CLA-2 CO:R:C:M 089597 MBR
Annette Smith
Intertrans Corporation
322 East Grand Avenue
South San Francisco, CA 94080
RE: TSVME 551 68020 Dual-Port Ethernet Controller; TSVME 541
X.25 Communication Board; Logic and Support Circuitry
Necessary for Communication Over Private or Public Data
Networks; Local Area Network; Wide Area Network;
Telegraphic Apparatus
Dear Ms. Smith:
This is in reply to your letter of March 19, 1991, on
behalf of Themis Computer, requesting classification of the TSVME
551 68020 Dual-Port Ethernet Controller, and the TSVME 541 X.25
Communication Board, under the Harmonized Tariff Schedule of the
United States Annotated (HTSUSA).
FACTS:
The submitted literature states that the "TSVME 551 68020
Dual-Port Ethernet Controller" is an intelligent, single board
interface between a VMEbus host system and two ETHERNET Networks.
ETHERNET connections are operated at their maximum rate by the
tri-bus architecture, the 5 port 1 megabyte shared memory, and a
VME Fast Transfer Module. A "powerful" 16 MHz 68020 processor
can support high level protocols and management of data migration
control without being disturbed by the two ETHERNET controllers.
The 1 megabyte shared memory is accessed through a port-
based system by the following users: the 68020 CPU, both ETHERNET
controllers, the VME Interface and the VME Fast Transfer Module.
The Fast Transfer Module, based upon a 2K FIFO buffer,
shortens VMEbus occupation times and offers extremely high data
rates (up to 20 megabytes per second).
The standard EPROMs supplied with the TSVME 551 board
contain an autotest which is executed upon "power-on," a debug
monitor (VBUG), and basic functions to be called in order to
command the ETHERNET controllers, the Fast Transfer Module and
the EPROM.
The TSVME 541 (X.25 Communication Board) Intelligent Serial
Communications (ISCC) board is a VMEbus-compatible (Versa Module
Europe) double Eurocard (revision C) with intelligent serial line
controller capability. The onboard controller circuit provides
management of two independent multiprotocol serial lines.
The TSVME 541 is designed around an intelligent peripheral
controller (IPC) architecture based on a 68010-10 onboard
microprocessor, and it supports the X.25 level-3 communications
software. This architecture makes it a self-contained and
efficient communications management module. It allows the host
system to be connected to a national network of the Transpac,
Telenet, Tymnet, or any other type that manages the X.25
protocol. Physical line interfacing is implemented on removable
PC adaptation boards connected to the main board.
X.25 is a document describing internationally standardized
protocol to be used by packet switching networks. It was
proposed by the Comite Consultatif International Telephonique et
Telegraphique (CCITT) and has been adopted by most of the common
carriers of the world involved in packet switched data networks.
Packet networks offer the ability to statistically multiplex
several users onto a single network access point through the use
of Packet Assemblers and Disassemblers (PADs).
The TSVME 551 68020 Dual-Port Ethernet Controller is
designed for Local Area Network (LAN) applications, usually
within 300 meters or less, and functions at extremely high data
rates. It does not function as a modem.
The TSVME 541 X.25 communication board is designed for Wide
Area Network (WAN) applications and requires an external modem in
order to transmit and receive data over carrier current line
systems. However, both the 551 and the 541 are dedicated to the
transmission between two points of electrical impulses
representing text and/or images and other data using a line
connection connecting the transmitting station to the receiving
station.
ISSUE:
Whether the TSVME 541 X.25 Communication Board and the TSVME
551 68020 Dual-Port Ethernet Controller are classifiable under
heading 8471, Harmonized Tariff Schedule of the United States
Annotated (HTSUSA), which provides for "[a]utomatic data
processing machines," or under heading 8517, HTSUSA, which
provides for "[e]lectrical apparatus for line telephony or
telegraphy"?
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...
Neither the TSVME 541 communication board ("541
communication board") nor the TSVME 551 68020 Dual-Port Ethernet
Controller ("551 Ethernet controller") is classifiable as an
automatic data processing machine, as defined by Legal Note
5(A)(a) to Chapter 84, HTSUSA. Legal Note 5(A)(a)(2) requires
that digital machines must be capable of: "(2) being freely
programmed in accordance with the requirements of the user."
