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HQ 088747

October 25, 1993

CLA-2 CO:R:C:M 088747 MBR


TARIFF NO.: 676.30

District Director
U.S. Customs Service
Room 137
110 S. Fourth St.
Minneapolis, Minnesota 55401

RE: Protest No. 3501-90-000256; Disk Drives; Controllers; ADP Machines; Parts; Unfinished; HQ 085946; HQ 554581; HQ 068986; HQ 079697; HQ 082602; HQ 080082; Daisy-Heddon; U.S. v. John A. Steer; U.S. v. Willoughby Camera Store; Nord Light v. U.S.; Westinghouse Electric v. U.S.; Fairchild Camera v. U.S.

Dear Sir:

This is our response regarding Further Review of Protest No. 3501-90-000256, regarding the classification of disk drives and controllers under the Tariff Schedules of the United States (TSUS).


The IBM 9335 Direct-Access Storage Subsystem provides fixed- disk storage for a main frame ADP system. The 9335 Direct-Access Storage Subsystem consists of one IBM 9335 AO1 Device Function Controller and from one to four IBM 9335 Model BO1 Direct-Access Storage Units. After importation, the controller and one or more disk drives are mounted in a rack enclosure. The units are connected by cables.

The IBM 9335 Model AO1 Device Function Controller is designed to be mounted in a 5.25 inch drawer. It consists of: a system adapter, a microprocessor, random access read/write memory (RAM) and read only storage (ROS), a device adapter which comprises a device interface adapter and a device read/write adapter, power supplies, cooling equipment and front and back control panels.

The IBM 9335 Model BO1 Direct-Access Storage Unit is designed to be rack-mounted in a 10.5 inch drawer. Each Model BO1 stores approximately 850 million bytes of formatted information on three fixed 14 inch disks. The information is accessed by two rotary actuators, each of which carries six read/write heads. The main components of the Model BO1 are: a disk enclosure (sealed unit) comprising three disks, 12 read/write heads, the disk spindle of the drive motor, two actuators, combined main air and breather filter, electronic circuitry for (1) head selection, (2) read preamplification, and (3) write current. Each BO1 also has a front
control panel, input/output plugs in the rear, a power supply and is cooled by a forced-air fan at the front of the unit. Power is supplied to the dc power supply unit and the fan from a combined supply plug and filter through a power supply on/off switch and a manually resettable circuit breaker.

The disk drives and controllers were entered in 1987 and 1988 under the duty-free provision for parts of ADP machines in item 676.54, TSUS. However, they were classified under the provision for office machines not specifically provided for in item 676.30, TSUS. The entries were liquidated on October 19, 1990 and the protest was timely filed on November 19, 1990.


Are the disk drives and controllers classifiable as parts of ADP machines in item 676.54, TSUS, or are they properly classifiable as office machines n.s.p.f. in item 676.30, TSUS?


In HQ 085946, dated January 2, 1990, we reviewed the classification of the same merchandise. In that decision we addressed the same questions specifically raised in the instant Protest. Additionally, HQ 554581, dated July 2, 1987, addressed the dutiable status of similar rack mounted data processing equipment. Accordingly, reference should be made to our previous decisions for detailed information as to our current position.

In summary, we stated that we did not regard Headnote 2(a), Subpart G, Part 4, Schedule 6, TSUS (which requires that office machines have a base) and General Headnote 10(h) (which requires that TSUS provisions be regarded as encompassing unfinished versions of an article as well as finished versions) in conflict. This position was also previously taken in such matters as our decision of November 5, 1981, IA 120/81, file No. 068986. Accordingly, the fact that components of the instant type lack housings in their condition as imported, does not, by itself preclude their classification under item 676.30, if a housing will be added after importation or they otherwise will be used in an installation with a common housing, i.e., a rack.

We further held, that the base for fixing or placing an office machine on a table, desk, etc., which was part of the added housing, whether or not a single or common housing, also satisfied the Headnote 2(a) requirements in the case of rack-mounted equipment.

