CLA-2 CO:R:C:M 952631 MBR
Mr. Harry Wood
H.A. & J.L. Wood, Inc.
Pembina, North Dakota 58271
RE: Revocation of HQ 086478; "DevelNet" Local Area Network (LAN)
System; Develcon Electronics; HQ 951331; HQ 952659
Dear Mr. Wood:
On April 9, 1990, we issued HQ 086478 to you regarding the
classification of the "DevelNet" LAN system, 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, 1992, as modified by HQ 952659, dated October 7, 1992.
FACTS:
The DevelNet system has been designed to fulfill local area
network requirements by providing data processing functions similar
to a centralized data PBX. The system also allows the user to
create regional or national "wide area" networks by connecting
various local area networks into a fully integrated data
communications network. This will permit users of the various
terminals, computers, or other devices, in one part of the network
to communicate with other equipment (users, data bases, terminals,
etc.) throughout the network which may operate with different
communications protocols and speeds. In addition, DevelNet is
being developed to provide access to public and private data
transmission networks such as Telenet, Tymnet, Datapac and
Ethernet. DevelNet is also being designed to incorporate data PBX
or local area networking devices from other vendors into its wide
area network. This will permit customers who have already
installed local data communications equipment (i.e., Local Area
Networks) to implement a wide area network without having to
replace previously installed equipment. DevelNet has been designed
to incorporate network management features, redundant power
supplies, controller boards, and self diagnostic capabilities.
-2-
ISSUE:
What is the classification of the "DevelNet" LAN 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
"DevelNet" 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.
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.
-3-
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 "DevelNet" LAN 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 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 acquired, 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 "DevelNet" 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 Develcon Electronics "DevelNet" LAN 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.
EFFECT ON OTHER RULINGS:
For the reasons stated above, HQ 086478, dated April 9, 1990,
is revoked under authority of section 177.9(d), Customs
Regulations.
Sincerely,
John Durant, Director
Commercial Rulings Division
ATTACHMENT: HQ 951331
HQ 952659