be at the computer site
or at a remote location from the host computer. The signal is
transmitted to the communications controller over a telephone or
microwave link via a data modem. The Communications Controller
decodes and translates the data into standard computer-input
format and then passes the message to the host computer. The
host computer is not sold or imported with the MDTs. The host
computer is then able to display the field message on output
terminals at the base or headquarters office for personnel to
view. Should the base or headquarters personnel wish to send
messages to the field personnel, they simply input the message
into their terminals and the process works in reverse. The field
personnel may also have the ability to access the host computer
directly from the MDT for specific data if the system with which
the MDT operates is programmed for such access.
Your literature states that the digital communication
provided by this system offers a number of advantages over voice
radio communications. Radio channels are becoming increasingly
scarce and the use of MDTs allows five to ten times as many users
on the same channels. The MDT digital communications allows
messages to be exchanged faster, with greater accuracy and with
greater privacy since a decoder is necessary to understand the
message. The MDTs allow direct access to data bases by personnel
in the field without assistance of a dispatcher. The MDTs also
allow the field personnel to update files within a data base from
the field without going through a dispatcher. Preformatted
messages may be developed for the most frequently used messages
so that a single keystroke and fill-in-the blank forms guide the
user through any data entry function. This type of data entry
reduces paperwork by eliminating the need for written reports.
The MDTs at issue include the following models: 6031,
6100, 7031, 7100, 9031, 9035, 9036, 9100 and the KDT series (800,
840, 880, 480C). HQ 085404 addressed the 6100, the 7031, the
9031 and the 9100. This ruling addresses all these models of
MDTs as they have all been discussed with this office and may
continue to be imported. The descriptions of these models are
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taken from your January 31, 1991, submission and prior
submissions for HQ 085404. All of the MDTs are rugged units
designed to be water resistant and dust-proof.
The 6031, 7031 and the 9031 units were the original, pre-
Motorola, MDI data terminals. All three units utilize 4.0 MHz
Z80 microprocessors and small amounts of RAM and ROM memory.
The 6031: The 6031 is a portable unit with an integral RF
transceiver. No other information was submitted regarding this
model.
The 7031: The 7031 is a small vehicle mounted unit used
primarily in taxi services. The unit is 2.6 x 11.4 x 5.5 inches
in size and weighs 2.75 pounds. The 7031 has a Liquid Crystal
Display ("LCD") screen capable of displaying two lines of text
with 40 characters per line. The 7031 has a 64 character ASCII
upper case character set. The keyboard has eight single-stroke
keys, six defined key sequences (F plus another key), 0-9
numeral keys, a "TX" key which initiates transmissions, a "Nm"
key which displays the next message, a "MDI" key which is an
emergency or automatic transmit key, and a "F" key which
initiates a multikey sequence. The 7031 has a modem data rate of
4800 bits per second ("bps") with a FM modulation baseband. It
contains 16k bytes of Random Access Memory ("RAM") and 48K bytes
of Programmable Read Only Memory ("PROM"). The 7031 does not
have an integral transceiver, but the radio modem chip used with
the 7031 interfaces directly with an associated mobile radio.
This model can be configured for both standard communications and
specific message formats. However, because of its small size its
use is essentially limited to pre-defined procedures.
The 9031: The 9031 is a single-piece vehicle mounted unit
designed for public safety agencies, public utilities, and
courier services. The unit is 9.9 x 10.6 x 7.6 inches in size
and weighs 7.7 pounds. It has a five inch amber Cathode Ray Tube
("CRT") display for sixteen lines and 32 characters per line.