Although they do perform some forms of data processing (such as
service data which defines protocol, packet size, etc.) it is
Customs position that they are not freely programmed, and
therefore are not classifiable under heading 8471.
Heading 8517, HTSUSA, provides for: "[e]lectrical apparatus
for line telephony or line telegraphy, including such apparatus
for carrier-current line systems." The Harmonized Commodity
Description and Coding System Explanatory Notes (ENs) to heading
8517 of the HTSUSA, page 1360, state:
The term "electrical apparatus for line telephony or
line telegraphy" means apparatus for the transmission
between two points of speech or other sounds (or of
symbols representing written messages, images or other
data), by variation of an electric current or of an
optical wave flowing in a metallic or dielectric
(copper, optical fibers, combination cable, etc.)
circuit connecting the transmitting station to the
receiving station. The heading covers all such
electrical apparatus designed for this purpose,
including the special apparatus used for carrier-
current line systems.
The term "apparatus" has been defined by the courts as a
combination of articles and materials which are intended,
adapted, and necessary for the accomplishment of some purpose.
The Deseret Co., v. United States, ___CIT___, Slip Op. 86-93
(1986). Your literature states that 541 communication board
architecture makes it a self-contained and efficient
communications management module. It allows the host system to
be connected to a national network such as the Transpac, Telenet,
Tymnet, or any other type that manages the X.25 protocol. Your
literature also states that the 551 Ethernet controller can
support high level protocols and management of data migration
control without being disturbed by the two ETHERNET controllers,
and offers extremely high data rates (up to 20 megabytes per
second).
Therefore, both the 541 X.25 communication board, and the
551 Ethernet controller data communications systems are a
combination of articles and materials intended, adapted and
necessary for the accomplishment of a specific purpose, i.e.,
that of network data communication (LAN & WAN).
Heading 8517, HTSUSA, provides for: "[e]lectrical apparatus
for line telephony or line telegraphy, including such apparatus
for carrier-current line systems." The issue has been raised as
to what the term "Carrier Current" line systems encompasses.
"Carrier Current" is used in connection with both power and
communications circuits, however, the principle is basically the
same for both systems. The term refers to the use of a
relatively high-frequency alternating current superimposed on the
ordinary circuit frequencies in order to increase the usefulness
of a given transmission line. Thus, in the case of power
systems, carrier currents of several kHz frequency are coupled to
the 60-Hz transmission lines. These carrier currents may be
modulated to provide telephone communication between points on
the power system or they may be used to actuate relays on the
system. The latter use is known as carrier relaying. Carrier
currents have greatly extended the usefulness of existing line
facilities of the telephone and telegraph companies. Several
carrier frequencies may be coupled to the lines already having
regular voice or telegraph signals on them. Each of these
carrier frequencies may be modulated with a separate voice or
telegraph channel and thus a given line may carry the regular
signal plus several new carrier channels, each of which is
equivalent to another circuit at regular frequencies. At the
receiving end, the various channels are separated by filters and
the signals are demodulated and then fed to conventional phone or
telegraph circuits. The number of carrier channels which may be
applied to a given line depends upon the characteristics of the
line, varying from one or two for some lines to several hundred
for a coaxial cable. See Van Nostrand's Scientific Encyclopedia,
Seventh Edition, Vol. 1, page 518 (1989).
Heading 8517, HTSUSA, provides for: "[e]lectrical apparatus
for line telephony or line telegraphy, including such apparatus
for carrier-current line systems." Therefore, heading 8517,
HTSUSA, includes apparatus for carrier-current line systems, but
is not limited to such apparatus.
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)
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, a definition of data
communication packet switching (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 helpful in that it is demonstrative of the Customs
Co-Operation Council's consideration for inclusion of this type
of apparatus in Chapter 85.
Certainly, both the 541 X.25 communication board, and the
551 Ethernet controller data communications systems are
apparatus designed for the transmission of data between two
points, by variation of an electric current connecting the
transmitting station to the receiving station.
Heading 8517, HTSUSA, specifically 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).
