CLA-2 CO:R:C:G 087468 MBR
Mr. Preston T. Scott
Fenwick, Davis & West
1920 N Street, N.W.
Suite 650
Washington, D.C. 20036
RE: Reconsideration of HQ 083611, dated May 11, 1990, Regarding
Line Drivers and Datasets; Electrical Apparatus for Line
Telephony or Telegraphy; Automatic Data Processing
Dear Mr. Scott:
This is in reply to your letter of July 2, 1990, requesting
reconsideration of HQ 083611, dated May 11, 1990, regarding the
classification of line drivers and datasets, under the Harmonized
Tariff Schedule of the United States Annotated (HTSUSA).
In HQ 083611, dated May 11, 1990, we held that seven models
of the Micom Micro 400 series were classifiable in subheading
8517.82.00, HTSUSA, which provides for telegraphic apparatus.
FACTS:
The articles in question consist of seven models of the
Micom Micro 400 series.
Model M400MP is an asynchronous (i.e., data transmission in
an irregular fashion) line driver that operates over in-house
customer-owned twisted pair cable to transmit data in digital
form without modulation between a computer and a terminal over
distances ranging from a few hundred feet to a few miles. This
model operates at data rates ranging from 0 to 19,200 bps, and
supports both full and half-duplex modes over either one or two
pairs of wires.
Model M401 is an asynchronous local dataset designed
specifically for short haul digital transmission. This model is
designed to transmit data in digital form without modulation
between a computer and terminal over distances ranging up to a
few miles (ordinarily within a single building or local complex
of buildings). The M401 can also be used as a line driver over
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in-house customer owned twisted pair cables.
Model M420MP is a synchronous (i.e., data transmission in a
continuous stream) line driver designed specifically for short-
haul digital data transmission without modulation between a
computer and a terminal over distances ranging from a few hundred
feet to a few miles. This model operates at data rates ranging
from 1200 to 19,200 bps on 2 or 4 wire privately owned metallic
circuits. The M420MP can be arranged in system network
configurations of point-to-point or multi-point on 2-wire half-
duplex or 4 wire full-duplex links.
Model M421 is a synchronous local dataset designed
specifically for short-haul digital data transmission between a
computer and a terminal. This model is designed to transmit data
in digital form without modulation between a computer and a
terminal over distances ranging up to a few miles (ordinarily
within a single building or local complex of buildings).
Model M430 DTE/DCE is an extremely compact asynchronous line
driver designed for point-to-point full duplex operation over in-
house twisted pair cable to transmit data in digital form without
modulation between a computer and a terminal over distances
ranging from a few hundred feet to a few miles. This model
requires no external power and no EIA interface cable, and
operates as both DCE and DTE devices.
Model M431 DTE/DCE is an asynchronous mini-local dataset
designed for operation up to 9600 bps over 4 wire private line
metallic circuits to transmit data in digital form without
modulation between a computer and a terminal ranging from a few
hundred feet to a few miles (ordinarily within a single building
or local complex of buildings).
Models M4400MP, M4401, M4420, and M4421 are racked mounted
card module versions of Models M400MP, M401, M420MP, and M421
which allow installation of up to 16 cards of any such model in a
Model 4000 rack-mount chassis.
ISSUE:
Whether line drivers and datasets are classifiable within
heading 8471, HTSUSA, which provides for automatic data
processing (ADP) machines and units thereof; or within heading
8517, HTSUSA, which provides for electrical apparatus for line
telephony or line telegraphy.
LAW AND ANALYSIS:
As a basis for reconsideration you have raised five issues
that you state were either not addressed or were addressed with
"demonstrable inaccuracy." We will address each issue in turn.
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ISSUE #1
You stated the following:
1. Customs states in the ruling that MICOM's line drivers
are not "connectable" to a central processing unit (CPU) or
"specifically designed" for an automatic data processing
(ADP) system, when in fact MICOM's line drivers are
"connectable" to a CPU and are "specifically designed" for
an ADP system.