The display screen has five areas: message display, operations
indicator area, status identifier area, prompt field, and memory
indicator area. Standard characters sets in the 9031 include the
64 normal upper case ASCII characters plus an additional 64
character graphics set. The keyboard is a standard typewriter
("QWERTY") keyboard with a function key cluster. The 9031
features a 40K bytes RAM and 20K bytes of RAM, and has a memory
capacity of 100 message lines of 32 characters per line, with an
additional 64 lines of downloadable local forms storage. The
unit has an integral 4800 bps modem and a universal RS-232C
serial interface that can support a printer. However, the 9031
does not have an integral transceiver. The 9031 transmits and
receives on a FM baseband via a MDI radio, an 800 MHz frequency
synthesized radio. The radio is generally mounted in the
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vehicle's trunk. The 9031 can be configured for both use in
different types of systems and for individual uses within a
single system. Configuration possibilities include user-
specified messages such as electronic mail, a maximum of sixteen
fill-in forms, and programs to establish operational and message
priorities. A 9031 user has direct access to a central computer
for both input and output. The 9031 can relay both voice and
data messages depending on the type of radio used with the unit.
The 9031 was modified into the 9035 and the 9036.
The first round of upgrades produced the 6100, the 7100-10
and the 9100-10. These units are similar to the prior models.
They incorporate 4.0 MHz Z80 microprocessors, but their internal
memory and off-line processing and data entry functions have been
upgraded.
The 6100: The 6100 is a small, compact portable terminal. It is
9.75" x 2.5" x 2.25" in size and weighs 3.5 pounds. The 6100 has
a 5 x 2.6 inch LCD screen capable of displaying eight lines with
40 characters per line. The screen of the 6100 is hinged to the
keyboard so that the two components fold together. The
adjustment angle of the display ranges from zero degrees when
closed to 135 degrees when fully open. The unit's keyboard has
60 keys including 40 alpha-numeric keys, 11 keys for editing and
local terminal operations, and six keys whose functions change
under software control (soft keys). The 6100 uses the standard
ASCII character set and a set of special graphic characters. The
single logic board of the 6100 contains two communications chips,
and two microprocessors, one for communications and input/output
functions, and the other for applications configuration and
message management. Program memory for the unit resides in
EPROM, while the communications related variables are stored in
Electrically Erasable Programmable Read-Only Memory ("EEPROM").
Message data and application configuration data are stored in
RAM. The 6100 has a message capacity of up to 40 characters x 50
lines, or up to 20000 characters. The unit also contains a
serial port for connection to peripheral devices. The unit
transmits data at 4800 bps on a FM baseband. The 6100 has a
built-in MHz radio transmitter and receiver with an internal
antenna. It transmits at a frequency of 806 MHz to 821 MHz and
receives at a frequency of 851 MHz to 866 MHz.
The 7100-10: The 7100-10 is a small mobile terminal
specifically designed for dispatching services. The unit is
23.4 x 16.3 x 3.5 cm in size and weighs 1kg. The 7100-10 has a
LCD screen that displays four lines of text with 40 characters
per line. The keyboard of the 7100-10 is a numeric keyboard with
a number of special function keys. The unit has a 64 ASCII
character set. The 7100-10 can support six messages of up to 10
lines of 32 character per line in its local message storage area
for recall, up to 16 predefined messages, and up to 16 fill-in-
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the-blank forms. The 7100-10 functions with an MDI 8300 radio
to transmit over FM radio channels at a rate of 4800 bps. The
unit has 64K bytes of EPROM, 24K bytes of RAM, and 1K of E2
PROM. The unit has a serial RS-232C connection at the unit's
base that can support external devices such as a printer or a
bar-code reader. The 7100-10 comes in two forms: the 7100-10
with a small, full keyboard, and the 7100D with a limited
keyboard.
The 9100-10: The 9100-10 is similar to the prior models. It is a
single-piece mobile terminal with a QWERTY keyboard, a function
key cluster and a five inch amber CRT screen which displays 10
lines of 32 characters per line. The 9100-10 has a memory
capacity of 100 message lines of 32 characters per line, along
with 3K bytes of downloadable local forms storage. The unit
incorporates 4.0 MHz Z80 microprocessors. The unit has a message
transmission rate of 4800 bps, and transmits on a FM baseband
with a frequency range of 806 to 825 MHz. Messages are received
on a frequency range of 851 to 870 MHz. Messages may be
retransmitted automatically up to four times if necessary.
