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HQ 086105

May 7, 1990

CLA-2 CO:R:C:G 086105 AJS


TARIFF NO.:, 8471; 8517

Mr. Irving W. Smith, Jr.
George R. Tuttle Law Offices
1331 Pennsylvania Avenue, N.W.
Suite 1200F
Washington, D.C. 20004

RE: Networking Interface Boards

Dear Mr. Smith:

Your letter of December 5, 1989, requesting a tariff classification under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA), has been referred to this office for reply.


The articles in question are network interface boards (NIBs). They are designed for either physical incorporation into a personal computer (PC) or into other units of an automatic data processing (ADP) system. NIBs are connectable to other PCs and units (e.g., input units, output units, storage units and gateway equipment) over a variety of local area network (LAN) media including coaxial cables and twisted pair wire. The NIBs convert, process and format data so that several data processing machines are able to function as a single ADP system, known as a LAN. A LAN is described as a system consisting of a set of nodes (e.g., terminals, micro-computers, minicomputers, mainframes, printers, hard disks, or work stations) that are interconnected by a set of links (e.g., coaxial cable, twisted-pair wires or fiber optic cable). McGraw-Hill Encyclopedia of Electronics and Computers, (2nd ed. 1988), p. 505.

The NIBs allow PCs to off-load their interface responsibilities so that they can instead concentrate on data
processing. These interface responsibilities involve the performance of two major functions. First, the NIBs receive binary information from a PC and convert this into digital data so that it can be used at other locations within the LAN. Examples of this conversion are character format conversion and file conversion. Once converted, this data is either formatted separately or grouped into units of data known as packets. This data is then transmitted to different locations within the LAN. Once received by another NIB, the packets are converted into a form usable by the destination device. In sum, the NIBs essent- ially process, translate, convert and transmit data for use within the LAN. The NIBs also perform such additional functions as encoding/ decoding, LAN protocol implementation, temporary memory storage, control logic for access to host computer, and LAN processor local memory.

The NIBs themselves consist of various programmed chips (including microprocessors), resistors, transistors and logic devices which operate with the network transmission and protocol software.


Whether the articles in question are classifiable within heading 8471, HTSUSA, which provides for ADP machines and units thereof; or classifiable within heading 8517, HTSUSA, which provides for electrical apparatus for line telephony or line telegraphy.


Classification of merchandise under the HTSUSA is governed by the General Rules of Interpretation (GRI's). GRI 1 provides that classification is determined first in accordance with the terms of the headings of the tariff and any relative section or chapter notes.

Heading 8471 provides for ADP machines and units thereof. ADP machines are devices "which, by logically interrelated operations performed in accordance with pre-established instructions (programs), furnish data which can be used as such or, in some cases, serve in turn as data for other data processing operations." Explanatory Note (EN) 84.71(I); see also Chapter 84, Note 5(A). NIBs clearly do not satisfy this description. However, ADP machines may be in the form of a system consisting of a variable number of separately-housed units.

In order for an article to be classifiable as a separately- housed unit of an ADP system it must satisfy the following description:

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

(b) It is specifically designed as part of such a system (it must, in particular, unless it is a power supply unit be able to accept or deliver data in a form (code or signals) which can be used by the system). Chapter 84, Note 5(B).

The NIBs are connectable to the CPU of a PC as well as other units of an ADP system. In addition, they are also specifically designed to operate as part of an ADP system. However, they are not a separately-housed unit but instead a networking board suitable for physical incorporation into an ADP machine or unit thereof.

You claim that NIBs are control or adapter units. EN 84.71 I(D)(4) states that control and adapter units effect the inter- connection of the CPU to other digital data processing machines, groups of input units, or output units. This category includes channel to channel adapters used to connect two digital systems to each other. Control units are described as intermediary control devices which link peripheral units to the CPU. C.J. and R.J. Sippl, Computer Dictionary and Handbook (Computer D & H), (3rd ed. 1980), p. 115. Control units are used to interface (i.e., interact or interconnect) computers and peripheral devices. Myles E. Walsh, Understanding Computers: What Managers Need to Know, (1981), p. 36. They contain the electronics which control the operation of the peripheral devices. Id. p. 37. Adapter units which are also referred to as display adapter units, control the transmission of data, unit control information, and the sequencing and synchronizing of the various units. Computer D & H, p. 161. Channel adapters are devices which permit connections between various data channels of differing equipment. Id. p. 65. The NIBs in question do not satisfy any of these descriptions, and therefore are not classifiable as control or adapter units.

Subheading 8471.99.60, HTSUSA, provides for other units suitable for physical incorporation into ADP machines or units thereof. NIBs are units of an ADP system in that they are connectable to the CPU of an ADP system and specifically designed as part of such system. They are also physically incorporated into an ADP machine or unit thereof, and involved in furthering the data processing of these machines. Thus, NIBs are class- ifiable within subheading 8471.99.60.

NIBs are not classifiable as an accessory of an ADP machine. In order to be considered an accessory of an ADP machine, an article must be designed to be mounted on the machine. EN 84.73.

NIBs are designed to be mounted in an ADP machine or unit thereof. Accessories covered by heading 8473 are interchangeable parts or devices designed to be mounted on a machine to adapt it for a particular operation, or to perform a particular service relative to the main function of the machine, or to increase its range of operations. EN 84.73. The NIBs do not satisfy this description, and therefore they are not classifiable as an accessory to an ADP machine.

Heading 8517, HTSUSA, provides for electrical apparatus for line telephony or line telegraphy. EN 85.17 states that the electrical apparatus of this heading encompass "apparatus for the transmission between two points of speech or sound (or 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 fibers, combination cable, etc.) circuit connecting the transmission station to the receiving station."

NIBs partially involve the transmission of digital signals over lines between different PCs and other units within a LAN. However, this transmission function is a secondary function whose purpose is to further data processing within a LAN. GRI 1 requires classification to be determined according to the terms of the headings and relevant legal notes. In this instance, the NIBs are most accurately described by the terms of heading 8471 because of their processing, translation and conversion functions. They do more than transmit a signal by variation as described in the ENs to heading 8517. Instead, they aid in the performance of logically interrelated operations which furnish data (i.e., automatic data processing) that can be used as such or which serves as data for other data processing operations.

In HQ 083074 ( March __, 1990), Customs considered the classification of devices called protocol converters. These devices are similar to NIBs in that they provide translation, processing and transmission functions for the networking of different types of data processing machines. We ruled that these devices were classifiable within the ADP machine heading under the Tariff Schedules of the United States (TSUS) and not the telephone and telegraph heading. While this decision is not binding under the HTSUSA, Congress has indicated that prior TSUS decisions should be considered instructive in interpreting the HTSUSA. H. Rep. No. 100-576, 100th Cong., 2D Sess. 548 (1988) at 550. We consider this decision instructive in supporting the classification of the articles in question within heading 8471.


The network interface boards in question are classifiable within subheading 8471.99.60, HTSUSA, which provides for units suitable for physical incorporation into ADP machines or units thereof, duty free.


Jerry Laderberg
Acting Director
Commercial Rulings Division

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