CLA-2 CO:R:C:M 952628 MBR

Mr. William J. LeClair
Transborder Customs Services, Inc.
One Trans-Border Drive, P.O. Box 800
Champlain, N.Y. 12919

RE: Revocation of HQ 089277; The EDA Instruments, Inc., MCN.1008 Asynchronous Packet Assembler/Disassembler (PAD); Logic and Support Circuitry Necessary for Asynchronous Communication Over Private or Public Data Networks; HQ 951331; HQ 952659

Dear Mr. LeClair:

On August 14, 1991, we issued HQ 089277 to you regarding the classification of the MCN.1008 Asynchronous Packet Assembler/ Disassembler (PAD), under the Harmonized Tariff Schedule of the United States (HTSUS).

Subsequently, due to our ongoing research and analysis, we have reconsidered the classification of automatic data processing machine (ADP) networking equipment. See HQ 951331, dated September 18, 1991, as modified by HQ 952659, dated October 7, 1992.

FACTS:

You stated that the "Packet Assembler/Disassembler" (PAD) is a data communications multiplexor designed to operate on X.25 networks provided by both public and private communications carriers, in other words, telephone companies. PADs are utilized in the following typical data network communication system configuration: COMPUTER + PAD + MODEM = NETWORK = MODEM + PAD + COMPUTER.

The literature that you have submitted states that EDA Instruments, Inc., MCN.1008 Asynchronous Packet Assembler/Disassembler (PAD) contains the logic and support circuitry necessary for asynchronous communication over private or public data networks. The MCN.1008 PAD is an X.3 Packet Assembler/Disassembler (PAD) which allows from one to eight device interfaces to share a common X.25 communication trunk. The PAD can adapt to different types of devices through the assignment of a set of parameter values for each interface. There are also parameters to control the format of data transfer between a terminal and a

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computer, to improve communication efficiency by reducing the number of packets generated over the network. These parameters can be software configured according to the user's needs and are stored in a battery backed up memory called NV (non-volatile) RAM.

ISSUE:

Whether the "Packet Assembler/Disassembler" (PAD) is classifiable under heading 8471, HTSUS, which provides for "[a]utomatic data processing machines and units thereof," 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 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...

Legal Note 5(B) to chapter 84, HTSUS, provides guidance regarding units of automatic data processing machines. It states: Automatic data processing machines may be in the form of systems consisting of a variable number of separately housed units. A unit is to be regarded as being a part of the complete system if it meets all of the following conditions:

(a) It is connectable to the central processing unit 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).

It has been asserted that ADP networking systems such as the MCN.1008 Asynchronous Packet Assembler/Disassembler (PAD) units are essential to the ADP systems they are connected to because they process and format the data of the computers they serve. We now agree.

It is also important to note that the ENs, page 1299-1300, describe separately presented ADP units as follows:

This heading also covers separately presented constituent units of data processing systems. Constituent units are those defined in Parts (A) and (B) above as being parts of a complete system.

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Apart from central processing units and input and output units, examples of such units include:

(4) Control and adaptor units such as those to effect interconnection of the central processing unit to other digital data processing machines, or to groups of input or output units which may comprise visual display units, remote terminals, etc.

This category includes channel to channel adapters used to connect two digital systems to each other.

(5) Signal Converting units. At input, these enable an external signal to be understood by the machine, while at output, they convert the output signals that result from the processing carried out by the machine into signals which can be used externally.

The PAD unit does in fact effectuate interconnection of the CPU unit to other units or ADP machines, thereby serving control and adaption functions, as well as performing signal conversion. Thus, classification is appropriate in subheading 8471.99.15, HTSUS, which provides for ADP control or adapter units.

Our diligent fact finding, and research and analysis of this issue, has been continually ongoing. Therefore, we have learned more about this merchandise, its functions, and its geometrically progressive technological developments.

Therefore, based on the new information submitted, and in an effort to expeditiously and accurately address this classification issue, we have reconsidered our position. It is now our conclusion that the data processing features of control and adaption do in fact represent the principal function of the PAD unit, directing classification in subheading 8471.99.15, HTSUS, which provides for: "[a]utomatic data processing machines and units thereof: [o]ther: [o]ther: [c]ontrol or adapter units."

HOLDING:

The EDA Instruments, Inc., MCN.1008 Asynchronous Packet Assembler/Disassembler (PAD) unit is properly classifiable under subheading 8471.99.15, HTSUS, which provides for: "[a]utomatic data processing machines and units thereof: [o]ther: [o]ther: [c]ontrol or adapter units." The rate of duty is Free.

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EFFECT ON OTHER RULINGS:

For the reasons stated above, HQ 089277, dated August 14, 1991, is revoked under authority of section 177.9(d), Customs Regulations.

Sincerely,

John Durant, Director
Commercial Rulings Division

ATTACHMENT: HQ 951331
HQ 952659