The second round of upgrades occurred after Mobile Data
International was acquired by Motorola. The 6000 series models
were replaced by the existing Motorola KDT series, the 800, 840,
880 and the 480C. These KDT units use Motorola processors, the
68HC11 eight-bit processor.
KDT 800, 840 and 880: The 800, 840 and 880 KDTs are portable
models of 7.8 x 4.0 x 1.43 inches in size and a weight of
approximately 30 oz. The 800, 840 and 880 models have a 7 x 4.8
inches LCD screens. The 800 model displays two lines of 27
characters per line. The 840 and 880 models display four lines
of 40 characters per line. The units have QWERTY keyboards with
editing keys and function key clusters. The models have two on-
board processors, one used for data processing functions and the
other for communications. The 800 model has 32K bytes of ROM and
24K bytes of RAM. The 840 and 880 have 128K bytes of ROM and 32K
bytes of RAM. The KDTs have an integral RF transceiver. All
three models operate on a FM baseband at a rate of 4800 bps, with
a transmitter frequency range of 806-821 MHz, and a receiver
frequency range of 851-866 MHz. The units have interface ports
capable of supporting peripheral devices.
KDT 480C: The 480C is a mobile component system with a
detachable keyboard, a CRT display mounted in the passenger
compartment of the vehicle, and a housing containing the
processor, memory and radio modem, which will ordinarily be trunk
mounted in the vehicle. The system can accommodate voice as well
as data communication. The display unit is 5 x 10.7 x 9 inches
in size with a CRT viewing area of 8 x 3 inches. The 480C
displays 14 lines of characters per line. The display unit is
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mounted in the passenger compartment of the vehicle. The
keyboard is 10.7 x 1.5 x 6.3 inches in size and is connected to
the display unit in the passenger compartment. The keyboard has
12 programmable function keys, 41 alpha-numeric and punctuation
keys, 8 editing keys, and 6 terminal operations keys. The unit
supports the full 96 character ASCII set, plus a 32 graphic
display character set. The logic unit containing the processor,
memory and radio modem is 11.5 x 7.2 x 2.7 inches in size and
connects to the keyboard and display by cables. The 480C has 32K
bytes of ROM and 24K bytes of RAM. The unit has interface ports
capable of supporting peripheral devices.
Further upgrades have occurred on the 7100 and the 9100.
These series were upgraded to include the 7100-11 and the 9100-
11. The upgraded models have essentially the same
microprocessors and operating systems. The units have similar
capabilities, differing only in screen and memory sizes. The
7100-11 has a smaller memory capacity than the 9100-11 and a
smaller screen. However, the 7100-11 allows for "windowing"
around the full size screen. The current top of the line model
is the 9100-20 mobile unit which incorporates a 16 bit processor,
the Motorola 68000 microprocessor.
Motorola expects volume importation of the 7100, the 9100
and the KDT series units. Although some of the listed models are
no longer currently marketed, they continue to be sold to the
companies for which they were designed. The units currently
being imported are produced in Singapore. The procedure for
importation is to import the units complete with microprocessors
and with all electronic components on board except for the
applications programming in the form of RAM and EPROM plug-ins.
In their condition as imported the units are also without the RF
transceiver for the portable units. Once in the United States
the EPROM and RAM is programmed, incorporated into the unit and
the unit is then tested and parameter set for the particular end
user application. You state that at the time of entry the units
are substantially complete to be classified as the finished
units.
HQ 085404 classified the 6100, the 7031, the 9031 and the
9100 under heading 8525, Harmonized Tariff Schedule of the United
States Annotated ("HTSUSA"), as "Transmission apparatus for
radiotelephony, radiotelegraphy, radio-broadcasting or
television, whether or not incorporating reception apparatus..."