In HQ 083611, we stated that line drivers and datasets
(hereafter "telegraphic apparatus") do not meet the requirements
of Chapter 84, Legal Note 5(B). Although this telegraphic
apparatus may be "connectable to the central processing unit
either directly or through one or more units," this telegraphic
apparatus is not "specifically designed as part of such a
system." This telegraphic apparatus is designed "for the
transmission between two points of speech or other sounds (or of
symbols representing written messages, images or other data)..."
as provided for under 8517, HTSUSA (see the Harmonized Commodity
Description and Coding System Explanatory Notes to 8517). Many
machines are "connectable" to a CPU and "specifically designed"
to work with an ADP system and yet are not classifiable in
heading 8471, HTSUSA. Thus, the correct test, as delineated in
Legal Note 5(B)(b) is that a unit must be "specifically designed
as part of such a system," not merely designed to work with or
"for" an ADP system. Above, you admit that this telegraphic
apparatus is "specifically designed for an ADP system." Units
that are "specifically designed as part of such a [ADP] system"
are enumerated in heading 8471. These units include: digital
processing units, input/output units, storage units, control or
adapter units, and power supplies. No where is telegraphic
apparatus enumerated, nor was it intended to be classifiable
here.
Legal Note 5, chapter 84, also states:
Heading 8471 does not cover machines incorporating or
working in conjunction with an automatic data processing
machine and performing a specific function. Such machines
are classified in the headings appropriate to their
respective functions or, failing that, in residual headings.
The instant telegraphic apparatus works in conjunction with
ADP machines and performs the specific function of telegraphic
communication, and is therefore classifiable under the heading
appropriate to its respective function, i.e., 8517, HTSUSA.
Furthermore, the Customs Co-Operation Council Harmonized
Commodity Description and Coding System, Summary of Comments and
Observations by the Technical Team, Chapter 85, (April 25, 1979)
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stated:
With regard to packet switching equipment, the Technical
Team reproduces below, for information, a text published by
the Secretariat for the attention of the Working Party on
Customs applications of computers (Doc. 21.926):
The transmission of computer system messages or parts
of messages between distant points in the form of
discrete packets which are transmitted over an
independently operated computer driven network. The
routes followed by messages are determined by the
network and not by the sending systems. Packet
switching is in many ways analogous to the conventional
manual postal system in which an independent carrier
receives and delivers letter packets for a community of
users. Any one transmission line of the network may
carry messages from different senders to different
addresses. A message to be transmitted across a
packet switched network is handled in the following
manner: [t]he message is split into a number of
packets of fixed maximum size each prefixed by the
source and destination addresses, length and sequence
number. Each packet is then handled by the network as
a discrete message, being passed from one switch or
node of the network to the next as soon as possible,
depending on the destination address, the traffic
density and the routes available. At the destination,
the addresses, etc., are stripped off, the packets
combined to form the original message and an
acknowledgement sent back to the source according to
whether or not the message is free from error. By
using high speed links for the network, packets,
originating from a large number of users transmitting
into the network at moderate speeds, may be
interleaved within the network, while maintaining full
integrity and security. In this manner, network time
is shared between users in a similar manner to that of
a time sharing computer system.
Although the above text is not binding on us, such
information is instructive because it is demonstrative of the
Customs Co-Operation Council's consideration for inclusion of
this type of apparatus in Chapter 85.
Additional U.S. Rules of Interpretation, Rule 1. (a) states:
a tariff classification controlled by use (other than actual
use) is to be determined in accordance with the use in the
United States at, or immediately prior to, the date of
importation, of goods of that class or kind to which the
imported goods belong, and the controlling use is the
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principal use.
Heading 8517 is a tariff classification controlled by use.