The issue has been raised whether or not the 551 Ethernet
controller or the 541 X.25 communication board should be
considered "modems" for tariff purposes. The Computer Glossary,
Fourth Edition, by Alan Freedman (1989), defines "Modem" as
follows:
(MOdulator-DEModulator) A modem is a device that adapts a
terminal or computer to a communications network. Modems
turn digital pulses from the computer into frequencies
(modulate) within the audio range of the telephone system
and convert the frequencies back into digital pulses
(demodulate) on the receiving side. Specialized modems are
used to connect personal computers to a broadband local area
network, which, similar to the telephone system, use
electromagnetic waves for transmission signals, but at
different frequencies. The telephone industry also refers
to a modem as a dataset.
The modem handles the dialing and answering of the call
and also generates the speed of the transmission, which is
measured in bits per second. Modems used on telephone lines
transmit at speeds of 300, 1200, 2400, 4800, 9600 and 19200
bits per second. The effective data rate is 10% of the bit
rate; thus, 300 bits per second (bps) is equivalent to 30
characters per second (cps). It would take a full minute to
fill up a video screen at that rate; 15 seconds at 1,200 bps
and about seven seconds at 2,400 bps. Due to noisy lines in
the dial-up telephone system, the higher speeds can be
problematic, and private lines may be required.
In order to have a personal computer dial up and
communicate with another computer or public information
service, more than a modem is required. The computer must
have a serial port available into which the modem is
connected. In addition, a communications program must be
used in order to direct the computer to do the transmitting
and receiving.
As this definition delineates, "[m]odems turn digital pulses
from the computer into frequencies (modulate) within the audio
range of the telephone system and convert the frequencies back
into digital pulses (demodulate) on the receiving side." Neither
article in question performs these particular, specialized
functions. In fact, the importer states that this merchandise
requires the addition of a modem in order to function over
twisted pair cable.
Based upon the design and intended applications of the
instant merchandise, it is Customs opinion that the 551 Ethernet
controller (for Local Area Networks) is not principally used for
carrier current line systems, however, the 541 X.25 communication
board (for Wide Area Networks) is principally used for carrier
current line systems.
Therefore, the TSVME 551 68020 Dual-Port Ethernet Controller
data communication system is classifiable under subheading
8517.82.00, which provides for: "[e]lectrical apparatus for line
telephony or telegraphy, including such apparatus for carrier-
current line systems: [o]ther apparatus: [t]elegraphic."
Whereas, the TSVME 541 X.25 communication board is
classifiable under subheading 8517.40.70, which provides for:
"[e]lectrical apparatus for line telephony or telegraphy,
including such apparatus for carrier-current line systems:
[o]ther apparatus, for carrier-current line systems: [o]ther:
[t]elegraphic." For similar holdings regarding similar data
communications merchandise, see HQ 089277, dated August 14, 1991,
HQ 089227, dated July 24, 1991, HQ 086035, dated August 2, 1990,
HQ 086478, dated April 9, 1990, HQ 087468, dated January 8, 1991,
HQ 086615, dated April 20, 1990, HQ 085661, dated February 15,
1990, and NY 852403, dated May 31, 1990.
HOLDING:
The TSVME 551 68020 Dual-Port Ethernet Controller data
communication system is classifiable under subheading
8517.82.00, which provides for: "[e]lectrical apparatus for line
telephony or telegraphy, including such apparatus for carrier-
current line systems: [o]ther apparatus: [t]elegraphic." The
rate of duty is 4.7% ad valorem.
The TSVME 541 X.25 communication board is classifiable
under subheading 8517.40.70, which provides for: "[e]lectrical
apparatus for line telephony or telegraphy, including such
apparatus for carrier-current line systems: [o]ther apparatus,
for carrier-current line systems: [o]ther: [t]elegraphic." The
rate of duty is 4.7% ad valorem.
Recorded media (Software) of heading 8524, HTSUSA, remains
classifiable within that heading, whether or not it is entered
with the apparatus for which it is intended. Therefore, the
software for the above articles is classifiable under subheading
8524.90.40, HTSUSA, which provides for: "[r]ecords, tapes and
other recorded media for sound or other similarly recorded
phenomena...: [o]ther: [o]ther."
Sincerely,
John Durant, Director
Commercial Rulings Division