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HQ 958720




March 28, 1996

CLA-2 RR:TC:MM 958720 RFA

CATEGORY: CLASSIFICATION

TARIFF NO.: 8517.90.44

Port Director
U.S. Customs Service
Los Angeles Airport Area
300 S. Ferry Street
Terminal Island, CA 90731

RE: Protest 2720-95-101202; Modem Board Missing Firmware; Unfinished or Incomplete; Parts; Heading 8517; GRI 2(a)

Dear Port Director:

The following is our decision regarding Protest 2720-95-101202, which concerns the classification of unfinished modem boards under the Harmonized Tariff Schedule of the United States (HTSUS).

FACTS:

The subject merchandise are semi-finished printed circuit board assembly modem cards, part numbers 1442FQ, 1442FT, and 1442VFT. As imported, the modem boards have the following components: a telephone/modem interface; logic/memory interface chips for the computer; transformers; 2 crystals for the controllers; and relays. After importation, the controller, modem data pump, and EPROM chip will be added to the modem board. The controller controls the modulation and demodulation of a signal. The modem data pump contains the algorithms which allow the modem to connect to the telephone line. The EPROM chip maintains preprogrammed information.

The merchandise was entered under subheading 8517.40.10, HTSUS, as unfinished modem boards. The entries were liquidated on September 15 and 22, October 6 and 20, 1995, under subheading 8517.90.26, HTSUS, as other parts of telegraphic apparatus. The protest was timely filed on October 20, 1995.

The subheadings under consideration are as follows:

8517: Electrical apparatus for line telephony or telegraphy, including such apparatus for carrier-current line systems; parts thereof:

8517.40.10: Other apparatus, for carrier-current line systems: [m]odems, of a kind used with data processing machines of heading 8471. . . .

Goods classifiable under this provision have a general, column one rate of duty of 4.2 percent ad valorem.

8517.90: Parts:

8517.90.26: Other parts, incorporating printed circuit assemblies: Parts for articles of subheadings 8517.20, 8517.30,
8517.40.50 and 8517.81: For telegraphic switching apparatus. . . .

Goods classifiable under this provision have a general, column one rate of duty of 4.7 percent ad valorem.

8517.90.38: Other: Printed circuit assemblies: For telephonic apparatus: Other. . . .

Goods classifiable under this provision have a general, column one rate of duty of 8.5 percent ad valorem.

8517.90.44: Other: Printed circuit assemblies: For telegraphic apparatus. . . .
. Goods classifiable under this provision have a general, column one rate of duty of 4.7 percent ad valorem.

ISSUE:

Whether the modem board, missing the controller, modem data pump and EPROM chip, is classifiable as an unfinished modem or as part of a modem, under the HTSUS?

LAW AND ANALYSIS:

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

Complete or finished modems are classifiable under subheading 8517.40.10, HTSUS. The protestant states that the semi-finished modem boards are classifiable as incomplete or unfinished modem boards based upon GRI 2(a), which states 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."

To be classified as an incomplete or unfinished modem, the merchandise must have the essential character of the complete or finished articles. The term "modem" is not defined in the HTSUS or in the Harmonized Commodity Description and Coding System Explanatory Notes (EN), which constitute the official interpretation of the HTSUS. See T.D. 89-80, 54 FR 35127, 35128 (August 23, 1989).

In Rico Import Co. v. United States, 16 CIT 770, 797 F. Supp. 1028 (1992), the court stated that "[i]t is well settled that tariff acts must be construed to carry out the intent of the legislature." See Nippon Kogaku (USA), Inc. v. United States, 69 CCPA 89, 92, 673 F.2d 380, 382 (1982)(citing Sandoz Chem. Works, Inc. v. United States, 43 CCPA 152, 156, C.A.D. 623 (1956)). The first place to look to establish the intent of Congress is the language of the statute itself. Consumer Prod. Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108 (1980). The court may resolve ambiguities in the plain language of a statute by resorting to legislative history and other extrinsic sources. Sandoz Chem. Works, 43 CCPA at 156.

A tariff term that is not defined in the HTSUS or in the EN's is construed in accordance with its common and commercial meaning. Nippon Kogaku (USA) Inc. v. United States, 69 CCPA 89, 673 F.2d 380 (1982). Common and commercial meaning may be determined by consulting dictionaries, lexicons, scientific authorities and other reliable sources. C.J. Tower & Sons v. United States, 69 CCPA 128, 673 F.2d 1268 (1982). Lexicon sources defines "modem" as follows:

1. The Computer Glossary, Sixth Edition, by Alan Freedman: Modem (MOdulator-DEModulator) Device that adapts a terminal or computer to a telephone line. It converts the computer's digital pulses into audio frequencies and converts them back into pulses at the receiving side.

2. New Grolier Encyclopedia Electronic Publishing, Inc., 1994: A modem is a device that converts one form of communication signal into another. It is used as a link between devices that use different forms of signals, such as computers and telephones. The word modem derives from this use. That is, conversion from the digital signals . . . of computers to the analog signals . . . of telephones is called modulation, while the reverse process is called demodulation. Modems can also carry out various control functions for coordinating the transmitted data.

Digital data from a computer, in the form of a sequence of bits, is fed to a modem. The modem converts the bits into an analog signal that preserves the distinction between the low and high bits; for example, the bits may be converted into two frequencies such as 1,200 Hz and 2,200 Hz. At the receiving end, another modem detects the two frequencies and produces a digital signal that is identical to the original digital signal. In this way, data can be transmitted at the rate of up to 9,600 bits per second over ordinary telephone lines, and at even higher rates over "shielded" lines.

We find that the semifinished boards do not have the essential character of a finished modem board because in its condition as imported, it lacks the ability to modulate and demodulate a signal, and it does not have the capability of being able to connect to the telephone line. Therefore, the semifinished boards are not classifiable under subheading 8517.40.10, HTSUS, as unfinished modems based upon the application of GRI 2(a). We find that the semifinished printed circuit board assemblies are classifiable as parts for the use of sending and receiving telegraphic signals. The subject modem cards are properly classifiable under subheading 8517.90.44, HTSUS, which provides for printed circuit assembly parts for telegraphic apparatus.

HOLDING:

The semi-finished printed circuit board assembly modem cards, part numbers 1442FQ, 1442FT, and 1442VFT, are classifiable under subheading 8517.90.44, HTSUS, which provides for: "[e]lectrical apparatus for line telephony or telegraphy, including such apparatus for carrier-current line systems; parts thereof: [p]arts: [o]ther: [p]rinted circuit assemblies: [f]or telegraphic apparatus. . . ." Goods classifiable under this provision have a general, column one rate of duty of 4.7 percent ad valorem.

Because reclassification of the merchandise as indicated above is the same as the liquidated rate of duty, you should DENY the protest. 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, Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director
Tariff Classification Appeals

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