CLA-2 CO:R:C:M 951009 MBR
Mr. Sidney H. Kuflik
Lamb & Lerch
233 Broadway
New York, NY 10279
RE: "10 Base-T MAU Adapter - Transceiver"; Networking Data
Communications System; Telegraphic Apparatus; Part Number
0580-2940-00
Dear Mr. Kuflik:
This is in reply to your letter of November 19, 1991, on
behalf of Bel Fuse Inc., requesting classification of the "10 Base-
T MAU Adapter - Transceiver" for the 10 Base-T networking data
communications system, under the Harmonized Tariff Schedule of the
United States (HTSUS).
FACTS:
Your state that "Ethernet is the popular system by which
computer networks can transmit and receive data to and from other
ADPs and/or peripheral units." Computers using the Ethernet system
contain an Ethernet "card" (printed circuit board with components
mounted thereon). The older Ethernet cards were designed for
networking over coaxial cable. Coaxial cable has a greater
transmission capacity (bandwidth) than standard twisted pair
telephone wires. However, the current medium of choice for
Ethernet networks is over unshielded twisted-pair (UTP) cable using
the 10 Base-T standard passed by the IEEE (Institute of Electrical
and Electronics Engineers). This allows computers to transmit and
receive data over existing telephone lines within a commercial
building. In order for the older Ethernet cards to transmit and
receive over twisted-pair cable, instead of coaxial cable, a 10
Base-T Adapter must be utilized. "MAU" represents: "Media
Attachment Unit."
ISSUE:
What is the classification of the "10 Base-T MAU Adapter -
Transceiver." Is the 10 Base-T Adapter classifiable under heading
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8471, HTSUS, which provides for "Control or adapter units" of ADP
machines, 8473, HTSUS, which provides for parts of ADP machines, or
under heading 8517, HTSUS, which provides for "[e]lectrical
apparatus for line telephony or telegraphy"?
LAW AND ANALYSIS:
The General Rules of Interpretation (GRI's) to the HTSUS
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...
Customs has previously classified merchandise for the 10 Base-
T networking data communications system for the same importer and
counsel (see HQ 089224, dated July 26, 1991). HQ 089224, regarding
10 Base-T Filters (not cited by importer's counsel), delineated
Customs position regarding merchandise for local area networking in
general, and the 10 Base-T standard in particular.
The submitted literature clearly shows that the 10 Base-T MAU
Adapter - Transceiver" is an integral element of an Ethernet local
area network (to be used with older Ethernet cards) that operates
over twisted-pair cable (telephone lines), and as such, is
dedicated to data communication. The Computer Glossary, Fourth
Edition, Alan Freedman (1989), defines a "Local Area Network" as
follows:
A local area network is a communications network that serves
several users within a confined geographical area. Although
the term may refer to any communications network within a
building or plant, it typically refers to the interconnection
of personal computers.
Personal computer local area networks function as distributed
processing systems in which each computer, or node, in the
network does its own processing and manages some of its data.
Shared data is stored in a high-performance pc in the network,
called a file server or network server, which acts as a remote
disk drive to all the users in the network.
The printers that are attached to the network can function on
a first-come, first-served basis, or they can be connected to
a computer, called a print server, which collects the print
output and feeds it to the printer one job at a time.
A local area network is the backbone of office automation and
allows electronic mail and other information to be
communicated between all users of the system. Local area
networks are becoming essential for small work groups that
enter, share and exchange the same information.
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With the use of a gateway, local area network can connect to
minicomputer and mainframe networks.
BASEBAND NETWORKS
Baseband networks are all digital networks that require
information in digital form. Examples are ARCNET, Token Ring,
Ethernet and Starlan. All of these networks are driven by
network management software that resides in the file servers
and the work stations. Examples of network software are
Microsoft's NetBIOS and LAN Manager, Apple Talk, TPC/IP and
Novell's NetWare.
BROADBAND NETWORKS
Broadband networks use carrier frequencies and can handle
voice and video transmission as well, for example, Wang
Computer's WangNET.
The instant merchandise is utilized for Baseband Networks, and
uses an individual digital signal.
It remains Customs position that Local Area Networking (LAN)
apparatus is principally used for "line telegraphy" and as such is
not classifiable in heading 8471, HTSUS, as a "unit" of an ADP
system.
The importer's counsel argues alternatively that the 10 Base-T
MAU Adapter - Transceiver is a "part" of an automatic data
processing machine. However, the fact that this merchandise
requires the attachment of another article(s), i.e., the Ethernet
card, the PC, and a network, in order to be capable of performing
its function (data communication), does not render it a "part,"
since there is no requirement that a machine must be "self-
activating." Nord Light, Inc. v. United States, 49 CCPA 12, C.A.D.
