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HQ 089828

December 3, 1991

CLA-2 CO:R:C:M 089828


TARIFF NO.: 8517.30.30, 8471.99.15, 8471.99.90

Mr. William D. Outman
Baker & McKenzie
815 Connecticut Avenue, N.W.
Washington, D.C. 20006-4078

RE: IBM Model 3745 Communications Controller; Unit; ADP System; Processing; Network

Dear Mr. Outman:

This is in response to your letter of June 27, 1991, on behalf of IBM, requesting classification of the IBM Model 3745 Communications Controller, under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA).


You describe the IBM Model 3745 Communication controller ("Controller") as a separately housed ADP system control unit which operates totally within ADP environments. Several models of the Controller are available to provide specialized host-to- host, general purpose, low-end, medium and high-end ADP system on-line interface. The Controllers also provide data communications control between the following: 1) the ADP system host or main central processing unit(s), and directly attached distributed ADP token-ring subsystems and their ADP terminal devices, and such ADP terminal devices and distributed ADP subsystems which are modem attached; 2) such directly attached ADP terminal devices and directly attached distributed ADP subsystems, and one or more directly or remotely connected ADP system host processors; and 3) directly or remotely connected host processors of different ADP systems.

Each Controller contains one or two Central Control Units ("CCU"), a 4 or 8 megabyte main storage section per CCU, and a hard disk drive for storage of the IBM Advanced Communication Function/Network Control Program ("ACF/NCP"), a version of licensed software which provides operation control. Microprocessors distributed throughout the Controller provide
increased efficiency in task performance. These microprocessors run the independently operating "microcode" which controls low- level functions of scanners, channel adapters, power blocks and other components. Protocol-independent Line Interface Couplers support a wide range of data-transfer speeds. A single scanner type supports line speeds from 50 bps to 256 kbps, while channel adapters support byte, block and selector attachment.


Whether the subject communications processors are classified within heading 8517, HTSUS, as "Electrical apparatus for line telephony or telegraphy, including such apparatus for carrier- current line systems; parts thereof...", or within heading 8471, HTSUS, as "Automatic data processing machines and units thereof...."


The classification of merchandise under the HTSUS is governed by the General Rules of Interpretation (GRI's). GRI 1 states in part:
for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes...

The competing headings in the instant case are headings 8517 and 8471, HTSUS. These headings describe:

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

8517.30.30 Telephonic or telegraphic switching apparatus...Other

8471 Automatic data processing machines and units thereof...Other

8471.99.15 Other...control or adapter units...

8471.99.90 Other...Other...

Chapter 84, Legal Note 5, HTSUS, defines the term "automatic data processing machines" for the purposes of heading 8471, HTSUS. Chapter 84, Note 5(A)(a) states that "automatic data processing machines" includes:

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..."

Legal Note 5(b) further provides that ADP machines may be in the form of systems consisting of a variable number of separately housed units. A unit must meet the following requirements to be regarded as part of a complete system:

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

(b) It is specifically designed as part of such a system.

HQ 085666, dated November 8, 1989, held that certain communications controllers imported by Fujitsu America, were classifiable under subheading 8471.99.15, HTSUSA, which provides for automatic data processing machines and units thereof, other control or adapter units. You argue that the instant merchandise is similar, and therefore, should be similarly classifiable. We agree. The instant merchandise is essentially an enormous, highly diverse, front end processor. The result is that the main frame computer spends less time servicing the "teleprocessing network" and CPU resources are available for more application processing. Thus, these communications controllers have taken over certain processing functions originally performed by the CPU of an ADP system. Furthermore, the Controller meets the requirements of chapter 84, Legal Note 5(b), as a unit of an ADP system.

The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) to heading 8471, HTSUS, defines "control or adapter units" as follows:

[Units which] effect interconnection of the central processing unit to other digital data processing machines, or to groups of input or output units which may comprise visual display units, remote terminals, etc.

Therefore, the IBM Model 3745 Communications Controller is properly classifiable within subheading 8471.99.15, HTSUS, which provides for: "[a]utomatic data processing machines and units thereof...: [o]ther: [o]ther: [c]ontrol or adapter units."

The importer argues that the instant merchandise is "Data

Terminal Equipment" (DTE) which is separate and distinct from "Data Communications Equipment" (DCE). The Basics Book of Data Communications, by Codex, in reference to DTE and DCE, states the following:

Now, a data communications network can be divided into three distinct parts. The Data Terminal Equipment (DTE) is any digital device such as a terminal, printer or computer that transmits and/or receives data. We call them "digital" because they operate in binary. The Data Communications Equipment (DCE) is any other device attached to the communications line that manipulates the transmitted signal or data (you'll see why it needs to be manipulated in a second). The third part is the medium over which the signal is sent. Often, the medium used is a telephone line. The point at which these devices connect with one another is called the interface....If two digital devices want to communicate over an analog telephone line, then equipment must be added at either end to convert the digital signal to analog so it can travel the phone line, and then convert it back to digital so it can feed directly into a DTE at the receiving end. These devices that modulate and demodulate or manipulate the signal are called modems and belong to the DCE category.

However, Customs has consistently held that the most important factor to be considered, for classification purposes, is whether the merchandise is principally used for data processing or for the transmission of data between two points.


The IBM Model 3745 Communications Controller is classifiable in subheading 8471.99.15, HTSUS, which provides for: "[a]utomatic data processing machines and units thereof...: [o]ther: [o]ther: [c]ontrol or adapter units."


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