HQ 0950869 - Protest No. 0901-9X-XXXXXX; IBM Token Ring Adapter Cards; TRACs; Local Area Networking; ADP Machine; Control And Adapter Unit; HQ 951331; HQ 952659 - United States International Trade Commision Rulings

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HQ 950869

October 15, 1992

CLA-2 CO:R:C:M 950869 MBR

CATEGORY: CLASSIFICATION

TARIFF NO.: 8471.99.15

District Director
U.S. Customs Service
111 West Huron St.
Buffalo, New York 14202

RE: Protest No. 0901-9X-XXXXXX; IBM Token Ring Adapter Cards; TRACs; Local Area Networking; ADP Machine; Control And Adapter Unit; HQ 951331; HQ 952659

Dear Sir:

This is in response to the request for further review of Protest No. 0901-9X-XXXXXX, dated August 22, 1991, regarding the classification of IBM Token Ring Adapter Cards ("TRACs"), under the Harmonized Tariff Schedule of the United States (HTSUS).

We have recently reconsidered the classification of Local Area Network (LAN) equipment in general, and Network Interface Boards in particular. See HQ 951331, dated September 18, 1992, as modified by HQ 952659, dated October 7, 1992.

FACTS:

IBM Token Ring Adapter Cards ("TRACs) are printed circuit boards or cards with components mounted thereon. The mounted components consist of microprocessors, integrated circuit ("I/C") memory (random access memory, or "RAM," read-only memory, or "ROM," read-only storage or "ROS") and other active circuit components. TRACs are designed for physical incorporation and installation within IBM automatic data processing ("ADP") machines and units, such as IBM personal computers ("PCs"), communications controllers, and cluster controllers.

ISSUE:

Whether the IBM Token Ring Adapter Cards ("TRACs") are classifiable under headings 8471 and 8473, HTSUS, which provide for automatic data processing machines and parts thereof, or under heading 8517, HTSUS, which provides for "[e]lectrical apparatus for line telephony or telegraphy"?

LAW AND ANALYSIS:

Since the HTSUS came into effect there has been a great deal of controversy regarding the classification of LAN boards. However, there is no clear classification guidance from either the HTSUS or the Harmonized Commodity Description and Coding System Explanatory Notes (ENs), primarily due to the technological advancements in this area.

However, Legal Note 5(B) to chapter 84, HTSUS, provides guidance regarding units of automatic data processing machines. It states:

Automatic data processing machines may be in the form of systems consisting of a variable number of separately housed units. A unit is to be regarded as being a part of the complete system if it meets all of the following conditions:

(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 (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).

We agree that the TRACs are essential to the ADP systems with which they are integrated because they process and format the data of the computers they serve.

The Harmonized Commodity Description and Coding System Explanatory Notes (ENs), pages 1299-1300, describe separately presented ADP units as follows:

This heading also covers separately presented constituent units of data processing systems. Constituent units are those defined in Parts (A) and (B) above as being parts of a complete system.

Apart from central processing units and input and output units, examples of such units include:

(4) Control and adaptor units such as those to 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.

After extensive research and analysis, it is now our opinion that the principal function of the TRAC is, in fact, to effectuate the interconnection of the CPU unit to other units or ADP machines, thereby serving "control" and "adaption" functions, as described by
the ENs. Therefore, the TRACs are properly classifiable in subheading 8471.99.15, HTSUS, which provides for "Control or adapter units."

HOLDING:

The IBM Token Ring Adapter Cards ("TRACs"), are 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." The rate of duty is Free.

The protest should be allowed in full. A copy of this decision should be attached to the Customs Form 19 and provided to the protestant as part of the notice of action on the protest.

Sincerely,

John Durant, Director

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