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HQ 953403




March 28, 1995

CLA-2 CO:R:C:M 953403 RFA

CATEGORY: CLASSIFICATION

TARIFF NO.: 8473.30.40

District Director of Customs
555 Battery Street
P.O. Box 2450
San Francisco, CA 94126

RE: Protest No. 2809-92-101330; Modular Microprocessor Complex Board; Automatic Data Processing (ADP) machines; Chapter 84, Note 5(A)(a); 8471.91; GRI 2(a); EN 84.71; 9903.41.20; HQ 087695; HQ 950762; HQ 951566; HQ 951443; HQ 950832; HQ 089008

Dear District Director:

The following is our decision regarding the request for further review of Protest No. 2809-92-101330, which concerns the classification of modular microprocessor complex boards imported from Japan by IBM Corporation under the Harmonized Tariff Schedule of the United States (HTSUS). The subject merchandise was entered on March 12, 1991, and was liquidated on May 8, 1992. The protest was timely filed on August 5, 1992.

FACTS:

The subject merchandise is a model PN 95F4300 logic card that is designed for use with the IBM Personal System/2 model 90 and 95 XP486 system units (hereinafter referred to as "PS/2 Model 95"). This board incorporates the following components: Intel i486 SX 25 MHz microprocessor chip; socket for optional coprocessor; memory data buffers; memory controller; direct memory access controller; micro channel interface; read only memory chip (ROM) which contains stage 1 BIOS (basic input output system). Stage 1 BIOS simply checks to confirm that all the hardware within and/or connected to a PS/2 Model 95 is correctly wired and functioning. The board before us is one of several modular boards and cards within the PS/2 Model 95 which connect to the system unit main board.

The system unit main board contains the following functional circuitry: central processor unit channel circuitry; auxiliary storage device interface circuitry; input (keyboard, mouse) interface circuitry; and input/output interface circuitry. The modular microprocessor board before us lacks the following components: directly accessible central processor unit storage (random access memory or RAM); Stage 2 BIOS-the microcode which controls the basic operations of the digital processing unit; and controllers for storage and input/output functions such as for magnetic hard disk and diskette drives, keyboard input, and display and/or printer output.

The merchandise was entered under subheading 8473.30.40, HTSUS, as parts of machines of heading 8471. The port liquidated the merchandise under subheading 9903.41.20, HTSUS, as ADP machines (subheading 8471.91.00) from Japan.

The subheadings under consideration are as follows:

8471.91.00: Automatic data processing machines and units thereof. . .: [o]ther: [d]igital processing units, whether or not entered with the rest of a system. . .

Goods classifiable under this provision have a general, column one rate of duty of 3.9 percent ad valorem.

9903.41.20 Articles the product of Japan: [a]utomatic data processing machines, of the type of which the constituent units are separately housed, whether finished or unfinished . . .: [h]aving a microprocessor-based calculating mechanism . . .(provided for in subheading 8471.91) . . .

Goods classifiable under this provision have a general, column one rate of duty of 100 percent ad valorem.

8473.30.40 Parts and accessories . . . suitable for use solely or principally with machines of headings 8469 to 8472: [p]arts and accessories of the machines of heading 8471: [n]ot incorporating a cathode ray tube. . .

Goods classifiable under this provision have a general, column one, free rate of duty.

ISSUE:

Whether the subject microprocessor board is classifiable as an unfinished automatic data processing machine or as a part for an automatic data processing machine under the HTSUS?

LAW AND ANALYSIS:

Classification of merchandise under the HTSUS is in accordance with the General Rules of Interpretation (GRI's), taken in order. GRI 1 provides that classification shall be determined according to the terms of the headings and any relative section or chapter notes.

In order to qualify as an automatic data processing machine (ADP), the merchandise must meet the definition of an ADP set forth in Chapter 84, Note 5(A)(a), which provides that for the purposes of heading 8471, ADP machines mean:

[d]igital machines, capable of (1) storing the processing program or programs and at least the data immediately necessary for execution of the program; (2) being freely programmed in accordance with the requirements of the user; (3) performing arithmetical computations specified by the user; and, (4) executing, without human intervention, a processing program which requires them to modify their execution, by logical decision during the processing run.

