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HQ 960012



June 16, 1997

CLA-2 RR:TC:MM 960012 DWS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8517.50.50

Mr. Herbert J. Lynch
Sullivan & Lynch
156 State Street
Boston, MA 02109-2508

RE: QuickTalk Audio Conferencing System; Chapter 84, Notes Explanatory Note 85.17; 8471

Dear Mr. Lynch:

This is in response to your letter of November 25, 1996, on behalf of Autel, Inc., concerning the classification of the QuickTalk Audio Conferencing System under the Harmonized Tariff Schedule of the United States (HTSUS). We regret the delay in our response.

FACTS:

The merchandise consists of the QuickTalk Audio Conferencing System (QuickTalk), which is a fully digital audio conferencing bridge using advanced digital signal processor technology. The QuickTalk, which connects either to the public telephone network via an Integrated Services Digital Network (ISDN) or to a Private Branch Exchange (PBX), operates automatically without requiring the assistance of a telephone operator. It can accommodate up to thirty callers simultaneously in one telephone conference or grouped together in multiple conferences, each of which may have between two to thirty participants (i.e., up to fifteen conferences may be held at the same time without one interfering with the other). The QuickTalk features personal identification numbers (PINs) for conference participants to maintain security and protect conferences from unauthorized callers. You claim that it utilizes five digital automatic central processing units programmed to perform individual and group functions.

When a caller dials a QuickTalk conference number, QuickTalk asks the caller to enter the conference access PIN. QuickTalk confirms that the correct PIN has been entered and plays a message welcoming the caller to the conference. Each time a new caller joins a conference, QuickTalk plays a brief "headcount" message to all the members of the conference, telling them how many people are now participating. The caller is joined to the conference and can start talking to other callers in the same conference. When a caller leaves a conference, QuickTalk plays another "headcount" message.

ISSUE:

Whether the QuickTalk is classifiable under heading 8471, HTSUS, as an automatic data processing machine or a unit thereof, or under subheading 8517.50.50, HTSUS, as other telephonic apparatus.

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

The HTSUS provisions under consideration are as follows:

8471: [a]utomatic data processing machines and units thereof . . .

8517.50.50: [e]lectrical apparatus for line telephony or line telegraphy, including line telephone sets with cordless handsets and telecommunication apparatus for carrier-current line systems or for digital line systems; videophones; parts thereof: [o]ther apparatus, for carrier-current line systems or for digital line systems:
[o]ther: [t]elephonic.

The general, column one rate of duty for goods classifiable under this provision is 8.5 percent ad valorem.

As you claim that the QuickTalk is either an automatic data processing (ADP) machine or a unit thereof, we must first determine whether it is described in any provision under heading 8471, HTSUS.

Chapter 84, notes 5(A)(a) and (B), HTSUS, state:

(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;

(B) Automatic data processing machines may be in the form of systems consisting of a number of separate units. Subject to paragraph (E) below, a unit is to be regarded as being a part of a complete system if it meets all the following conditions:

(a) It is of a kind solely or principally used in an automatic data processing system;

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

(c) It is able to accept or deliver data in a form (coded or signals) which can be used by the system.

The QuickTalk does not meet the terms of chapter 84, note 5(A)(a), HTSUS, as it does not appear to be freely programmable in accordance with the requirements of the user. Although it is programmed to perform specific functions, you have offered no evidence that it is freely programmable, and the provided literature demonstrates that the QuickTalk is not. Therefore, for tariff purposes, the QuickTalk is not an ADP machine.

The QuickTalk also does not meet the terms of chapter 84, note 5(B), as it is not of a kind solely or principally used in an automatic data processing system. Therefore, for tariff purposes, the QuickTalk is not an ADP unit.

Because the QuickTalk is neither an ADP machine nor an ADP unit, and because it is not described elsewhere under heading 8471, HTSUS, it is precluded from classification under heading 8471, HTSUS.

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 or legally binding, provide a commentary on the scope of each heading of the HTSUS, and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989). In part, Explanatory Note 85.17 (p. 1472) states that:

[t]he term "electrical apparatus for line telephony or line telegraphy" means apparatus for the transmission between two points of speech or other sounds
(or of symbols representing written messages, images or other data), by variation of an electric current or of an optical wave flowing in a metallic or dielectric
(copper, optical fibres, combination cable, etc.) circuit connecting the transmitting station to the receiving station.

The heading covers all such electrical apparatus designed for this purpose, including the special apparatus used for carrier-current line systems.

We find that the QuickTalk is described under heading 8517, HTSUS, as it meets the definition of "electrical apparatus for line telephony". The QuickTalk is solely designed for audio teleconferencing, doing so by connecting to a PBX or using an ISDN to connect to a public telephone network. The QuickTalk is "apparatus for the transmission between two points of speech". Therefore, as it is not more specifically described elsewhere in the HTSUS, the QuickTalk is classifiable under subheading 8517.50.50, HTSUS.

HOLDING:

The QuickTalk Audio Conferencing System is classifiable under subheading 8517.50.50, HTSUS, as other telephonic apparatus.

Sincerely,

John Durant, Director
Tariff Classification

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