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HQ 086575


March 16, 1990

CLA-2 CO:R:C:G 086575 JMH

CATEGORY: CLASSIFICATION

TARIFF NO.: 676.15, 676.30, 676.54

Mr. Daniel A. Pinkus
Assistant Chief Counsel
International Trade Litigation
Room 258
26 Federal Plaza
New York, NY 10278

RE: National Advanced Systems v. United States, Court No. 88-01- 00015; additional instruction processors

Dear Mr. Pinkus:

This is in response to your February 20, 1990, request for the classification of "additional instruction processors" (AIP) under the Tariff Schedules of the United States (TSUS). The classification of the AIPs is the subject of National Advanced Systems v. United States, Court No. 8-01-00015.

FACTS:

The article in question, the additional instruction processor, is part of the AS/XL computer mainframe system. This system is manufactured by Hitachi Ltd. of Japan and imported by National Advanced Systems. The basic AS/XL system, a uniprocessor system, is of modular design and consists of an instruction processor, a storage control unit, an input/output processor, and a multifunctional service processor. The basic system has the capability to become a multiprocessor system by the inclusion of additional instruction processors (AIPs).

The AIP is a separately housed component. It contains a buffer control and translation lookaside buffer, along with instruction, execution high-speed arithmetic, high-speed decimal arithmetic, and high-speed decimal units. The AIP translates virtual addresses to absolute addresses, prefetches instructions, provides the execution unit with instruction fields to be processed, and updates the program counter, instruction pointers and other instruction control functions. Operating concurrently, the execution unit performs the arithmetic and logical operations specified by the instruction unit.

The AIP was classified by the San Francisco district under item 676.15, TSUS, "[a]ccounting, computing, and other data- processing machines..." The importer, believing that the appropriate classification is within item 676.54, TSUS, as "[p]arts of automatic data-processing machines..." or within item 676.30, TSUS, as "[o]ffice machines not specially provided for...", filed Protest No. 28097-000581. The protest was denied. National Advanced Systems has filed suit within the Court of International Trade.

ISSUE:

Whether the AIP should be classified within item 676.15, TSUS, as "[a]ccounting, computing, and other data-processing machines...", or within item 676.54, TSUS, as"[p]arts of automatic data-processing machines and units thereof..."

LAW AND ANALYSIS:

Item 676.15, TSUS, describes "[a]ccounting, computing,and other data-processing machines..." Main frame systems such as the AS/XL normally consist of various modules--centrol processing units, storage units, controllers, power units and a console. When imported as one system, this office has determined that the predominant element is the central processing unit. See Headquarter's Ruling Letter 076092, dated June 3, 1985. The central processing unit provides the arithmetic, logic and control functions which are the core of the system. HQ 076092 determined that the processor unit provided the arithmetic functions which satisfied the "calculating mechanism" requirement of item 676.15. See Schedule 6, Part 4, Subpart G, headnote 2(b), TSUS. The system was classified as an entirety within item 676.15, TSUS, since the nature of the system was determined by the processor unit.

The importer and the literature both state that the AIP performs the same functions that the existing processor performs in the basic system. The literature discusses the dyadic, three and four processor concepts. Apparently two or more AIPs can perform concurrent executions, and if one AIP fails the system can continue operating by disconnecting the failed AIP and relying on the others. Thus, the AIP acts as both an enhancement unit and an actual processor unit.

It is the opinion of this office that the AIP is the control processing unit of the AS/XL system. The AIP performs such functions as translating addresses, executing commands, updating the program counter, control functions and the arithmetic and logic operations. Thus, the AIP performs the most basic functions of a data processing machine--control, arithmetic, and logic. Since the AIP performs these critical functions it cannot
be merely a part. The definition of a "data processing machine" is met. Therefore, the appropriate classification of the AIP is under item 676.15.

The importer argues that since an AIP cannot function on its own it cannot be a data processing machine within item 676.15, but must be a "part" within item 676.54, TSUS. This point was resolved in Headquarters Ruling Letter 554581, dated July 2, 1987 (HQ 554581). That an article "requires the attachment of another article in order to be capable of performing its function does not render [it] a 'part,' in that there is no requirement that a machine must be 'self- activating.' Nord Light, Inc., v. United States, 49 CCPA 12, C.A.D. 786 (1961)." HQ 554581, p. 14.

