United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 2002 HQ Rulings > HQ 562393 - HQ 962521 > HQ 961518

Previous Ruling Next Ruling
HQ 961518

January 23, 2002

CLA-2 RR:CR:GC 961518 gah


TARIFF NO.: 8517.50.50

Port Director
U. S. Customs Service
New York/JFK Area
Bldg. #77
Jamaica, NY 11430

RE: Internal Advice; Ericsson, Inc., fiber optic module series 5000

Dear Port Director:

This is in reply to your memorandum, dated January 8, 1998, (CLA-1:K:TC:A3 CL) forwarding a request for internal advice on the classification, under the Harmonized Tariff Schedule of the United States (HTSUS), of telecommunications transmitters and receivers submitted by counsel for Ericsson, Inc., dated September 23, 1997 and in response to a proposed rate advance dated February 17, 1997. In preparing this decision, consideration was given to Ericsson’s original letter of August 1, 1997 requesting cancellation of the proposed rate advances as well as supplemental submissions from counsel dated August 23, 1997, February 4, 1998, and March 24, October 18, and November 2, 2000, and an oral conference held on June 12, 2001.


The merchandise is described by Ericsson as their Fiber Optic Modules, series 5000, optical transmitter and optical receiver modules. These devices translate light pulse signals into electrical signals and in the opposite direction, translate electrical signals into light pulse signals. The pulses are put on fiber optic cable and are used in communication networks. The submitted literature states that the goods are fully compliant with ITU-T G.957, G.958 and Bellcore GR-253-CORE recommendations. They are inter-office short-haul and long-haul devices, operating within the 1530 to 1560 nm band. Transmission standards range from STM-1, OC-3, 155 Mbps to STM-16, OC-48, 2488 Mbps for the
series. Transmission distance for the short-haul devices is less than 15 km (approx. 24 miles). This corresponds to SONET “intermediate reach” products. Transmission distance for the long-haul devices is less than 40 km (approx. 64 miles), or less than 80 km (approx. 129 miles).

Counsel has submitted data sheets on Ericsson’s transmitter and receiver modules. The functions generally performed by transmission/reception apparatus include: transmitting/receiving, modulation/demodulation, coding/decoding, multiplexing/demultiplexing, signal amplification/regeneration, and synchronization.

Typically, a transmitter module in the 5000 series contains a fully fabricated and packaged laser diode module for generation of an optical signal. The laser diode module contains a laser diode and feedback photo diode, permanently attached to a metal base, which acts as a heat sink and permits the diode to be properly aligned. The photo diode serves as a back face monitor for the laser, adjusting the emissions from the laser to generate a uniform transmission. In addition, each transmitter includes at least one integrated circuit that directs the conversion of electrical digital inputs by the laser module into the light pulse signals conveyed on the fiber optic cable. Such functions include a chip to reshape the electrical signal, a high speed (laser) driver, a laser safety circuit, and chips for bias and modulation control. Thus, the transmitter as a whole conducts numerous functions. While the laser diode module within the transmitter converts electricity into light, the transmitter does other major operations of transmitting the signal and modulating the signal.

A typical receiver module includes an InGaAs detector diode, preamplifier, noise filter, clock recovery, input power monitor and loss of incoming signal alarm. It also contains a photodiode, a PCB with one or more integrated circuits, a piezoelectric crystal and various passive components (resistors and capacitors), and a fiber optic pigtail with connector. Other receivers in this series may also contain transformers and SAW filters. Thus, the receiver functions as a preamplifier, noise filter, limiter, clock recovery, and decision circuit. All of these functions are performed on the electrical signal after it has been converted by the photodiode. Receiving, signal amplification, and clock synchronization are major transmission functions. Filtering, signal shaping (limiter), amplification, and decision circuit processing are required in all types of transmission systems because the signal degenerates over distance.

Customs sent notices of action on a number of dates beginning on February 17, 1997, and ending on September 29, 1997, to Ericsson stating that
it proposed a rate advance for the fiber optic module series 5000, reclassifying the goods from subheadings 8541.40.60 and 8541.40.95, HTSUS, and placing them in subheading 8517.50.50. Subsequently, the request for internal advice was filed, in which counsel argues that the classification of the modules should remain in subheadings 8541.40.60 and 8541.40.95, in line with NY 816354, dated December 27, 1995.