786 (1961). Thus, although when imported, the 10 Base-T MAU
Adapter - Transceiver is incapable of functioning unless placed in
configuration with certain other boards and devices, in their final
use they are, nevertheless, in and of themselves, network data
communication (electrical telegraphic) apparatus specifically
provided for in heading 8517, HTSUS. Westinghouse Electric
International Co. v. United States, 28 Cust. Ct. 209, C.D. 1411
(1952), cited with approval by Fairchild Camera & Instrument Corp.,
Inter-Maritime Forwarding Co., Inc. v. United States, 53 CCPA 122,
126, C.A.D. 887 (1966).
Heading 8517, HTSUS, 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 HTSUS, page 1360, state:
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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). There can
be no controversy that these boards are data communication boards
for local area networking.
Therefore, the instant 10 Base-T Adapter data communications
device, is a combination of articles and materials intended,
adapted and necessary for the accomplishment of a specific purpose,
i.e., that of local area network data communication (LAN).
The Customs Co-Operation Council Harmonized Commodity
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, a definition of data communication
packet switching (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
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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.
Certainly, these local area network data communications
devices are apparatus designed for the transmission of data between
two points, by variation of an electric current connecting the
transmitting station to the receiving station, as described above.
Heading 8517, HTSUSA, specifically includes line telegraphy
for the transmission of symbols representing written messages,
images or other data. The definition of "telegraphic apparatus" is
found within the EN to 85.17, p. 1363, which states:
This is essentially 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. (Emphasis added).
The issue has been raised whether or not the 10 Base-T data
communication adapter should be considered a "modem" for tariff
purposes. The Computer Glossary, Fourth Edition, by Alan Freedman
(1989), defines "Modem" as follows:
(Modulator-DEModulator) A modem is a device that adapts a
terminal or computer to a communications network. Modems turn
digital pulses from the computer into frequencies (modulate)
within the audio range of the telephone system and convert the
frequencies back into digital pulses (demodulate) on the
receiving side. Specialized modems are used to connect
personal computers to a broadband local area network, which,
similar to the telephone system, use electromagnetic waves for
transmission signals, but at different frequencies. The
telephone industry also refers to a modem as a dataset.
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The modem handles the dialing and answering of the call
and also generates the speed of the transmission, which is
measured in bits per second. Modems used on telephone lines
transmit at speeds of 300, 1200, 2400, 4800, 9600 and 19200
bits per second. The effective data rate is 10% of the bit
rate; thus, 300 bits per second (bps) is equivalent to 30
characters per second (cps). It would take a full minute to
fill up a video screen at that rate; 15 seconds at 1,200 bps
and about seven seconds at 2,400 bps. Due to noisy lines in
the dial-up telephone system, the higher speeds can be
problematic, and private lines may be required.
In order to have a personal computer dial up and
communicate with another computer or public information
service, more than a modem is required. The computer must
have a serial port available into which the modem is
connected. In addition, a communications program must be used
in order to direct the computer to do the transmitting and
receiving.
As this definition delineates, "[m]odems turn digital pulses
from the computer into frequencies (modulate) within the audio
range of the telephone system and convert the frequencies back into
digital pulses (demodulate) on the receiving side." The instant 10
Base-T adapter does not convert signals from digital to analog (it
is a digital-digital signal), it merely changes the impedance
characteristics. Therefore, it is not classifiable as a modem.
Furthermore, based upon the design and intended applications
of the instant merchandise, it is Customs opinion that the instant
10 Base-T Adapter (for Local Area Networking) is not principally
used for carrier current line systems.
Therefore, the instant "10 Base-T MAU Adapter - Transceiver"
local area network data communications system merchandise is
classifiable under subheading 8517.82.00, which provides for:
"[e]lectrical apparatus for line telephony or telegraphy, including
such apparatus for carrier-current line systems: [o]ther apparatus:
[t]elegraphic."
For similar holdings regarding similar data communications
merchandise, see HQ 089355, dated January 7, 1992, HQ 089596, dated
September 17, 1991, HQ 089597, dated September 5, 1991, HQ 089277,
dated August 14, 1991, HQ 089227, dated July 24, 1991, 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.
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HOLDING:
The "10 Base-T MAU Adapter - Transceiver," part number 0580-
2940-00, local area network data communication system merchandise
is classifiable under subheading 8517.82.00, which provides for:
"[e]lectrical apparatus for line telephony or telegraphy, including
such apparatus for carrier-current line systems: [o]ther apparatus:
[t]elegraphic."
Sincerely,
John Durant, Director
Commercial Rulings Division