HQ 0083611 - Line Drives and Datasets - United States International Trade Commision Rulings

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HQ 083611

May 11, 1990

CLA-2 CO:R:C:G 083611 AJS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8471; 8517

Mr. Preston T. Scott
Fenwick, Davis & West
1920 N Street, N.W.
Suite 650
Washington, D.C. 20036

RE: Line Drives and Datasets

Dear Mr. Scott:

Your letter of February 3, 1989, requesting a tariff classification under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA), has been referred to this office for reply.

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 drive 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 drive over in-house customer-owned twisted pair cables.

Model M420MP is a synchronous (i.e., data transmission in a continuous stream) line drive 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 the line drives and datasets in question 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:

Classification of merchandise under the HTSUSA is governed by the General Rules of Interpretation (GRI's). GRI 1 provides
that classification is determined first in accordance with the terms of the headings of the tariff and any relative section or chapter notes.

Heading 8471 provides for ADP machines and units thereof. An ADP machine may be in the form of a system consisting of a variable number of separately housed units. Chapter 84, Note 5(B). In order to be a unit of an ADP system, an article must be connectable to the central processing unit (CPU) and specifically designed as part of an ADP system. The line drives and datasets in question do not satisfy this description. They are designed to amplify and transmit digital signals over a line. This function does not necessarily involve data processing within the meaning of heading 8471.

You claim that the articles in question are units of an ADP system and therefore classifiable as a part or accessory of an ADP machine. Note 5(B) defines a unit of an ADP system (e.g., input, output, or storage units) which are classifiable within heading 8471. Parts and accessories of ADP machines are classifiable within heading 8473. This heading does not mention and is not related to the description of a unit of an ADP system in Note 5(B). Therefore, a comparison of the terms "parts and accessories" of an ADP machine and "units" of an ADP system is not possible under the HTSUSA.

Heading 8517, HTSUSA, provides for electrical apparatus for line telephony or line telegraphy. EN 85.17 states that electrical apparatus of this heading encompass "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 fibres, combination cable, etc.) circuit connecting the transmitting station to the receiving station. Furthermore, this heading covers all such electrical apparatus designed for this purpose, including the special apparatus used for carrier-current line systems. EN 85.17. The articles in question solely involve data transmission between two points by variation of a signal.

The submitted literature states that line drives and datasets are specifically designed for short-haul data transmission, which may be over telephone company private line metallic circuits. In addition, line drives and data sets are compared to and even called modems in some instances. This literature leads to the conclusion that line drives and data sets are basically substitutes for the more expensive and complex modems used during short-haul data transmission. This information supplied by your client supports the classification of line drives and datasets within heading 8517 along with modems, and not within heading 8471 as ADP machines or units thereof.

You argue that the articles in question do not satisfy the description of articles classifiable within heading 8517. Your conclusion is based on the assertion that line drives and datasets do not vary a current or wave when transmitting a signal. Instead, you state that they amplify a signal so that it can be transmitted from a computer to a terminal. Both Customs and the Customs Court have previously stated that a device which amplifies a signal does vary that signal, and such a device is classifiable within the provision for electrical telegraph and telephone apparatus.

Customs has previously stated that telecommunications equipment, both in a common and commercial sense, encompasses the transfer of sound, written information, video information, and data, as well as combinations thereof. (HQ 554295, January 15, 1987). This ruling also stated that there has been "a continuing recognition by Congress that, regardless of distance (i.e., "long-haul" or "local area") or type of signal (i.e., analog or digital), all transmission of information via an electromagnetic signal is, for tariff purposes, within the telephone and telegraph category . . . " Id p. 7. Transmission equipment involves the forwarding of electromagnetic signals over wire or cable. Id p.5. Examples of this equipment "include amplifiers, repeaters . . ." Id. Line drives and datasets transmit data in the manner described above and fall within the realm of tele- communications equipment.