The 6100 was classified in subheading 8525.20.60, HTSUSA, as
"...Transmission apparatus incorporating reception apparatus...
Other...Other..." The 7031, 7100-10, and the 9100 were
classified in subheading 8525.10.80, HTSUSA, as "...Transmission
apparatus...Other...Other..."
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You believe that the all of the units are input/output units
of data processing systems, and that the units are properly
classified under subheading 8471.92.10, HTSUSA, as "Automatic
data processing machines and units thereof...Other...Input or
output units, whether or not entered with the rest of the system
and whether or not containing storage units in the same
housing...Combined input/output units..." Alternatively, you
believe that the units are classified in subheading 8471.20.00,
HTSUSA, as "...Digital automatic data processing machines
containing in the same housing at least a central processing unit
and an input and output unit, whether or not combined..." You
also suggest subheading 8471.91.00, HTSUSA, which describes
"...Other..digital processing units, whether or not entered with
the rest of a system, which may contain in the same housing one
or two of the following types of units: storage units, input
units, output units..."
ISSUE:
Whether the mobile data terminals imported by Motorola are
automatic data processing machines and units thereof under
heading 8471, HTSUSA, or transmission apparatus for
radiotelephony, radiotelegraphy, radio-broadcasting or
television, whether or not incorporating reception apparatus
under heading 8525, HTSUSA.
LAW AND ANALYSIS:
The classification of merchandise under the HTSUSA is
governed by the General Rules of Interpretation ("GRIs"). GRI
1, HTSUSA, states in part that "for legal purposes,
classification shall be determined according to the terms of the
headings and any relative section or chapter notes and...
according to the following provisions." GRI 2, HTSUSA, one of
"the following provisions" requires that references in a heading
to an article include references to that article in an
incomplete, unfinished, unassembled, or disassembled state, as
long as the incomplete, unfinished, unassembled, or disassembled
article has the essential character of the finished article. We
accept your assertion that these articles have the essential
character of the finished articles. Although the MDTs are
entered in an incomplete state, they are classified as though
they were complete.
The headings in contention are heading 8471 and 8725,
HTSUSA. These headings describe the following:
8471 Automatic data processing machines and units
thereof...
* * * * * * * * * * * * *
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8525 Transmission apparatus for radiotelephony,
radiotelegraphy, radio-broadcasting or
television, whether or not incorporating
reception apparatus...
GRI 1 indicates that along with the terms of the headings,
any applicable section or chapter notes must be utilized. Both
headings are found within Section XVI of the tariff.
Furthermore, heading 8471 is within Chapter 84, HTSUSA, and
heading 8525 is within Chapter 85, HTSUSA. Thus the Section XVI,
Chapter 84, and Chapter 85 notes must be examined. The relevant
notes include Section XVI, Note 3, HTSUSA and Chapter 84, Note
5, HTSUSA.
Chapter 84, Note 5 provides the meaning of the term
"automatic data processing machines" as used within the tariff.
This definition is expressed in terms of the abilities an
automatic data processing machine must possess. Chapter 84, Note
5(A) states the abilities that a digital machine must be capable
of performing. The note does not state that the machine must
perform the functions, only that the machine be capable of
performing the functions. Theses functions are (1) storing the
processing program and the data necessary for the execution of
the program; (2) being freely programmable in accordance with
the requirements of the user; (3) performing arithmetical
computations specified by the user; and (4) executing the
processing program without human intervention. Chapter 84, Note
5(B) states that automatic data processing machines may be in the
form of a system which consists of a variable number of
separately housed units. A unit is to be regarded as part of the
system if it meets two requirements: (1) the unit is connectable
to the central processing unit either directly or through one or
more other units; and (2) the unit is specifically designed as
part of such a system, and is capable of accepting or delivering
data in a form which can be used by the system. (emphasis added)
These definitions of a machine and a separately housed unit
are supported by the Explanatory Notes to the HTSUSA. The
Explanatory Notes, although not dispositive, are to be looked to
for the proper interpretation of the HTSUSA. 54 Fed. Reg. 35127,
35128 (August 23, 1989). Guidance to heading 8471 is found in
Explanatory Note 84.71, Vol. 3, HCDCS, p. 1297. Explanatory
Note 84.71 supplements the Chapter 84 note by stating that in a
digital data processing machine the input and output units may be
combined in a single unit and the unit may be at a remote
location. See Explanatory Note 84.71(B)(3), Vol. 3, HCDCS, p.