For purposes of classification in item 676.15, TSUS, a data processing machine is a device, or a system consisting of several devices in the form of modules or units, which is capable of accepting and storing data necessary to execute a program, with the
additional capability of being freely programmed in accordance with the requirements of a user, and executing a processing program, without human intervention, which requires a logical decision that results in a certain modification of the execution during the processing run. In addition, there must be a capability to perform one or more of the four arithmetical operations (i.e., addition, subtraction, multiplication and division), specified by a user.

Merchandise which does not have the capability to perform arithmetical computation, but otherwise meets the above-outlined criteria, has generally been determined to be properly classifiable in item 676.30, TSUS, which provides for "[o]ffice machines, not specially provided for."

Such systems which are designed only for operation on "fixed" programs do not, by their very nature, meet the above-outlined criteria for purposes of tariff classification in item 676.15, TSUS. Automatic data processing systems which are either integrated with, or designed to work in conjunction with other apparatus to perform a specific function, may also be precluded from being provided for in item 676.15, TSUS, as classification is generally controlled by the respective specific function to be performed, rather than the "means" (data processing) by which the function is performed or facilitated. Examples of such systems would be those which are either integrated with, or otherwise restricted by their technology to either performing as or facilitating the function of, certain controlling apparatus (not to be confused with ADP "controllers"), communications apparatus, or analytical apparatus.

In the instant case, the chief use is known, at the time of importation, to be within a system dedicated to automatic data processing, as that term is described by lexicographical sources and is understood for purposes of tariff classification. There also can be no dispute that the units at issue are of a type of which the chief use is within the broad area of "doing work, concerning the writing, recording, sorting, filing of correspondence, records, accounts, forms, etc., or for doing other 'office work.'"

The determination of a unit's state of completion is made by determining the state of the unit itself and not the final "completed systems" in which they will ultimately function. They are fully assembled, have cooling apparatus and their own power sources. To make them fully functional one need only plug them in. In fact, it is clear that the only purpose of rack-mounting the units together is for the convenience of proximity in connecting them together with cables and, perhaps, space consolidation. Thus, it is our view that these units are complete.

Neither item 676.15, TSUS, nor item 676.30, TSUS, provides for "computers." Likewise, item 676.54, TSUS, does not provide for

"parts of computers." Rather, these tariff items provide for, respectively, certain data processing machines incorporating a calculating mechanism, and certain office machines, including so- called "peripherals" (i.e., constituent units of a data processing system that are external to a central processing unit and perform a variety of input, output, storage and other tasks, either online or off-line). Item 676.54, TSUS, provides for parts of both types of articles. That the subject units may be utilized to provide decentralized central processing to a nebulous so-called "complete" data processing system falls short of establishing that they are, for tariff purposes, essential "parts" of that system which is indefinable at time of importation. United States v. John A. Steer Co., 46 CCPA 132, C.A.D. 715, (1958).

Whether separate or joined, each is complete in and of itself and each is a distinct and separate commercial entity. The most that can be said is that they may (or may not) be used together with another particular type of unit of a data processing system, one as support for the other. It does not make them, for tariff classification purposes, a "part" of the ultimate automatic data processing system. United States v. Willoughby Camera Stores, Inc., 21 CCPA 322, T.D. 46075 (1933).

The fact that each unit at issue requires the attachment of another article in order to be capable of performing its function does not render each of them a "part," in that there is no requirement that a machine must be "self-activating." Nord Light, Inc. v. United States, 49 CCPA 12, C.A.D. 786 (1961). Although incapable of functioning unless placed in configuration with certain other devices, they nevertheless are, in and of themselves, peripheral machines used in conjunction with data processing machines, specifically provided for in item 676.30, TSUS. Westinghouse Electric International Co. v. United States, 28 Cust. Ct. 209, C.D. 1411 (1952), cited with approval by Fairchild Camera & Instrument Corp., Inter-Maritime Forwarding Co., Inc. v. United States, 53 CCPA 122, 126, C.A.D. 887 (1966). Furthermore, the fact that they are designed to share a common "rack-mounting" does not mandate their classification as a part. General Electric Company v. United States, 2 CIT 84 (1981).

