HQ 0087468 - Reconsideration of HQ 083611, dated May 11, 1990, Regarding Line Drivers and Datasets; Electrical Apparatus for Line Telephony or Telegraphy; Automatic Data Processing - United States International Trade Commision Rulings

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HQ 087468

January 8, 1991

CLA-2 CO:R:C:G 087468 MBR

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: 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
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.

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)
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
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
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.

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

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