HQ 951443 - Component Parts for Laptop Computers; Motherboard; BIOS ROM; CPU; GRI 2(a); Note 5(A)(a), Chapter 84; HQ 950762; HQ 950221; Essential Character; Explanatory Notes (V) and (VIII), GRI 2(a); Unassembled Digital Processing Unit - United States International Trade Commision Rulings

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HQ 951443

April 13, 1992

CLA-2 CO:R:C:M 951443 DWS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8471.20.00

District Director
U.S. Customs Service
Room 2017
300 South Ferry Street
Terminal Island
San Pedro, CA 90731

RE: Component Parts for Laptop Computers; Motherboard; BIOS ROM; CPU; GRI 2(a); Note 5(A)(a), Chapter 84; HQ 950762; HQ 950221; Essential Character; Explanatory Notes (V) and (VIII), GRI 2(a); Unassembled Digital Processing Unit

Dear Sir:

This is our response to electronic Customs Form 6431, dated March 20, 1992, relating to an entry of component parts for a lap-top computer, imported by Texas Instruments, Inc. The matter was referred to this office for response by the National Import Specialist.

FACTS:

The subject merchandise consists of various component parts for lap-top computers. According to counsel for the importer, one lap-top computer contains 414 parts, of which 142 are imported. Among the 142 parts imported are the motherboard, the CPU (central processing unit) chip, ROMs (read only memory), the cabinet, the power supply, the display screen, the keyboard, the display controller, and SRAM chips (static random access memory). Among the remaining 272 parts added in the United States are the BIOS ROM (basic input output system read only memory) chip, the hard disk drive, the video memory components, and TTL (transistor logic) ICs (integrated circuit).

It should be noted that the BIOS ROM chip is mounted on a separate board. That board is then mated to the motherboard after the motherboard's importation into the United States.

It appears that the Los Angeles port, based upon information it was given, believed that the parts were divided into kits, such that 51 kits of imported parts can build 51 laptop computers. Only after meetings between counsel for the importer and the National Import Specialist was it learned that the imported components are shipped for inventory purposes. When the imported parts are received, they "are removed from any groupings in which they may have been shipped and placed in inventory by part number along with other like numbered parts."

ISSUE:

Whether, for classification purposes, the subject shipment of parts has the essential character of a finished digital processing unit?

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 is determined according to the terms of the headings and any relative section or chapter notes.

It is claimed that the subject shipment of component parts has the essential character of a digital processing unit, and, therefore, is classifiable under subheading 8471.20.00, Harmonized Tariff Schedule of the United States (HTSUS), which provides for: "[d]igital automatic data processing machines, containing in the same housing at least a central processing unit and an input and output unit, whether or not combined."

The definitions for "motherboard" and "BIOS ROM" can be found in The Computer Glossary, Fourth Edition. The term "motherboard" is defined as:
the main printed circuit board in an electronic device which contains sockets that accept additional printed circuit boards. In a personal computer, the motherboard contains the bus, the microprocessor and all the chips used for controlling the peripherals that are considered standard with the system, such as the keyboard, text and graphics display, serial and parallel ports and joystick and mouse interfaces.

The term "BIOS ROM" is defined as:
the part of an operating system that contains the machine instructions necessary to activate the peripheral devices. The ROM indicates that it is permanently stored in a read only memory chip.

By definition, then, the motherboard contains all the devices necessary for controlling the peripherals with the system. The BIOS ROM is responsible for activating the peripheral devices. Therefore, the BIOS ROM is essential to the operation of the motherboard.

Note 5(A)(a), chapter 84, HTSUS, states that:

(A) For purposes of heading 8471, the expression "automatic data processing machines" means:

(a) Digital 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.

In HQ 950672, dated February 20, 1992, a CPU motherboard with an 80286 microprocessor, two 64k EPROMS, and a direct memory access controller was classified as a finished digital processing unit under heading 8471, HTSUS. In the ruling, it was stated that "[t]he subject CPU board satisfies this description [note 5(A)(a), chapter 84, HTSUS] of an ADP machine. The 80286 microprocessor and EPROMS enable the board to perform these functions."

Unlike the motherboard in HQ 950672, the subject motherboard does not contain the BIOS ROM chip. Therefore it cannot perform the functions described in note 5(A)(a), chapter 84, HTSUS. The lack of the BIOS ROM chip prevents the motherboard from performing input/output functions with the keyboard. Logic and control functions cannot be performed. Also, the processing program cannot be executed without human intervention.

GRI 2(a) provides that:

[a]ny reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule) entered unassembled or disassembled.

In HQ 950221, dated November 22, 1991, it was ruled that a motherboard, imported without a CPU unit, did not have the essential character of a finished ADP processing unit. Because the subject motherboard does not contain the BIOS ROM chip, essential to its operation, it does not impart the essential character of a finished digital processing unit under GRI 2(a).

Therefore, under GRI 2(a), the subject component parts do not impart the essential character of a digital processing unit. The BIOS ROM, essential to the operation of the motherboard and the computer, is not included with the motherboard, precluding the motherboard from classification as a finished digital processing unit.

Even if we ruled that the component parts impart the essential character of finished digital processing units, they still would be precluded from classification under subheading 8471.20.00, HTSUS, because they are not "unassembled" digital processing units as described in GRI 2(a).

In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes may be utilized. The Explanatory Notes, although not dispositive, are to be used to determine the proper interpretation of the HTSUS. 54 Fed. Reg. 35127, 35128 (August 23, 1989). Explanatory Notes (V) and (VII), GRI 2(a) (p. 2), HTSUS, states that:

(V) The second part of Rule 2(a) provides that complete or finished articles presented unassembled or disassembled are to be classified in the same heading as the assembled article. When goods are so presented, it is usually for reasons such as requirements or convenience of packing, handling or transport.

(VII) For the purposes of this Rule, "articles presented unassembled or disassembled" means articles the components of which are to be assembled either by means of simple fixing devices (screws, nuts, bolts, etc.) or by riveting or welding, for example, provided only simple assembly operations are involved.

First, the subject component parts, as noted, were not shipped unassembled for convenience of packing, handling, or transport, but as inventory for a manufacturing operation. Second, the creation of the computers in the United States is not a simple assembly operation. Complex operations are performed in the United States after importation, such as surface-mount processing, wave soldering, baking of the integrated circuits, screen printing, and bar coding.

Therefore, under the Explanatory Notes to GRI 2(a), the component parts are clearly not unassembled digital processing units for classification purposes.

HOLDING:

Under GRI 2(a), the subject shipment of component parts does not impart the essential character of a finished digital processing unit. Therefore, the component parts are not classifiable under subheading 8471.20.00, HTSUS. Each part is classifiable in its respective eo nomine heading.

Sincerely,

John Durant, Director
Commercial Rulings Division

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