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HQ 963252




July 23, 2001

CLA-2 RR:CR:GC 963252 RFA

CATEGORY: CLASSIFICATION

TARIFF NO.: 8517.50.90

Roland L. Shrull, Esq.
Middleton & Shrull
44 Mall Road, Suite 208
Burlington, MA 01803

RE: Shiva AccessPort; Routers; Network Equipment; Principal Use; Chapter 84, Legal Note 5(B) to Chapter 84; Headings 8471 and 8517; EN 85.17; HQ 961364, revoked

Dear Mr. Shrull:

This is in reference to Protest No. 0401-1997-100506, which you filed on behalf of Shiva Corporation. On June 30, 1998, Customs issued HQ 961364, classifying the Shiva AccessPort as automatic data processing (ADP) control and adapter units under heading 8471 of the Harmonized Tariff Schedule of the United States (HTSUS). In the course of examining similar merchandise, we now believe that the classification of the Shiva AccessPort set forth in that ruling is incorrect. This revocation will have no effect on the protest determination.

Pursuant to section 625(c), Tariff Act of 1930 (19 U.S.C. 1625(c)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act, Pub. L. 103-182, 107 Stat. 2057, 2186 (1993), notice was published on December 8, 1999, in the Customs Bulletin, Volume 33, Number 49, proposing to revoke HQ 961364. Five comments were received in response to this notice, but only one comment specifically addresses this ruling.

FACTS:

The merchandise consists of the Shiva AccessPort, which is a standalone router geared to telecommuters and small branch office users
requiring remote access to Internet service providers and large corporate local area networks (LANs). Through the use of this equipment over a telephone line, branch office employees may send and receive electronic mail, download critical documents, and reference product and order information. The AccessPort’s hardware specifications consist of the following: one 10BaseT Ethernet Interface, one RS232 Admin Port, two analog telephone sockets, one integrated services digital network (ISDN) basic rate interface (BRI), front panel light emitting diodes (LEDs) for status review, external power supply, and Ethernet and ISDN cables. It allows for aggregation of two ISDN Bchannels using multilink pointtopoint protocol (PPP) for 128 kbps throughput, and supports voice, facsimile, and data communication.

To keep connection time at a minimum, the router utilizes routing technology referred to as “spoofing”, which distinguishes when one LAN system is communicating with another over the telephone line and disconnects the telephone line when no such communication occurs. The AccessPort can provide up to 16 Internet protocol (IP) addresses, subnet mask, gateway address, domain name, and primary and secondary addresses, simplifying set up of small offices. The AccessPort coordinates with ADP machines utilizing Windows installed Wizard and Shiva Monitor graphics software. The AccessPort also contains the mass deployment tool (MDT), which allows network managers to control the configuration of a large number of AccessPorts centrally. A Windows graphics interface allows AccessPort configurations to be saved in ASCII format and provides tools allowing transfer of configurations and firmware upgrades to and from AccessPorts.

ISSUE:

Whether the Shiva AccessPort is classifiable under subheading 8471.80.10, HTSUS, as an ADP control or adapter unit, or under subheading 8517.50.90, HTSUS, as other telegraphic apparatus for digital line systems?

LAW AND ANALYSIS:

Classification of merchandise under the HTSUS is in accordance with the General Rules of Interpretation (GRIs). 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 Automatic data processing machines and units thereof; . . . : 8471.80 Other units of automatic data processing machines: 8471.80.10 Control or adapter units . . . .

Electrical 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 system; . . . :
8517.50 Other apparatus, for carrier-current line systems or for digital line systems: Other:
Telegraphic:
8517.50.90 Other. . . .

To be classified in heading 8471, as an ADP unit, the merchandise must meet all 3 requirements of Legal Note 5(B) to Chapter 84, HTSUS, which provides that:

Automatic data processing machines may be in the form of systems consisting of a variable 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 (codes or signals) which can be used by the system.

Often, networked equipment can meet the requirements of Legal Note 5(B)(b) and 5(B)(c) to chapter 84, for the following reasons: they are connectable to the central processing unit either directly or through one or more other units; and, they are able to accept or deliver data in a form (codes or signals) which can be used by the system. Classification determinations often turn on whether networked equipment meet the terms of Legal Note 5(B)(a) to chapter 84, HTSUS. That is, Customs must determine whether the networked equipment is of a kind solely or principally used in an ADP system.