General Headnote 10(h), TSUS, states:

10. For the purposes of these schedules --

(h) unless the context requires otherwise, a tariff description for an article covers such article, whether assembled or not assembled, and whether finished or not finished.

The courts have addressed the issue of "unfinished" versus "parts" classifications in the case of Daisy-Heddon, Div. of Victor Comptometer Corp. v. United States, 66 CCPA 97,

C.A.D. 1228, 600 F.2d 799 (1979). The court found the following criteria determinative in the analysis of this issue:

1. The number of omitted parts compared with the number of included parts.

2. The amount of time and effort needed to put the article in its completed condition compared to the time and effort needed to place it in its imported condition.

3. The cost of the imported (included) parts compared with the cost of the omitted parts.

4. The significance of the omitted parts to the overall functioning of the completed article.

5. The trade's characterization of the article as parts.

As to the first criteria, the disk drives and controllers consist of hundreds of parts, whereas, at importation, they are only missing one part (the housing).

As to the second criteria, the amount of time and effort needed to attach the housing is, no doubt, de minimis compared to the time and effort needed to place these highly complex and technologically advanced machines into their imported condition.

As to the third criteria, clearly the cost of the housing is minimal compared with the cost of the unit itself.

As to the fourth criteria, again, the housing itself is probably not necessary for the unit to function.

As to the fifth criteria, certainly the trade would characterize the imported article as an automatic data processing machine missing only one, non-essential, cosmetic part.

Furthermore, it is important to note that even parts which are essential are not controlling in this analysis. In this regard, the court stated:

If, as appellant argues, the omission of a part essential to the use of the eo nomine designated article would prevent classification as the article in an unfinished condition, there would be, in practical effect, no such thing as an unfinished article." Daisy-Heddon, at page 102.

There is no single factor that is determinative of the question presented. It is a totality that must be given consideration, with a view toward the guidance set forth by the court in Daisy-Heddon.

However, due to the advanced stage of completion of the imported article, the de minimis amount of time to complete it and the fact that only one cosmetic part is missing, we conclude that the disk drive and controller are properly classifiable under item 676.30, TSUS.

Internal Advice 9/87 (HQ 079697) and HQ 082602, provide classification guidance regarding "print engines." In these cases, it was determined that the large number of missing parts, the considerable amount of time to complete the printer and the cost of the missing parts, mandated classification under item 676.54, TSUS, ("parts of automatic data processing machines and units thereof"). However, the instant merchandise is complete except for one part. Thus, it does not require a large number of parts nor will it take substantial time or cost to fully complete. Whereas, Internal Advice 42/87 (HQ 080082) regarded the classification of five sub-assemblies for a dot matrix printer. This case held the sub-assemblies to be properly classifiable under item 676.30, TSUS, (unassembled printer units), even though there were a substantial number of parts not imported, including the touch pad control assembly. Again, we held that the amount of time and effort to complete was minimal as compared to the time and effort required to assemble the complex and sophisticated parts that go to make up the five sub-assemblies (even though the parts not included were essential).

Therefore, logical application of general tariff principles and previous classification determinations in this area mandate a conclusion that separately presented articles of a type, of which the chief use is as peripheral units of an automatic data processing machine, are properly classifiable in item 676.30, TSUS, regardless of whether they are housed, unhoused, or may ultimately share a common housing or chassis with other units, if it is determined that they are designed for use while placed or fixed to a floor, desk, table, or similar place, as are the instant units.


For the foregoing reasons, it is our view that the disk drives and controllers at issue are classifiable under the provision for office machines, n.s.p.f., in item 676.30, TSUS.

This protest should be denied in full. In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision, together with Customs Form 19, should be mailed by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with this decision must be accomplished prior to the mailing of this decision. Sixty days from the date of this decision the Office of Regulations and

Rulings will take steps to make this decision available to Customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, Lexis, Freedom of Information Act and other public access channels.


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