HQ 0951570 - Internal Advice 71/91; Retix Remote Bridge; Local Bridge; Board Level Products; Wide Area Networking; WAN; Local Area Networking; LAN; ADP Machine; Control And Adapter Unit; HQ 951331; HQ 952659 - United States International Trade Commision Rulings

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HQ 951570

October 16, 1992

CLA-2 CO:R:C:M 951570 MBR

CATEGORY: CLASSIFICATION

TARIFF NO.: 8471.99.15

District Director
U.S. Customs Service
880 Front St., Rm 5-S-9
San Diego, CA 92188

RE: Internal Advice 71/91; Retix Remote Bridge; Local Bridge; Board Level Products; Wide Area Networking; WAN; Local Area Networking; LAN; ADP Machine; Control And Adapter Unit; HQ 951331; HQ 952659

Dear Sir:

This is in response to your request for Internal Advice 71/91, dated November 19, 1991, regarding the classification of the Retix Remote Bridge, the Local Bridge, and the Board Level automatic data processing machine networking products, under the Harmonized Tariff Schedule of the United States (HTSUS).

We have recently reconsidered the classification of Local Area Network (LAN) equipment. See HQ 951331, dated September 18, 1992, as modified by HQ 952659, dated October 7, 1992.

FACTS:

The Retix Remote/Local Bridges ("Bridges") are stand alone units. They are fairly standard local area networking (LAN) and wide area networking (WAN) merchandise. They process data to a generic level in order to network the data and transfer it to other ADP machines. The Bridges manage data with respect to origin, priority, and user ID. At the time of importation the bridges do not contain EPROMs, cabinet, or power supply.

The "Board Level Products" ("Boards") are designed for physical incorporation into ADP machines. They operate in a similar manner to the Bridges and are analogous to network interface boards ("NIBS").

ISSUE:

Whether the Retix Remote/Local Bridges and network interface boards are classifiable under headings 8471 and 8473, HTSUS, which
provide for automatic data processing machines and parts thereof, or under heading 8517, HTSUS, which provides for "[e]lectrical apparatus for line telephony or telegraphy"?

LAW AND ANALYSIS:

Since the HTSUS came into effect there has been a great deal of controversy regarding the classification of LAN boards. However, there is no clear classification guidance from either the HTSUS or the Harmonized Commodity Description and Coding System Explanatory Notes (ENs), primarily due to the technological advancements in this area.

However, Legal Note 5(B) to chapter 84, HTSUS, provides guidance regarding units of automatic data processing machines. It states:

Automatic data processing machines may be in the form of systems consisting of a variable number of separately housed units. A unit is to be regarded as being a part of the complete system if it meets all of the following conditions:

(a) It is connectable to the central processing unit either directly or through one or more other units; and

(b) It is specifically designed as part of such a system (it must, in particular, unless it is a power supply unit, be able to accept or deliver data in a form (code or signals) which can be used by the system).

We agree that the LAN and WAN Bridges and Boards are essential to the ADP systems with which they are integrated because they process and format the data of the computers they serve.

The Harmonized Commodity Description and Coding System Explanatory Notes (ENs), pages 1299-1300, describe separately presented ADP units as follows:

This heading also covers separately presented constituent units of data processing systems. Constituent units are those defined in Parts (A) and (B) above as being parts of a complete system.

Apart from central processing units and input and output units, examples of such units include:

(4) Control and adaptor units such as those to effect interconnection of the central processing unit to other digital data processing machines, or to groups of input or output units which may comprise visual display units, remote terminals, etc.

After extensive research and analysis, it is now our opinion that the principal function of the LAN and WAN Bridges and Boards is, in fact, to effectuate the interconnection of the CPU unit to other units or ADP machines, thereby serving "control" and "adaption" functions, as described by the ENs. Therefore, the instant Bridges and Boards are properly classifiable in subheading 8471.99.15, HTSUS, which provides for "Control or adapter units."

Furthermore, in their condition at importation, without EPROMs, cabinet, and power supply, pursuant to GRI 2(a), the Retix Bridges and Boards are determined to have the essential character of the finished articles.

HOLDING:

The Retix Remote/Local LAN and WAN Brides and Boards, are classifiable in subheading 8471.99.15, HTSUS, which provides for: "[a]utomatic data processing machines and units thereof: [o]ther: [o]ther: [c]ontrol or adapter units." The rate of duty is Free.

Sincerely,

John Durant, Director

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