CLA-2 OT:RR:CTF:EMAIN HQ H301537 TPB
Robert D. Stang
Husch Blackwell LLP
750 17th St., NW, Suite 900
Washington, DC 20006-4675
Re: Binding ruling request on the tariff classification of ARRIS TG3482 Telephony Gateway
Dear Mr. Stang:
The following is our decision to your October 26, 2018 request for a binding ruling on the classification of a TG3482 Telephony Gateway (“TG3482 Gateway”), under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA).
On October 4, 2019, you informed CBP that you withdrew your request for a meeting prior to the issuance of the ruling.
FACTS:
According to your submission, the TG3482 Gateway is a “smart” networking device used with a number of telecommunications networks simultaneously to flow high-speed data (internet, voice, video) from one discrete network to another. The product is used in a residential environment to connect multiple Internet Protocol (“IP”') network devices (e.g., computers, home security cameras, telephones, speakers and even refrigerators, lighting and heating systems if IP connected) on a wireless (Wi-Fi) and wired basis. Using the TG3482 Gateway requires both telephone service and an Internet account.
ISSUE:
Whether the TG3482 Gateway is a “base station” classifiable in subheading 8517.61.0000, HTSUSA, or a switching and routing apparatus of subheading 8517.62.0020, HTSUSA.
LAW AND ANALYSIS:
Merchandise imported into the United States is classified under the HTSUS. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (GRIs) and, in the absence of special language or context which requires otherwise, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law for all purposes.
General Rule of Interpretation 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order. There is no dispute that the subject merchandise is classified under heading 8517, HTSUS. Accordingly, this matter is governed by GRI 6, which provides as follows:
For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to the above rules, on the understanding that only subheadings at the same level are comparable. For the purposes of this rule, the relative section, chapter and subchapter notes also apply, unless the context otherwise requires.
The following are the HTSUSA provisions under consideration are:
8517 Telephone sets, including telephones for cellular networks or for other wireless networks; other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network), other than transmission or reception apparatus of heading 8443, 8525, 8527 or 8528; parts thereof:
Other apparatus for transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network):
8517.61.00 Base stations….
* * *
8517.62.00 Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus….
8517.62.0020 Switching and routing apparatus
* * *
8517.62.0090 Other
The Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”) constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
In your view, the TG3482 Gateway acts as a base station for the multiple networks with which it communicates. You provide a Wikipedia definition for a “base station” which reads, in relevant part, “in wireless communications it is a transceiver connecting a number of other devices to one another and/or to a wider area.” The definition further states that with regard to wireless computer networking, “a base station is a radio receiver/transmitter that serves as the hub of the local wireless network, and may also be the gateway between a wired network and the wireless network. It typically consists of a low-power transmitter and wireless router.”
In that regard, it is your view that the TG3482 Gateway is similar to a hub in which all network communications go through the hub to an end user. Although the TG3482 receives and transmits data among networks, you posit that the product is not a switching or routing device, and that, in accordance with its "smart" functionality the TG3482 Gateway performs, including converting data received to an appropriate domain depending upon the user; controlling and organizing data received for distribution to the optimal network end-user; and “grooming” video and images and controlling the data to ensure maximum viewing quality, all of which collectively go well beyond those found in switching or routing apparatus.
You also note that the term “base station” is defined in the Explanatory Notes to heading 8517. Specifically, EN 85.17 (II), which pertains to “other apparatus for transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network)”, provides, in pertinent part, as follows:
Based stations.
The most common types of base stations are those for cellular networks, which receive and transmit radio waves to and from cellular telephones or to other wired or wireless networks. Each base station covers a geographical area (a cell). If the user moves from one cell to another while telephoning, the call is automatically transferred from one cell to another without interruption.
(Emphasis in original).
In your view, the TG3482 Gateway receives and transmits radio waves to and from cellular telephones. It also transmits radio waves to and from a number of other wireless (and wired) network devices (computers, security cameras, etc.). As such, the T03482 Gateway meets the definition of a “base station” provided in the ENs to heading 8517.
The “base stations” contemplated for classification under heading 8517, according to the EN, are typically devices for cellular networks, allowing a user to make calls on their cellular device while moving from one area (cell) to another without interruption. If we compare this with the TG3482 Gateway, we can see that the product under consideration, a home networking device which provides Ethernet, MoCA (Multimedia over Coax), and wireless networking (Wi-Fi) along with telephony service over two separate lines, are not the same. Although it can serve as an access point, the product at issue performs functions that are beyond those of “base stations”. To that end, it is the opinion of this office that the TG3482 Gateway is not classifiable in subheading 8517.61.0000, HTSUS.
In case the TG3482 Gateway cannot be classified under subheading 8517.61.0000, HTSUS, you argue in your submission that in the alternative, the device is properly classified under subheading 8517.62.0090, as “Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus; other.” In so doing, you point out that the technical literature provided with your submission confirms that the TG3482 Gateway receives and transmits voice, images and video data. Additionally, in light of the fact that the subject merchandise converts digital data to analog and analog data to digital, you argue that the TG3482 Gateway squarely meets the superior terms of subheading 8517.62, HTSUS (i.e., Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus). We agree that the product in question meets the terms of subheading 8517.62, HTSUS. With regard to the statistical subheading, it would appear from the information provided that there are two potential options: subheading 8517.62.0020 or 8517.62.0090.