The commenter states that routers reside in and are specifically designed for use within a LAN. Furthermore, the commenter states that routers near the periphery of a LAN perform the same functions, and in particular, the same data processing functions, as those routers located at the core of the LAN. Therefore, the commenter claims that the subject router should be classified in heading 8471. In resolving this issue, importers must provide evidence of sole or principal use. An unsupported claim, such as the one made by the commenter, that these goods are solely or principally used in an ADP system is not evidence. The courts have provided the following factors to apply, which are indicative but not conclusive, when determining the principal use of merchandise: general physical characteristics; expectation of the ultimate purchaser; channels of trade; environment of sale (accompanying accessories, manner of advertisement and display); use in the same manner as merchandise which defines the class; economic practicality of so using the import; and recognition in the trade of this use. See Lenox Collections v. United States, 19 Ct. Int’l Trade 345, 347 (1995); Kraft, Inc. v. United States, 16 Ct. Int’l Trade 483 (1992); G. Heileman Brewing Co. v. United States, 14 CIT 614 (1990). See also United States v. Carborundum Company, 63 CCPA 98, C.A.D. 1172, 536 F.2d 373 (1976), cert.denied, 429 U.S. 979 (1976). Even if an importer is able to meet the terms of Legal Note 5(B)(a), classification under Legal Note 5(E) to chapter 84 may still be applicable.

In applying the Lenox factors to the Shiva AccessPort, we note that it is designed for use in homes and small offices to provide access to public switched telephone network (PSTN) via ISDN lines for voice, fax and data transmission. It allows connection of computers, fax machines, and analog telephones on one line that has two channels (one device can use the entire bandwidth of the line or two devices can transmit simultaneously). The Shiva AccessPort has the following interfaces: one 10BaseT Ethernet Interface, one RS232 Admin Port, two analog telephone sockets, and one ISDN BRI. The expectation of the ultimate purchaser is to transmit data, fax, and voice over PSTN from a home office or small office. The use (class of merchandise) is ISDN, which is a circuit switched offering of Public Telephone Carriers designed to support integrated services. Recognition in the trade is that ISDN is based on CCITT/ITU-TSS [Consultive Committee for International Telephone and Telegraph/ International Telecommunications Union-Telecommunications Sector] standards.

The Shiva AccessPort allows connection of computers, fax machines, and analog telephones on one line for the transmission of voice, fax and data over a telephone line system. It has not been demonstrated that this apparatus is used solely or principally to interconnect units within a LAN. Based on these facts and the Lenox factors, we find that the Shiva AccessPort is not of a kind solely or principally used in an ADP system. It therefore does not meet the definition of an ADP unit as defined in Legal Note 5(B), and is precluded from classification in heading 8471, HTSUS.

Heading 8517, HTSUS, provides for electrical apparatus for line telephony or telegraphy, including telecommunication apparatus for digital line systems. The Harmonized Commodity Description and Coding System Explanatory Notes (EN) constitute the official interpretation of the HTSUS. While not legally binding nor dispositive, 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. See T.D. 89-80, 54 FR 35127, 35128 (August 23, 1989). EN 85.17, page 1472, states, in pertinent part, as follows:

[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.

(III) APPARATUS FOR CARRIERCURRENT
LINE SYSTEMS OR FOR DIGITAL LINE SYSTEMS

These systems are based on the modulation of an electrical carrier current or of a light beam by analogue or digital signals. Use is made of the carriercurrent modulation technique and pulse code modulation (PCM) or some other digital system. These systems are used for the transmission of all kinds of information (words, data, images, etc.).

These systems include all categories of multiplexers and related line equipment for metal or opticalfibre cables. “Line equipment” includes transmitters and receivers or electrooptical converters. Combined modulatorsdemodulators (modems) are also classified here.

Because the Shiva AccessPort functions as apparatus for the transmission between two points of speech or other sounds or symbols over a public or private telephone line, it is classifiable at GRI 1 in heading 8517, HTSUS, specifically under subheading 8517.50.90, HTSUS.

HOLDING:

Under the authority of GRI 1, the Shiva AccessPort is classifiable under subheading 8517.50.90, HTSUS, which provides for: “[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 system . . . : [o]ther apparatus, for carrier-current line systems or for digital line systems: [o]ther: [t]elegraphic: [o]ther....”

EFFECT ON OTHER RULINGS:

HQ 961364, dated June 30, 1998, is revoked. In accordance with 19 U.S.C. 1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.

Sincerely,

John Durant, Director
Commercial Rulings Division

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