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HQ 954093


July 22, 1993

CLA-2 CO:R:C:M 954093 MBR

CATEGORY: CLASSIFICATION

TARIFF NO.: 8471.99.15

Mr. Richard Kibler
Telematics International Inc.
1201 Cypress Creek Road
Ft. Lauderdale, Florida 33309

RE: Programmable Communication Processors PCP S240, S400, S4500, 5500; Packet Switching Backbone Node; X.25 Concentrator Node; Multiprotocol Network Access Node; LAN; WAN; Automatic Data Processing Machine; ADP; Control or Adapter Units; Telegraphic Switch; HQ 086035 (revoked by HQ 951331); HQ 952628

Dear Mr. Kibler:

This is in response to your letter of March 29, 1993, to the Area Director of Customs, New York Seaport, requesting classification of automatic data processing ("ADP") Programmable Communication Processors (models PCP S240, S400, S4500, 5500), under the Harmonized Tariff Schedule of the United States ("HTSUS"). Your letter was forwarded to this office for reply.

FACTS:

The Telematics Programmable Communication Processors are programmable processors utilizing Telematics, the proprietary TRAX operating system, and can be configured to function as a packet switching backbone node, an X.25 concentrator node, a multiprotocol network access node, a gateway to LAN, WAN, private and public data networks, and as a network management center. They are commonly and commercially designated as "X.25 Packet Switches."

The PCP S240 consists of a 115/230 VAC chassis, 175 watt power supply, a 68020 processor, space for up to two 4MB memory cards, and either a 40MB or 100MB fixed disk. A number of options may be added to the S240 including Line Processing Expanders, and Ethernet Line Adapters, to provide specific telecommunication type functions.

The PCP S400 consists of a 115/230 VAC chassis, a 68020 processor, space for up to two 4MB memory cards, a CPE transition
card, an Input/Output Processor, and can be configured to host up to two storage devices including a 640K microfloppy, a 40MB fixed disk and a 100MB fixed disk. A number of options may be added to the S400 including full duplex dual, quad, and octal channel input/output cards to provide specific telecommunications type functions.

The PCP S4500 consists of a 115/230 VAC chassis, up to three 68020 processors, and has space for up to four 4MB memory cards, an Address Protection Module, a Network Communications Processor, and can be configured to accommodate a 640KB microfloppy and up to four 40MB or 100MB fixed disks. A number of options can be added to the S4500 such as Line Processing Modules, Line Processing Extenders, Ethernet Line Adapters, and Transmission Communications Processors, to provide telecommunications type functions.

The PCP 5500 consists of a 115/230 VAC chassis, up to five 68020 processors, and has space for up to four 4MB memory cards, an Address Protection Module, a Network Communications Processor, up to two Transmission Communications Processor cards, and can be configured to accommodate a 640KB microfloppy and up to four 40MB or 100MB fixed disks. A number of options can be added to the S5500 such as Ethernet Line Adapters, and Transmission Communications Processors, to provide specific telecommunications type functions.

ISSUE:

Are the Telematics "Programmable Communication Processors" classifiable under subheading 8517.30.50, HTSUS, which provides for telegraphic switching apparatus, or are they classifiable under subheading 8471.99.15, HTSUS, which provides for ADP "control or adapter units"?

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.

In HQ 951331, dated September 18, 1992, we cited Legal Note 5(B) to chapter 84, HTSUS, which 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 PCPs are essential to the ADP systems with which they are integrated because they process and format the data of the computers they serve.

In HQ 951331 we also cited the ENs, pages 1299-1300, which 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.

However, it is our opinion that rather than "processing" being the principal function of such Local Area Network ("LAN") and Wide Area Network ("WAN") equipment, their principal function is, in fact, to effectuate interconnection of the CPU unit to other units or ADP machines, thereby serving "control" and "adaption" functions. In HQ 951331 it was our opinion that the LAN equipment did not have the essential character of control or adapter units because of its processing capabilities. However, it has come to our attention that the LAN equipment's processing capabilities are designed principally to perform the control and adaption functions, as described by the ENs.

The issue has been raised whether HQ 086035, dated August 2, 1990, is controlling since it classified a Digital Packet Network under heading 8517, HTSUS. However, HQ 086035 was revoked by HQ 951331, dated September 18, 1992. The current legal precedent for this merchandise is HQ 952628, dated October 13, 1992, which held that a Packet Assembler/Disassembler was classifiable in subheading 8471.99.15, HTSUS, which provides for control or adapter units. In HQ 952628 we stated:

It is now our conclusion that the data processing features of control and adaption do in fact represent the principal function of the PAD unit, directing classification 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."

HOLDING:

The Telematics ADP Programmable Communication Processors models PCP S240, S400, S4500, 5500, are properly classifiable under 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.

Sincerely,


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