Item 676.54, TSUS, describes "[p]arts of automatic data- processing machines and units thereof..." Confusion has resulted from "units thereof..." As stated in HQ 554581:

If this provision were construed to cover constituent units used within automatic data processing systems (i.e., "parts and units of automatic data processing machines" or "parts of automatic data processing machines; units thereof"), the result would be an enlarging of a superior provision, item 676.50, TSUS ("Parts of the foregoing"), by an inferior provision, item 676.54, TSUS, which is precluded by General Headnote 10(c)(i), TSUS.

The Customs Service has consistently interpreted the provision to cover part of data processing machines and parts of units of data processing machines.

What the drafters intended to be covered as "parts" has never been entirely clear. During the drafting of HQ 554581, the legislative history of item 676.54 was extensively researched at all participating agencies. A definition of what was to be included within item, 676.54, as a "part" of an ADP was not discovered or implied. See HQ 554581, pp. 19-23. The legislative history does make clear that the ADPs of item 676.15 and the peripheral units of ADPs within item 676.30, TSUS, "[o]ffice machines not specifically provided for...", are not included within item 676.54. HQ 554581, p. 20, citing S. Rep. No. 98-308, 98th Cong., 2nd Sess. 50, reprinted in 1984 U.S. Code Cong. & Ad. News 4910, 4959. Furthermore, prior to the creation of item 676.54, there was no significant difference between the rate of duty for parts and that of ADPs. See Tariff Classification Study Explanatory Materials (1964), cited in HQ 554581, p. 10.

The importer raised the classification within item 676.30 in the protest, but not in the complaint. Item 676.30 covers peripheral units dedicated to performing functions external to a main processor(s) of an ADP system. Examples of peripheral units include scanners, optical readers, keyboard units, disc drives, video display units, printer units, and other similar input, output, and storage devices. A shared characteristic of some peripheral units and ADPs is that they are free standing machines or consoles. The legislative history indicates that such free standing articles classified within items 676.15 and 676.30 are precluded from classification within item 676.54.

Therefore, the best argument is that the AIP is a digital data processing unit. The AIP is the core of the AS/XL system. HQ 554581 provided the following definition:
a data processing machine is a device, or a system consisting of several devices in the form of modules or units, which is capable of accepting and storing data necessary to execute a program, with the additional capability of being freely programmed in accordance with the requirements of a user, and executing a processing program, without human intervention, which requires a logical decision that results in a certain modification of the execution during the processing run. In addition, there must be a capability to perform one or more of the four arithmetical operations (i.e., addition, subtraction, multiplication, and division), specified by a user. HQ 554581, pp. 5-6.

The AIP is a data processing unit which contains the arithmetic, logic and control functions of the AS/XL system. From the literature, it appears that as either an actual processor unit or as an enhancement unit, the AIP is the heart and soul of the AS/XL system. It is the AIP which defines the parameters within which the AS/XL system operates. Therefore, the AIP is an "...other data processing machines..." classified under item 676.15, TSUS.

Alternatively, the AIP is classifiable as "[o]ffice machines not specially provided for..." under item 676.30, since the AIP is free standing and not a part of an ADP. Classifying the AIP within item 676.30 would not be seriously detrimental to the classification system.

However, this office is emphatic that the AIP is not a part of an ADP within item 676.54.

We agree with your conclusion that the AIP is not an unfinished data processing machine, in view of that fact that this unit is a finished, complete data processing unit.

HOLDING:

The Additional Instruction Processor is a digital data processing unit that performs the control functions of an ADP system. The AIP is properly classified under item 676.15, TSUS, as a "...other data processing machine..." Classification within this item occurs because of the functions the AIP performs and the crucial nature of these functions to the AS/XL system, and not because the AIP is an unfinished data processing machine.

Alternatively, the AIP is classifiable as "[o]ffice machines not specially provided for..." under item 676.30, since the AIP is a free standing unit and is not a part of an ADP. Classifying the AIP within item 676.30 would not be seriously detrimental to the classification system.

The AIP is not a part of an ADP within item 676.54.

Sincerely,

John Durant, Director
Commercial Rulings Division

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