CLA-2 CO:R:C:M 089224 MBR
Mr. Sydney H. Kuflik
Lamb & Lerch
233 Broadway
New York, NY 10279
RE: "10 Base T Filters"; Networking Data Communications System
Component; Telegraphic Apparatus; Electronic Filter; Hybrid
Integrated Circuit
Dear Mr. Kuflik:
This is in reply to your letter of February 22, 1991, on
behalf of Bel Fuse Inc., requesting classification of the "10
Base T Filter" component for the 10 Base T networking data
communications system, imported from Hong Kong, under the
Harmonized Tariff Schedule of the United States Annotated
(HTSUSA).
FACTS:
You state that "the 10 Base T Filters are specifically
designed to be affixed to 10 Base T networking boards used to
facilitate communications between personal computers (PC's)."
You also state that the 10 Base T Filters permit PC to PC
electronic signal communications to be maintained within the
appropriate FCC frequency range and within the prescribed signal
radiation limits.
Four models of the 10 Base T Filters are the subject of the
instant ruling request. Models A556-2006-DE and A556-3899-00 10
Base T Filters consist of discrete passive components;
capacitors, inductors, and transformers, which are mounted on a
printed circuit board and encapsulated. Models 0556-3392-00 and
0556-3392-01 10 Base T Filters also consist of discrete passive
components; capacitors, inductors, and transformers, but are
mounted on a ceramic based substrate using thick film technology.
ISSUE:
What is the classification of the "10 Base T Filter"
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component for the 10 Base T networking data communications
system, under the Harmonized Tariff Schedule of the United States
Annotated (HTSUSA)?
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...
Heading 8517, HTSUSA, provides for: "[e]lectrical apparatus
for line telephony or line telegraphy, including such apparatus
for carrier-current line systems." The Harmonized Commodity
Description and Coding System Explanatory Notes (ENs) to heading
8517 of the HTSUSA, page 1360, state:
The term "electrical apparatus for line telephony or
line telegraphy" means 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 fibers, combination cable, etc.)
circuit connecting the transmitting station to the
receiving station. The heading covers all such
electrical apparatus designed for this purpose,
including the special apparatus used for carrier-
current line systems.
The term "apparatus" has been defined by the courts as a
combination of articles and materials which are intended,
adapted, and necessary for the accomplishment of some purpose.
The Deseret Co., v. United States, ___CIT___, Slip Op. 86-93
(1986).
You state that the "10 Base T filters are specifically
designed to be attached to and function on 10 Base T networking
boards." Customs has consistently held that such networking data
communications systems are properly classifiable in heading 8517,
HTSUSA. See HQ 086035, dated August 2, 1990, HQ 086478, dated
April 9, 1990, HQ 087468, dated January 8, 1991, HQ 086615,
dated April 20, 1990, HQ 085661, dated February 15, 1990, and NY
852403, dated May 31, 1990. Certainly, the 10 Base T Filters are
a combination of articles and materials (capacitors, inductors,
and transformers) intended, adapted and necessary for the
accomplishment of a specific purpose, i.e., that of networking
data communications.
The Customs Co-Operation Council Harmonized Commodity
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Description and Coding System, Summary of Comments and
Observations by the Technical Team, Chapter 85, (April 25, 1979)
stated:
With regard to packet switching equipment, the Technical
Team reproduces below, for information, a text published by
the Secretariat for the attention of the Working Party on
Customs applications of computers (Doc. 21.926):
The transmission of computer system messages or parts
of messages between distant points in the form of
discrete packets which are transmitted over an
independently operated computer driven network. The
routes followed by messages are determined by the
network and not by the sending systems. Packet
switching is in many ways analogous to the conventional
manual postal system in which an independent carrier
receives and delivers letter packets for a community of
users. Any one transmission line of the network may
carry messages from different senders to different
addresses. A message to be transmitted across a
packet switched network is handled in the following
manner: [t]he message is split into a number of
packets of fixed maximum size each prefixed by the
source and destination addresses, length and sequence
number. Each packet is then handled by the network as
a discrete message, being passed from one switch or
node of the network to the next as soon as possible,
depending on the destination address, the traffic
density and the routes available. At the destination,
the addresses, etc., are stripped off, the packets
combined to form the original message and an
acknowledgement sent back to the source according to
whether or not the message is free from error. By
using high speed links for the network, packets,
originating from a large number of users transmitting
into the network at moderate speeds, may be
interleaved within the network, while maintaining full
integrity and security. In this manner, network time
is shared between users in a similar manner to that of
a time sharing computer system.
Although the above text is not binding on us, such
information is helpful in that it is demonstrative of the Customs
Co-Operation Council's consideration for inclusion of this type
of apparatus in Chapter 85.
You argue that the 10 Base T Filters are properly
classifiable under subheading 8473.30.00, HTSUSA, which provides
for parts of automatic data processing machines, since the 10
Base T networking boards are used in PCs. However, as cited
above, networking boards themselves are properly classifiable in
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heading 8517, HTSUSA, since the data communication system is
apparatus designed for the transmission of data between two
points, by variation of an electric current connecting the
transmitting station to the receiving station.
In the alternative, you argue that the 10 Base T Filters
are classifiable as hybrid integrated circuits, under subheading
8542.20.00, HTSUSA. The Legal Notes to chapter 85 state:
5. For the purposes of headings 8541 and 8542:
(b) "Electronic integrated circuits and
microassemblies" are:
(ii) Hybrid integrated circuits in which
passive elements (resistors, capacitors,
interconnections, etc.) obtained by thin- or
thick-film technology and active elements
(diodes, transistors, momolithic integrated
circuits, etc.) obtained by semiconductor
technology, are combined to all intents and
purposes indivisibly, on a single insulating
substrate (glass, ceramic, etc.). These
circuits may also include discrete
components.
Pursuant to Legal Note 5.(b)(ii) above, the 10 Base T
Filters cannot be considered hybrid integrated circuits due to
the fact that they do not contain any active elements, i.e.,
(diodes, transistors, monolithic integrated circuits, etc.).
Therefore, it is Customs position that the four models of
the 10 Base T Filter networking data communications system
components, are properly classifiable under subheading
8517.90.80, HTSUSA, which provides for: "[e]lectrical apparatus
for line telephony or telegraphy, including such apparatus for
carrier-current line systems: [p]arts: [o]f telegraphic
apparatus: [o]ther."
HOLDING:
Models A556-2006-DE, A556-3899-00, 0556-3392-00 and 0556-
3392-01, 10 Base T Filter networking data communications system
components, which consist of discrete passive components
(capacitors, inductors, and transformers) are classifiable under
subheading 8517.90.80, HTSUSA, which provides for: "[e]lectrical
apparatus for line telephony or telegraphy, including such
apparatus for carrier-current line systems: [p]arts: [o]f
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telegraphic apparatus: [o]ther." The rate of duty is 4.7% ad
valorem.
Sincerely,
John Durant, Director
Commercial Rulings Division