1298.
The subject MDTs work with a main computer at a remote
location to perform their functions. The MDI communications
systems consist of separately housed units which are able to
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function together from various locations. Such a system of
separately housed units is a machine within the meaning of
Chapter 84, Note 5(A), providing the system as a whole -- the
machine -- is capable of performing the four listed functions.
The MDI digital systems currently perform or are capable of (1)
storing the processing program and the data essential for
executing the program, (2) being programmable in accordance with
the requirements of the organization utilizing the systems, (3)
arithmetical computations, and (4) the execution of the program
without human intervention. Thus, the MDI mobile
data/communications systems are digital automatic data processing
machines within the meaning of Chapter 84, Note 5(A).
The MDTs are separately housed components which operate with
the MDI systems. The MDTs are connectable to the main computer
through the radio link, the modem and the communications
controller. Thus, the MDTs are connectable to the central
processing unit through other units. The MDTs are a specifically
designed part of the MDI systems. The MDTs are designed to
accept and deliver data. They perform as a combination input and
output unit. Since the MDTs meet the two conditions of Chapter
84, Note 5(B), the MDTs are separately housed units of a digital
data processing machine. Chapter 84, Note 5 states that "[s]uch
units entered separately are also to be classified in heading
8471. Thus, the terms of heading 8471 describe the MDTs.
The proper interpretation of heading 8525 is found in
Explanatory Note 85.25, Vol. 4, HCDCS, p. 1374. Explanatory Note
85.25(A) states that radio-telegraphy apparatus are "used for the
transmission of signals (representing speech, messages or still
pictures) by means of electro-magnetic waves which are
transmitted through the ether without any line connection." Vol.
4, HCDCS, p. 1374. The MDTs use electro-magnetic waves to
transmit signals which represent messages between personnel at a
base site and field personnel. This message transmission occurs
without the use of a line connection. Thus, the MDTs are also
described by heading 8525.
Section XVI, Note 3 states in pertinent part:
Unless the context otherwise requires, composite
machines consisting of...machines adapted for the
purpose of performing two or more complementary or
alternative functions are to be classified as if
consisting only of that component or as being that
machine which performs the principal function.
The subject MDTs consist of two types of machines. The
first type consists of machines incorporating a terminal
apparatus and a transmission/reception apparatus within a common
housing. These machines perform complementary or alternative
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functions. Therefore, these MDTs are composite machines within
the meaning of Section XVI, Note 3. The second type consists of
machines that are terminals which, although not incorporating a
transmission/reception apparatus, are designed to be connected to
a transmission/reception device. These machines, however, can
perform two different functions, data transmission and data
processing. Therefore, these MDTs are multi-function machines
within the meaning of Section XVI, Note 3. Both types of MDTs,
therefore, are classified according to their principal function.
This principal function is the controlling function or purpose
within the United States at, or immediately prior to, the date of
importation. See Additional U.S. Rule of Interpretation 1(a),
HTSUSA.
It is the opinion of this office that the principal function
of the MDTs is its communications ability via radio-telegraphy.