Heading 8517, HTSUSA, includes line telegraphy for the
transmission of symbols representing written messages, images or
other data. The definition of "telegraphic apparatus" is found
within the Harmonized Commodity Description and Coding System
Explanatory Note (EN) to 85.17, p. 1363, which states:
This is essentially designed for converting texts or images
into appropriate electrical impulses, for transmitting those
impulses, and at the receiving end, receiving these impulses
and converting them either into conventional symbols or
indications representing the text, or into the text or image
itself. (Emphasis added)
Clearly, the instant telegraphic apparatus is telegraphic
apparatus designed for the transmission of data between two
points. Therefore, it is necessary for Customs to reiterate that
the instant telegraphic apparatus is properly classifiable under
subheading 8517.82.00, HTSUSA, which provides for: "[e]lectrical
apparatus for line telephony or telegraphy, including such
apparatus for carrier-current line systems: [o]ther apparatus:
[t]elegraphic."
ISSUE #2
Legal Note 5(B), chapter 84, states: "[a] unit is to be
regarded as being a part of the complete system if it meets all
of the following conditions: (a) and (b)."
Therefore, you argue the insupportable conclusion that
"units" (classifiable in 8471, HTSUSA) are properly classifiable
as "parts" of units (heading 8473, HTSUSA). Clearly, the only
rational meaning of Legal Note 5(B) is that the term "part" is
intended here to mean a unit that is: "(a) ...connectable to the
central processing unit...., and (b) ...specifically designed as
part of such system." Whereas, heading 8473, HTSUSA, provides
for: "[p]arts and accessories (other than covers, carrying cases
and the like) suitable for use solely or principally with
machines of headings 8469 to 8472." Therefore, heading 8473,
HTSUSA, provides for parts of machines or units, but not for the
machines or units themselves. We find this to be self-evident
and believe, upon a more careful reading, it will become patently
clear to you as well.
ISSUE #3
You argue that certain ADP units (keyboards, screens,
printers and storage units) transmit information via an
electromagnetic signal and yet are not classified in heading
8517, along with your telegraphic apparatus. This basal result
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is reached simply by consulting Legal Note 7, chapter 84, which
states: "[a] machine which is used for more than one purpose is,
for the purposes of classification, to be treated as if its
principal purpose were its sole purpose." Simply stated, the
principal purpose of the eo nomine ADP units is automatic data
processing, whereas, the principal purpose of your telegraphic
apparatus is telegraphic transmission.
ISSUE #4
You argue that Customs has "utterly ignored and otherwise
failed to even acknowledge in any manner whatsoever three
documents written and issued by Customs on merchandise similar if
not identical computer interface articles."
We wish to direct your attention to the Legislative History
of the HTSUSA regarding "Prior Administrative and Judicial
Decisions," House Conf. Rep. No. 100-576, page 549, which states:
In light of the significant number and nature of changes in
nomenclature from the TSUS to the HTS, decisions by the
Customs Service and the courts interpreting nomenclature
under the TSUS are not deemed dispositive in interpreting
the HTS. Nevertheless, on a case-by-case basis prior
decisions should be considered instructive in interpreting
the HTS, particularly where the nomenclature previously
interpreted in those decisions remains unchanged and no
dissimilar interpretation is required by the text of the
HTS.
The three rulings that you refer to were rendered under the
TSUS, and cannot even be considered instructive because the
nomenclature and structure of the competing provisions has
substantially changed and a dissimilar interpretation is required
by the text of the HTS. Furthermore, the "similar if not
identical merchandise" in the referenced rulings were modems (you
emphatically argue that your telegraphic apparatus is not a
modem), which are now classified in heading 8517, HTSUSA.
ISSUE #5
You argue that in order for apparatus to be classifiable
under heading 8517, HTSUSA, the apparatus itself must do all
three of the following operations: 1) convert text or images into
electrical impulses, 2) transmit those impulses, and 3) reconvert
those impulses. Again, your argument is incorrect. Telegraphic
apparatus need only aid in the function of any of the three
necessary operations cited above in order to be classifiable
under the provision for telegraphic apparatus.
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HOLDING:
MICOM line drivers and datasets are classifiable within
subheading 8517.82.00, HTSUSA, which provides for telegraphic
apparatus dutiable at the rate of 4.7 percent ad valorem.
For the foregoing reasons, we must affirm HQ 083611, dated
May 11, 1990.
Sincerely,
John Durant, Director
Commercial Rulings Division