The Customs Court, the forerunner of the Court of International Trade, has held that the amplification of a voice signal for transmission from one point to another by means of a wire is a function classifiable within the provision for electrical telegraph and telephone apparatus. Fanon Electronic Industries, Inc. v. United States (Fanon), 65 Cust. Ct. 542, 544, (1970). This provision is the predecessor of heading 8517. In Fanon, the court specifically rejected the argument that an article which amplifies a signal cannot be classified as telephonic apparatus. Id at 544. Furthermore, the Court also rejected the assertion that the limited transmission of a signal of only 150 feet removed the article from classification as telephonic apparatus. Id at 545. If the amplification and transmission of a voice signal over a wire is a function of telephonic apparatus, certainly the amplification and transmission of a digital signal over a line is a function of telegraphic apparatus. In addition, the Court stated that the intent of Congress in enacting the provision for electrical telegraph and telephone apparatus was to encompass all communications equipment by wire within that provision. Id at 546. The articles in question involve communication by wire and Congressional intent requires their classification within the heading for electrical telegraph and telephone apparatus.

These decisions are not binding on Customs, but Congress has indicated that earlier decisions under the TSUS must not be disregarded in applying the HTSUSA. The conference report to the Omnibus Trade Bill of 1988, states that "on a case by case basis prior decisions should be considered instructive in interpreting the HTS[USA], particularly where the nomenclature previously interpreted in those decisions remains unchanged and no dissimilar interpretation is required by the text of the HTS[USA]." (emphasis added) H. Rep. No. 100-576, 100th Cong., 2D Sess. 548 (1988) at 550, reprinted in 1988 U.S. CODE CONG. & ADMIN. NEWS 1581-83. We consider the previously discussed ruling and case most instructive in resolving the classification of the articles in question.

You claim that our reliance upon Fanon and HQ 554295 would lead to an artificial classification rationalized under an antiquated tariff schedule which is neither designed nor intended for present day application. The HTSUSA was adopted in 1988 as part of the 1988 Omnibus Trade Bill and can certainly not be considered antiquated. The text of heading 8517 is substantially the same as the TSUS text dealt with in Fanon. Furthermore, the statement from HQ 554295 that "all transmission of information via an electromagnetic signal is, for tariff purposes, within the telephone and telegraph category" is basically restated within EN 85.17 by the use of the phrase "this heading [8517] covers all such electrical apparatus designed for this purpose [line telephony or line telegraphy]." Thus, the classification of line drives within heading 8517 is not an artificial classification rationalized under an antiquated tariff schedule but a classification based on long held principles restated in a recently adopted tariff schedule.

Subheading 8517.82.00, HTSUSA, provides for telegraphic apparatus. EN 85.17(II) describes telegraphic apparatus as devices "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." Telegraphic apparatus therefore involve conversion, transmission, reception and then conversion again of signals representing converted non-voice type information (e.g., text and data). Line drives and datasets amplify and transmit such a signal from a computer to a terminal. This transmission function furthers communication as it is described in heading 8517, and not automatic data processing as it is described in heading 8471. Therefore, the articles in question are classifiable as telegraphic apparatus.

You claim that line drives do not modulate an electrical impulse, and therefore they are excluded from classification as telegraphic apparatus. Modulation or conversion of signals is
not necessarily required in all aspects of transmission or reception of digital signals. Certain devices may be solely involved in the transmission or reception of digital signals. Thus, the fact that the articles in question are only involved in the transmission of digital signals is enough to bring them within the scope of the telegraphic apparatus subheading. To rule otherwise would exclude all equipment which solely transmits digital signals from this heading. This result would violate the intent of Congress, as enunciated in Fanon and reaffirmed by Customs in HQ 554295 and the HTSUSA, to classify all communi- cation equipment within the heading for electrical telegraph and telephonic apparatus.

HOLDING:

The line drives and datasets in question are classifiable within subheading 8517.82.00, HTSUSA, which provides for telegraphic apparatus dutiable at the rate of 4.7 percent ad valorem.

Sincerely,

Jerry Laderberg
Acting Director
Commercial Rulings Division

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