You argue that the TG3482 Gateway is not routing or switching apparatus of subheading 8517.62.0020. HTSUSA. In support of this, you note that a definition of a “gateway” included with your submission states that, “Gateways are distinct from routers or switches in that they communicate using more than one protocol.” See https://en.wikipedia.org/wiki/Gateway_(telecommunications). As an initial matter, you note that depending upon the data function being performed by the TG3482 Gateway (receiving, transmitting, converting, storing, optimizing) and the corresponding networking device (telephone, computer, security device, etc.) this product will use more than one protocol. As such, the TG3482 Gateway does not meet the industry definition of a switch or a router.
You further note that, as opposed to a switch or a router that merely transmits data between networks, the TG3482 Gateway controls the data received or transmitted. In that regard. It can optimize data for a particular end user; “groom” video and images to ensure maximum viewing quality; or even store the data for later transmission. Switches and routers lack these capabilities.
Taking the above into consideration, it is your view that the TG3482 Gateway is a product that the industry distinguishes from switches and routers and has uses and capabilities not found in switches and routers. You therefore conclude that the TG3482 Gateway cannot be classified under subheading 8517.62.0020, HTSUSA (a tariff provision specific to “switching and routing apparatus”), and must therefore be classified under subheading 8517.62.0090.
The product at issue is a “gateway”. In your submission, you attempt to distinguish this product from a “router” or a “switch”, which are classified under subheading 8517.62.0020.
A “router” is defined in the Oxford English Dictionary (OED) as follows:
A device, circuit, algorithm, etc., which serves to determine the destinations of individual incoming signals; esp. a device which receives data packets and forwards them to the appropriate computer network or part of a network.
A “gateway” is defined in the OED as follows:
Computing. A device or interface which connects two or more separate computer systems, networks, or programs, and which typically provides services such as routing data, handling user access, and enabling communication between networks which use different protocols. Id.
These definitions are in line with the definitions you provided as well as online results, which, in essence, state that routers and gateways are both used to regulate network traffic between two or more separate networks, however, gateways regulate traffic between two dissimilar networks, while routers regulate traffic between similar networks.
Although a gateway and a router are different devices, they perform very similar functions in that they are both used to regulate network traffic either within a particular network or between two or more separate networks. A router, switch, and hub are in essence all forms of gateways. They allow data to move within a network or between networks. The commodity known as a gateway is used when the data needs to be converted from one type of network to another. After the conversion takes, place the gateway device still acts to route that converted data to the next point. A gateway will “usually” perform the function of or take the place of a router.
As such, the issue at hand is whether the scope of subheading 8517.62.0020 covers only the commodities known as “switches” and “routers”, or all apparatus that is used to switch and/or route data. A plain reading of the terms of the subheading would favor the latter interpretation, as it does not name a specific device, such as in the case of subheading 8517.62.0010, “modems”. Rather, subheading 8517.62.0020 provides for “switching and routing apparatus”, i.e., apparatus that have the ability to switch or route voice, images, or other data (compare this if the subheading read “switches and routers”).
In order to utilize the TG3482 Gateway, the user must establish an internet account and telephone service via their cable company using standard Data over Cable Service Interface Specification (DOCSIS) technology. Once activated, the TG3482 provides wireless 802.11a/b/g/n/ac connectivity, wired Ethernet connectivity, up to two lines of telephone service, integrated MoCA 2.0 home networking, Li-ion battery backup, a USB host port and one gigabyte of memory making capable of storing videos, images and data. Although not a router, the TG3482 Gateway is routing apparatus based on its functionality.
With regard to NY Ruling Letter N051464, dated February 10, 2009, cited by you in your request, we note that one of the products classified therein was a Wi-Fi access point (WAP), utilized in a wide-area network (WAN), which functions similarly to a hub. Considering the facts of that ruling, the goods at issue are not substantially similar to those presently before us.
HOLDING:
Based on the forgoing, by application of GIRs 1 and 6, the TG3482 Gateway is classified under heading 8517, more specifically under subheading 8517.62.0020, HTSUSA, which provides for “Telephone sets…; other apparatus for the transmission or reception of voice, images or other data…: Other apparatus for transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network): Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus: Switching and routing apparatus”. The 2019 column one, general rate of duty for merchandise of this subheading is free.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the internet at www.usitc.gov/tata/hts/.
Effective July 6, 2018, the Office of the United States Trade Representative (USTR) imposed an additional tariff on certain products of China classified in the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(b), HTSUS. The USTR imposed additional tariffs, effective August 23, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(d), HTSUS. Subsequently, the USTR imposed further tariffs, effective September 24, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(f) and U.S. Note 20(g), HTSUS. For additional information, please see the relevant Federal Register notices dated June 20, 2018 (83 F.R. 28710), August 16, 2018 (83 F.R. 40823), and September 21, 2018 (83 F.R. 47974). Products of China that are provided for in subheading 9903.88.01, 9903.88.02, 9903.88.03, or 9903.88.04 and classified in one of the subheadings enumerated in U.S. Note 20(b), U.S. Note 20(d), U.S. Note 20(f) or U.S. Note 20(g) to subchapter III shall continue to be subject to antidumping, countervailing, or other duties, fees and charges that apply to such products, as well as to those imposed by the aforementioned Chapter 99 subheadings.
Products of China classified under subheading 8517.62.00, HTSUS, unless specifically excluded, are subject to the additional 10 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.04, in addition to subheading 8517.62.0020, HTSUS, listed above.
The tariff is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Notice cited above and the applicable Chapter 99 subheading.
Sincerely,
Gregory Connor, Chief
Electronics, Machinery, Automotive, and
International Nomenclature Branch