HQ 0952632 - Revocation of HQ 086615; ARCNET Adapter Boards and Hubs; Local Area Network Interface Boards; LAN; Automatic Data Processing Machine; ADP; Control or Adapter Units; HQ 952659 - United States International Trade Commision Rulings

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HQ 952632

January 15, 1993

CLA-2 CO:R:C:M 952632 MBR

CATEGORY: CLASSIFICATION

TARIFF NO.: 8471.99.15

Steven W. Baker, Esq.
Bellsey and Baker
100 California Street, Suite 670
San Francisco, CA 94111

RE: Revocation of HQ 086615; ARCNET Adapter Boards and Hubs; Local Area Network Interface Boards; LAN; Automatic Data Processing Machine; ADP; Control or Adapter Units; HQ 952659

Dear Mr. Baker:

On April 20, 1990, we issued HQ 086615 to you regarding the classification of certain ARCNET adapter boards and hubs, under the Harmonized Tariff Schedule of the United States (HTSUS).

FACTS:

"ARCNET" is a local area network developed by the Datapoint Corporation that interconnects a wide variety of personal computers and workstations via coaxial cable. Twisted wire pairs and fiber optic versions are also available. It uses the token passing access method and transmits at 2.5 megabits per second. ARCNET is a distributed star topology that interconnects up to 255 computers. Introduced in 1968, ARCNET was the first local area network technology. With adapters, ARCNET can connect to most other mainframe and minicomputer networks as well. See The Computer Glossary, Fourth Edition, Alan Freedman (1989).

The AQ-PCA 100 ARCNET (AQ-PCA 100) adapter board is designed for use with the IBM PC, XT, AT and other compatible computers.

The AQ-PSA 100 ARCNET (AQ-PSA 100) adapter board uses 16 bit path architecture to connect an ARCNET system to an IBM Micro- Channel product. This adapter board enables the user to select configuration options from a menu on the CRT.

The AQ-HUB 8, 8-port ARCNET active hub (AQ-HUB 8) supports up to eight RG-62/U coaxial ports. Each port can be connected to either a network adapter card or another active or passive hub. The AQ-HUB 8 provides electrical isolation and signal regeneration.

It enables network expansion of up to a 20,000 foot span.

The AQ-HUB 4, 4 port ARCNET passive hub links a maximum of four work systems of a network. The work systems must be within a 100 foot radius of the hub.

ISSUE:

Are ARCNET local area network adapters and hubs classifiable under subheading 8517.82.00, HTSUS, which provides for "[e]lectrical apparatus for line telephony or telegraphy...: [O]ther apparatus: [t]elegraphic," or are they classifiable under 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"?

LAW AND ANALYSIS:

Since the HTSUS came into effect there has been a great deal of controversy regarding the classification of LAN equipment in general. 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.

In HQ 952659, dated October 7, 1992, we cited Legal Note 5(B) to chapter 84, HTSUS, which 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 agreed that the LAN boards are essential to the ADP systems with which they are integrated because they process and format the data of the computers they serve.

In HQ 952659 we also cited the Harmonized Commodity Description and Coding System Explanatory Notes (ENs), pages 1299- 1300, which 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.

Regarding the Explanatory Notes, the court in Rico Import Co. v. United States, Slip Op. 92-146 (1992), stated: "The Joint Committee on the Omnibus Trade and Competitiveness Act recognized the CCC's Explanatory Notes to the Harmonized System as the CCC's official interpretation of the Harmonized System." See 23 Cust. Bull. 379, 380-81, T.D. 89-80 (1989). The Joint Committee stated that the Explanatory Notes, while drafted subsequent to the Harmonized System and not considered binding on the contracting parties, are nevertheless "useful in ascertaining the classification of merchandise under the system." Id. at 381.

It is our opinion that the principal function of the instant LAN equipment is, in fact, to effectuate interconnection of the CPU unit to other units or ADP machines, thereby serving "control" and "adaption" functions, as described by the ENs.

HOLDING:

The AQ-PCA 100 ARCNET (AQ-PCA 100) adapter board, which is designed for use with the IBM PC, XT, AT and other compatible computers, is classifiable under 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.

The AQ-PSA 100 ARCNET (AQ-PSA 100) adapter board uses 16 bit path architecture to connect an ARCNET system to an IBM Micro- Channel product. This adapter board is classifiable under 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.

The AQ-HUB 8, 8-port ARCNET active hub (AQ-HUB 8) supports up to eight RG-62/U coaxial ports. Each port can be connected to either a network adapter card or another active or passive hub. The AQ-HUB 8 is classifiable under 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.

The AQ-HUB 4, 4 port ARCNET passive hub links a maximum of four work systems of a network. The AQ-HUB 4 is classifiable under 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.

EFFECT ON OTHER RULINGS:

For the reasons stated above, HQ 086615, dated April 20, 1990, is revoked under authority of Section 177.9(d), Customs Regulations.

Sincerely,

John Durant, Director

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