This conclusion is based on more than simply the presence of the
radio modem within some of the MDI/Motorola units. MDI/Motorola
has not marketed a "data processing system." The literature
establishes that MDI is advertising and selling "communications
systems." Throughout their advertising literature and videos the
communications functions of the MDI systems are continually
emphasized. The literature states that organizations are
purchasing systems to replace their voice communications systems.
"Efficient communications," "optimum dispatch operations,"
"communicate with our field service people more efficiently and
quickly without having to use voice communications" are comments
stated and repeated in testimonials in Databurst, MDI's
advertising newsletter. Vol. 5, No. 4 (Fall 1990). The
principal function of the MDTs in the United States at this time
is the ability for base and field personnel to communicate and
relay messages that formerly had to be performed by voice
communications. Although the ability to access data exists, it
is an additional bonus of the systems.
Although your arguments regarding the data processing
functions of the MDT have some merit, this office is not
convinced that data processing is the principal function or
purpose. The data processing capabilities of the MDTs are
severely limited. The users of the MDTs are able to retrieve and
send data but they are not able to substantially manipulate data,
nor will they spend the greatest use of their time with the MDT
attempting to manipulate data on the MDT. The majority of
functions of the MDTs are quickly performed by functions keys or
a multikey combination to acknowledge receipt of and respond to a
message from the base or headquarters site.
The primary use of the MDT systems and the aspect which
impresses system purchasers is its speed, efficiency and
reliability in sending messages. The principal use of the system
is as follows: (1) a calltaker or dispatcher will input a
message to the system, (2) the message will be directed to field
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personnel by a computer program, as you indicate, or in many
instances by an individual at a base site, (3) the field
personnel acknowledge receipt of the message, perform the
necessary task, and/or respond accordingly. This "system" is a
communications system. The system's speed and efficiency is made
possible by a host computer. However, that the system utilizes a
computer for its operations does not make it a data processing
system, nor does it make the transmission of messages within the
system data processing.
The MDTs principal function is the transmission of messages
via radio-telegraphy. The classification of the MDT units with
integral transceivers is subheading 8525.20.60, HTSUSA, as
"Transmission apparatus for radiotelephony, radiotelegraphy,
radio-broadcasting or television, whether or not incorporating
reception apparatus...Transmission apparatus incorporating
reception apparatus...Other...Other..." The MDT units without an
integral transceiver are classified in subheading 8525.10.80,
HTSUSA, as "Transmission apparatus for radiotelephony,
radiotelegraphy, radio-broadcasting or television, whether or not
incorporating reception apparatus... Transmission
apparatus...Other...Other..."
HOLDING:
The Mobile Data International MDTs are described by both
heading 8471 as units of automatic data processing machines and
by heading 8525 as transmission apparatus for radiotelegraphy.
Within the meaning of Section XVI, Note 3, the MDTs with integral
transceivers are composite machines, and the MDTs without
integral transceivers are multifunction machines. However, the
MDTs' principal function under Section XVI, Note 3, is the
transmission of messages via radiotelegraphy. In accordance with
GRI 1, the MDTs are classified under heading 8525.
The appropriate classification for models 6031, 6100, KDT
800, KDT 840, and KDT 880 is subheading 8525.20.60, HTSUSA, as
"Transmission apparatus for radiotelephony, radiotelegraphy,
radio-broadcasting or television, whether or not incorporating
reception apparatus...Transmission apparatus incorporating
reception apparatus...Other...Other..."
The appropriate classification for the models 7031, 7100-10,
7100-11, 9031, 9100-10, 9100-11, 9100-20 and KDT 480C is
subheading 8525.10.80, HTSUSA, as "Transmission apparatus for
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radiotelephony, radiotelegraphy, radio-broadcasting or
television, whether or not incorporating reception apparatus...
Transmission apparatus...Other...Other..."
EFFECT ON OTHER RULINGS:
HQ 085404, dated July 20, 1990, is hereby affirmed in full.
Sincerely,
John Durant, Director
Commercial Rulings Division