The Harmonized Commodity Description and Coding System Explanatory Notes (EN) constitute the Customs Cooperation Council's official interpretation of the HTSUS. While not legally binding, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. EN 84.71, page 1298, states that for a digital data processing system to be complete, it must comprise a central processing unit (CPU), an input unit (i.e., keyboard) and an output unit (i.e., computer monitor).

The subject microprocessor board does not meet the definition of an ADP machine as set forth in Note 5(A) to Chapter 84 and EN 84.71 because it lacks Stage 2 BIOS which prevents the board from storing data immediately necessary for the execution of the program, as well as the instructions necessary to accept or process data.

GRI 2(a) provides that "any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article." In reference to GRI 2(a), General Note (IV) to Section XVI, page 1132, states that throughout this section "any reference to a machine or apparatus covers not only the complete machine, but also an incomplete machine (i.e., an assembly of parts so far advanced that it already has the main essential features of the complete machine)."

Based upon GRI 2(a) and General Note (IV) to Section XVI, we find that the subject microprocessor board cannot be classified under heading 8471, HTSUS, as an unfinished or incomplete ADP machine because it lacks the ability to accept, store and process data. Therefore, we find that the subject merchandise is classifiable as parts of a computer under subheading 8473.30.40, HTSUS. Classification of the subject merchandise is precluded under subheading 9903.41.20, HTSUS, because the merchandise is not classifiable under subheading 8471.91.00, HTSUS.

In HQ 087695 (March 6, 1991), we addressed the issue of essential character for incomplete or unfinished ADP machines. In that ruling, we held that an incomplete or unfinished circuit board (motherboard) without the data processing chips did not possess the essential character of an ADP machine. This line of reasoning was upheld and affirmed in other decisions. See HQ 951566 (August 12, 1992); HQ 951443 (April 13, 1992); HQ 950832 (February 11, 1992).

The port claims that HQ 950762 (February 20, 1992), is contrary to the line of reasoning stated above. In HQ 950762, we held that the CPU (central processing unit) board with the essential chip for data processing does meet the criteria of possessing the essential character of a complete or finished ADP machine. After reviewing this matter, we find that HQ 950762 is correctly decided, because it distinguishes the subject merchandise of that ruling from the line of reasoning stated above.

The port also states that HQ 089008 (July 8, 1991) is also contrary to our other rulings. In HQ 089008, we held that the Sub-System Carriers (mainframe computer boards) were substantially complete ADP machines, classifiable under item 676.15, TSUS (the predecessor to the HTSUS). In the Legislative History, House Conf. Rep. No. 100-576, page 549, Congress stated that:

[i]n light of the significant number and nature of changes in nomenclature from the TSUS to the HTS[US], decisions by the Customs Service and the courts interpreting nomenclature under the TSUS are not deemed dispositive in interpreting the HTS[US]. Nevertheless, on a case-by-case basis prior decisions should be considered instructive in interpreting the HTS[US], particularly where the nomenclature previously interpreted in those decisions remains unchanged and no dissimilar interpretation is required by the text of the HTS[US]."

The holding in HQ 089008 is not persuasive here because the tariff provision under TSUS is substantially different from the HTSUS tariff provision under consideration in the present case. Furthermore, HQ 089008 is not applicable to the subject merchandise because the merchandise in HQ 089008 dealt with components for a mainframe computer and not parts for personal computers.

HOLDING:

For the foregoing reasons, we find that the subject microprocessor boards are classifiable under subheading 8473.30.40, HTSUS, which provides for parts of ADP machines under heading 8471, HTSUS. Goods classifiable under this provision have a general, column one free rate of duty.

The protest should be GRANTED. In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision, together with the Customs Form 19, should be mailed by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, Information Act and other public access channels.

Sincerely,

John Durant, Director
Commercial Rulings Division

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