HQ 951057 - Protest No. 2809-90-000719; Mainframe Computer Boards; Unfinished Computer - United States International Trade Commision Rulings

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HQ 951057

February 1, 1994

CLA-2 CO:R:C:M 951057 MBR

CATEGORY: CLASSIFICATION

TARIFF NO.: 676.15

District Director of Customs
555 Battery St.
POB 2450
San Francisco, CA 94126

RE: Protest No. 2809-90-000719; Mainframe Computer Boards; Unfinished Computer

Dear District Director:

This is our response to Protest No. 2809-90-000719, dated April 25, 1990, concerning the classification of mainframe computer boards, under the Tariff Schedules of The United States (TSUS).

FACTS:

The imported merchandise includes four Sub-System Carriers (SSCs) which are advanced design printed circuit boards (boards). The SSCs incorporate: (1) Central Processing Unit (CPU); (2) Memory Control Unit (MCU) which controls communication and data transfer between all SSCs; (3) Channel Subsystem Processor (CSP) which contains Input/Output (I/O) circuits and provides connection to peripherals; (4) Main Storage Unit (MSU) subsystem which consists of at least one MSU SSC and from 32 to 128 memory array boards. One entry contained a CPU, a CSP, and a MSU. The other entries included a CPU, a CSP, a MSU, and a MCU. None of the entries contained an Service Processor ("SVP"), Channel Handling Unit ("CHU"), System Control Interface ("SCI"), or memory array boards. The SVP controls the power on/off, provides timing, and loads microcode. The SCI acts as an interface between the SVP and the mainframe units. The CHU provides input/output ("I/O") logic capability.

ISSUE:

What is the classification of mainframe computer boards (SSCs), under the TSUS? Are they classifiable, as appraised, under item 676.15, TSUS, which provides for accounting, computing, and
other data processing machines, or under item 676.54, TSUS, as claimed, which provides for parts of automatic data-processing machines?

LAW AND ANALYSIS:

There is no disagreement that the chief use of each board at issue, at the time of importation, is within a system dedicated to automatic data processing, as that term is described by lexicographical sources and is understood for purposes of tariff classification. Similarly, there is no dispute that the boards 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, mailing of correspondence, records, accounts, forms, etc., or for doing other 'office work.'"

The importer argues that Customs has incorrectly reclassified the mainframe computer boards (SSCs) as an unfinished data processing machine. The importer states that the boards are parts that are "incapable of fulfilling simultaneously" all of the requisite functions of an ADP machine, and therefore, the SSCs cannot be considered a digital processing machine.

The importer also argues that all of the entries lack an SVP, a CHU and an SCI, without which "an operator cannot even turn the 5990 [system] on."

We agree that, in the condition as imported, the boards are not capable of functioning. The addition of wiring, power supply, SVP, etc., is necessary in order for the mainframe to function as designed. However, the fact that each board requires the attachment of another article in order to be capable of performing its function does not render each board 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, when imported, the boards are incapable of functioning unless placed in a configuration with certain other boards and devices, in their final use they nevertheless are in and of themselves, data processing machines specifically provided for by item 676.15, 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). Similarly, the fact that they must be incorporated within a system housing or chassis does not mandate their classification as a part. General Electric Company v. United States, 2 CIT 84, (1981).

The importer argues that: "Since each entry lacked the critical SVP and memory array boards, no entry constituted a 'substantially complete article,' as required under the holding of Daisy-Heddon."

However, the importer's application of the criteria outlined by the court in Daisy-Heddon, Div. Victor Comptometer Corp. v. United States, 66 CCPA 97, C.A.D. 1128 (1979), is misplaced, in that the analysis, or comparison, should be directed to a board in its complete or finished form, not the ultimate "completed systems" in which they will function. In fact, the boards' utility and marketability is such that the final magnitude, extent and purpose of the ultimate system is unknown, and will most likely change due to a user's desired modification necessitated by changing needs or expanding requirements. The boards are unfinished articles, but for the most part only to the extent of their placement into a housing, rack, or chassis, which will always mandate their use while placed on or fixed to a floor, desk, or similar place.

The importer argues that operations needed to put the merchandise in a completed state require a significant amount of manpower and technical "fine tuning." Primarily, this extensive fine tuning pertains to the timing functions that enable the boards to communicate with each other. However, this technical fine tuning does not alter the specific identity of the merchandise at importation.

The importer also argues that without the cooling system, memory cards, channel cards, and interface, the merchandise is not classifiable as a substantially complete ADP machine. We disagree. There has not been shown to be any significant parts omitted from any of the boards which would preclude a determination that they are substantially complete data processing machines classifiable in item 676.15, TSUS. The imported boards are the boards that actually perform the data processing. See HQ 554581, dated July 2, 1987, in which Customs held single board computers which may be used as a host computer or may be used for CPU functions either in a subsystem dedicated to facilitating a non-data processing function or in a data processing system which has so-called "decentralized" CPU functions, properly classifiable under 676.15, TSUS.

HOLDING:

The mainframe computer boards (SSCs), are properly classifiable as appraised under item 676.15, TSUS, which provides for accounting, computing, and other data processing machines, since at least one CPU board is included with each entry.

For the reasons stated above, 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 the 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.

Sincerely,

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