CLA-2 CO:R:C:M 952629 MBR
Mr. Julian Higgins
5407 Eglinton Ave. West, #202
Toronto, Ontario
M9C 5K6 Canada
RE: Revocation of HQ 089227; "SOFTLINK" System; Smartlink Canada
Limited; Protocol Conversion; Control or Adapter Unit; HQ
951331; HQ 952659
Dear Mr. Higgins:
On July 24, 1991, we issued HQ 089227 to you which held that
the "SOFTLINK" system was classifiable under heading 8517,
Harmonized Tariff Schedule of the United States (HTSUS), which
provides for telegraphic apparatus.
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, 1992, as modified by HQ 952659, dated October 7, 1992.
FACTS:
Your product literature states that the main applications of
SOFTLINK involve the transfer of data between asynchronous host
systems and Value Added Networks (VANS). These include links into
the CentreFile Service, and links from universities and
polytechnics into the UCCA and PCAS networks.
The synchronous transmission rate is determined by the
external clock derived from a modem or Network Termination Unit
(NTU). Each synchronous port can operate at its own speed, or
SOFTLINK can provide a clock to one port derived from the other
port. The protocol is selected by means of the MODE switch on the
front panel. There are 8 combinations of 2780/3780, both full and
half duplex on both ports. At the end of the file transfer
process, SOFTLINK transfers a log file to the local host giving a
history of all file transfers taking place and the number of lines
in each file. Any errors in transmission will be highlighted in
the log file. The SOFTLINK requires an external modem in order to
transmit and receive data over carrier current line systems.
-2-
The SOFTLINK unit has a metal housing and "is about the size
of a large telephone directory." It contains a power supply and
a single circuit board. The circuit board contains a processor,
memory, devices to control the bringing in and sending out of data,
and two EPROMs (Erasable Programmable Read Only Memory). The
EPROMs are programmed by Smartlink to fulfill a customer's
particular needs.
ISSUE:
What is the classification of the SOFTLINK data communications
system, under the Harmonized Tariff Schedule of the United States?
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 networking systems such as the
"SOFTLINK" system 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.
-3-
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 "SOFTLINK" system 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 "SOFTLINK" system,
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 SOFTLINK data communication system 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 089227, dated July 24, 1991,
is revoked under authority of section 177.9(d), Customs
Regulations.
Sincerely,
John Durant, Director
Commercial Rulings Division
ATTACHMENT: HQ 951331
HQ 952659