CLA-2 CO:R:C:M 952632 MBR
Steven W. Baker, Esq.
Bellsey and Baker
100 California Street, Suite 670
San Francisco, CA 94111
RE: Revocation of HQ 086615; ARCNET Adapter Boards and Hubs; Local
Area Network Interface Boards; LAN; Automatic Data Processing
Machine; ADP; Control or Adapter Units; HQ 952659
Dear Mr. Baker:
On April 20, 1990, we issued HQ 086615 to you regarding the
classification of certain ARCNET adapter boards and hubs, under the
Harmonized Tariff Schedule of the United States (HTSUS).
FACTS:
"ARCNET" is a local area network developed by the Datapoint
Corporation that interconnects a wide variety of personal computers
and workstations via coaxial cable. Twisted wire pairs and fiber
optic versions are also available. It uses the token passing
access method and transmits at 2.5 megabits per second. ARCNET is
a distributed star topology that interconnects up to 255 computers.
Introduced in 1968, ARCNET was the first local area network
technology. With adapters, ARCNET can connect to most other
mainframe and minicomputer networks as well. See The Computer
Glossary, Fourth Edition, Alan Freedman (1989).
The AQ-PCA 100 ARCNET (AQ-PCA 100) adapter board is designed
for use with the IBM PC, XT, AT and other compatible computers.
The AQ-PSA 100 ARCNET (AQ-PSA 100) adapter board uses 16 bit
path architecture to connect an ARCNET system to an IBM Micro-
Channel product. This adapter board enables the user to select
configuration options from a menu on the CRT.
The AQ-HUB 8, 8-port ARCNET active hub (AQ-HUB 8) supports up
to eight RG-62/U coaxial ports. Each port can be connected to
either a network adapter card or another active or passive hub.
The AQ-HUB 8 provides electrical isolation and signal regeneration.
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It enables network expansion of up to a 20,000 foot span.
The AQ-HUB 4, 4 port ARCNET passive hub links a maximum of
four work systems of a network. The work systems must be within
a 100 foot radius of the hub.
ISSUE:
Are ARCNET local area network adapters and hubs classifiable
under subheading 8517.82.00, HTSUS, which provides for
"[e]lectrical apparatus for line telephony or telegraphy...:
[O]ther apparatus: [t]elegraphic," or are they 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"?
LAW AND ANALYSIS:
Since the HTSUS came into effect there has been a great deal
of controversy regarding the classification of LAN equipment in
general. However, there is no clear classification guidance from
either the HTSUS or the Harmonized Commodity Description and Coding
System Explanatory Notes (ENs), primarily due to the technological
advancements in this area.
In HQ 952659, dated October 7, 1992, we cited Legal Note 5(B)
to chapter 84, HTSUS, which 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).
We agreed that the LAN boards are essential to the ADP systems
with which they are integrated because they process and format the
data of the computers they serve.
In HQ 952659 we also cited the Harmonized Commodity
Description and Coding System Explanatory Notes (ENs), pages 1299-
1300, which describe separately presented ADP units as follows:
This heading also covers separately presented constituent
units of data processing systems. Constituent units are those
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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.
Regarding the Explanatory Notes, the court in Rico Import Co.
v. United States, Slip Op. 92-146 (1992), stated: "The Joint
Committee on the Omnibus Trade and Competitiveness Act recognized
the CCC's Explanatory Notes to the Harmonized System as the CCC's
official interpretation of the Harmonized System." See 23 Cust.
Bull. 379, 380-81, T.D. 89-80 (1989). The Joint Committee stated
that the Explanatory Notes, while drafted subsequent to the
Harmonized System and not considered binding on the contracting
parties, are nevertheless "useful in ascertaining the
classification of merchandise under the system." Id. at 381.
It is our opinion that the principal function of the instant
LAN equipment is, in fact, to effectuate interconnection of the CPU
unit to other units or ADP machines, thereby serving "control" and
"adaption" functions, as described by the ENs.
HOLDING:
The AQ-PCA 100 ARCNET (AQ-PCA 100) adapter board, which is
designed for use with the IBM PC, XT, AT and other compatible
computers, is 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.
The AQ-PSA 100 ARCNET (AQ-PSA 100) adapter board uses 16 bit
path architecture to connect an ARCNET system to an IBM Micro-
Channel product. This adapter board is 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.
The AQ-HUB 8, 8-port ARCNET active hub (AQ-HUB 8) supports up
to eight RG-62/U coaxial ports. Each port can be connected to
either a network adapter card or another active or passive hub.
The AQ-HUB 8 is 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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The AQ-HUB 4, 4 port ARCNET passive hub links a maximum of
four work systems of a network. The AQ-HUB 4 is 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 086615, dated April 20, 1990,
is revoked under authority of Section 177.9(d), Customs
Regulations.
Sincerely,
John Durant, Director