CLA-2 CO:R:C:M 953330 MBR
Mr. Bruce A. Johnson
Unicity Customs Brokers Ltd.
6358 Viscount Road
Mississauga, Ontario L4V 1H3
RE: Telesystems SLW Inc.; ARLAN; Multiple Port Network Unit;
Wireless Data Network; Repeater; Router; Local Area Network
Interface Cards; Transmission Module; Transceiver; LAN;
Automatic Data Processing Machine; Control or Adapter Units;
Radiotelegraphy; Radio; 8471.99.15; HQ 951331; HQ 952659; HQ
087984; HQ 085404
Dear Mr. Johnson:
This is our reply to your letters of January 25, 1993, and
April 28, 1993, on behalf of Telesystems SLW Inc., requesting
classification of a "Wireless Data Network" and constituent units
thereof, under the Harmonized Tariff Schedule of the United States
(HTSUS). Your letters were forwarded to this office for reply.
FACTS:
The instant ruling request pertains to the following wireless
Local Area Network (LAN) units:
-ARLAN 100 Wireless Data Network
-ARLAN 120 Multiple Port Network Unit
-ARLAN 130 Single Port Network Unit
-ARLAN 150 Repeater
-ARLAN 410 T Router
-ARLAN 411 T Spread Spectrum LAN Card Router
-ARLAN 650 & 670 Wireless Network Interface Cards
-ARLAN 091 T Spread Spectrum Transmission Module
The ARLAN 100 family of data networking products offers
wireless connectivity for automatic data processing machines (ADP).
The ARLAN 100 is a high capacity system capable of supporting a
large number of users within a single building or throughout a
multi-building campus. This system is comprised of a centrally
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located Network Controller and an associated set of outlying
Network Units. Radio transmission and reception is performed at
915 MHz. The purpose of a wireless LAN system is to avoid costly
wiring and to provide mobility to the users.
ISSUE:
What is the classification of the ARLAN 100 wireless LAN
network and units thereof ("Wireless LAN Units")? Is
classification appropriate under subheading 8471.99.15, HTSUS,
which provides for ADP "control or adapter units," as asserted by
the importer, or are they classifiable under subheading 8525.20.60,
HTSUS, which provides for radiotelegraphy transmission apparatus
incorporating reception apparatus, as classified by the port?
LAW AND ANALYSIS:
Section 177.1(a), Customs Regulations, provides:
The issuance of rulings generally--(1) Prospective
transactions....Generally, a ruling may be requested under the
provisions of this part only with respect to prospective
transactions--that is, transactions which are not already
pending before a Customs Service office by reason of arrival,
entry, or otherwise.
The correct procedure for obtaining classification advice
regarding ongoing transactions is under the Internal Advice
procedure governed by Section 177.11, Customs Regulations.
Since the HTSUS came into effect there has been a great deal
of controversy regarding the classification of LAN equipment.
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 951331, dated September 18, 1992, (modified by 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
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(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 agree that the instant Wireless LAN Units 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 951331 we also cited the Harmonized Commodity
Description and Coding System Explanatory Notes (ENs), pages 1299-
1300, which describe separately presented ADP units, in pertinent
part, 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.
We also concur that the Wireless LAN Units are control or
adapter units designed to effect interconnection of the CPU to
other digital data processing machines, or to groups of input or
output units which may comprise visual display units, remote
terminals, etc.
However, since the Wireless LAN Units incorporate
electromagnetic transceivers, they are also prima facie
classifiable under subheading 8525.20.60, HTSUS, which provides for
radiotelegraphy transmission apparatus incorporating reception
apparatus.
The Legal Notes to section XVI, which encompass both heading
8471, HTSUS, and heading 8525, HTSUS, provide the following
guidance regarding the classification of composite machines:
3. Unless the context otherwise requires, composite machines
consisting of two or more machines fitted together to
form a whole and other machines adapted for the purpose
of performing two or more complementary or alternative
functions are to be classified as if consisting only of
that component or as being that machine which performs
the principal function.
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LAN units perform two major functions. They receive binary
information from a PC and convert this to digital data so that it
can be used at other locations within the LAN. Examples of this
conversion are character format conversion and file conversion.
Once converted, this data is either formatted separately or grouped
into units of data known as packets. This data is then transmitted
to different locations within the LAN.
Once received by another LAN unit, the packets are converted
into a form usable by the destination device. Thus, LANs process,
translate, convert, and transmit data for use within the LAN
system. LAN units also perform such additional functions as
encoding, decoding, LAN protocol implementation, temporary memory
storage, control logic for access to the host computer, and
processing local memory.
It is Customs position that the local area networking function
is the principal function of the instant Wireless LAN Units, not
merely the transmission and reception of radiotelegraphy.
In HQ 085404, dated July 20, 1990, which was reconsidered and
affirmed in HQ 089356, dated September 13, 1991, we held that
Mobile Radio Data Terminals were composite machines with the
principal function of radiotelegraphy, and were therefore
classifiable under subheading 8525.20.60, HTSUS. The instant case
is distinguishable from HQ 085404 because the Mobile Data Terminals
were simply automated replacements for voice transmission radio
communications systems. The data processing function was a
secondary, ancillary function to that of the radio transmission.
Whereas, the instant Wireless LAN Units operate as standard LAN
units with the addition of a radio transceiver. Customs has
consistently held that LAN units, utilizing a variety of media for
interconnection, were classifiable under subheading 8471.99.15,
HTSUS.
HOLDING:
The ARLAN 100 Wireless Data Network Units are 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.
Sincerely,
John Durant, Director