Are the receiver and transmitter classifiable in heading 8517 as electrical apparatus for digital line telephony or heading 8541 as photosensitive semiconductor devices assembled in modules or light emitting diodes?


Classification of merchandise under the Harmonized Tariff Schedule of the United States (HTSUS) is in accordance with the General Rules of Interpretation (GRI). GRI 1 provides that classification shall be determined according to the terms of the headings and any relative section or chapter notes. Merchandise that cannot be classified in accordance with GRI 1 is to be classified in accordance with subsequent GRIs.

The following HTSUS headings are under consideration:

Heading 8517: Electrical apparatus for line telephony or line telegraphy, including line telephone sets with cordless handsets and telecommunication apparatus for carrier-current line systems or for digital line systems; videophones.

Heading 8541: Diodes, transistors and similar semiconductor devices; photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels; light emitting diodes; mounted piezo-electric crystals.

The Harmonized Commodity Description and Coding System Explanatory Notes (EN) constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 FR 35127, 35128 (August 23, 1989).

Counsel makes two main arguments for classifying the optical transmitters and receivers in heading 8541. First, heading 8541 is a more specific description for the modules at issue than is heading 8517. Second, if heading 8541 is not more specific for the goods, than they are classified as parts of telecommunications apparatus.

Counsel claims that the transmitter is essentially a laser diode, while the receiver is essentially a photodiode. The text of heading 8541 enumerates light emitting diodes, which include laser diodes, and photosensitive semiconductor devices, which include photodiodes. The EN to heading 8541 describes these two devices. Light emitting diodes include laser diodes, which”emit a coherent light beam and are used, e.g., in communication systems using fibre optics.” Photosensitive semiconductor devices include photodiodes which ”are characterized by a variation in resistivity when light rays strike their p n junction. The devices of this category (have) housing(s) which (are) partly transparent to permit the passage of light.”

Heading 8517, HTSUS, covers electrical apparatus for line telephony or line telegraphy... and telecommunication apparatus for carrier-current line systems or for digital line systems. Telecommunications apparatus for carrier-current or digital line systems, by reference to the heading’s EN(III), are:
based on the modulation of an electrical carrier-current or of a light beam by analogue or digital signals. Use is made of the carrier-current modulation technique and pulse code modulation (PCM) or some other digital system. These systems are used for the transmission of all kinds of information (words, data, images, etc.). These systems include all categories of multiplexers and related line equipment for metal or optical-fibre cables. “ Line equipment ” includes transmitters and receivers or electro-optical converters. Combined modulators-demodulators (modems) are also classified here.

Thus, the EN to heading 8517 specifies transmitters and receivers as complete line apparatus within the scope of the heading text. Receivers and transmitters are devices that are defined as accepting signals and generating signals, respectively. A. Freedman, The Computer Glossary 440, 552 (Sixth Ed. 1993). The instant goods meet these definitions and are commercially known as receivers and transmitters for use in telecommunications systems. The EN also calls them by their function, electro-optical converters.

Regarding counsel’s first argument, that heading 8541 more specifically describes their transmitters and receivers, counsel cites ABB Power Transmission v. U.S., 19 CIT 1044 (1995), where the Court found that a module of thyristors were classifiable in heading 8541, even though they contained other minor devices. The Court reasoned that “...the principal and sole function of a thyristor module is imparted by the thyristors acting in unison...” In other words, where every element of a device works toward one function, that of the thyristors, heading 8541 specifically describes the module. Here, it is claimed that all of the circuitry in the transmitters and receivers work together to support the function of the photosensitive device in the laser module.

To the contrary, as discussed in the facts, above, there are several functions of the goods, each one an important function of the transmitters and receivers. Heading 8541 describes only one part of the device, that of generating an optical or electric signal. Heading 8541 does not include combinations of goods from two or more distinct groups enumerated in heading 8541, or combinations of goods of heading 8541 and another heading, when the combination of goods do not contribute to a single function covered by a single group enumerated in heading 8541. See HQ 962957, dated October 23, 2000.

The EN for GRI 3(a) states that a heading which more completely describes the merchandise is preferred to one that describes only part of the good. We believe that heading 8517 and its description of telecommunications apparatus for carrier-current or digital line systems completely describes the merchandise at issue. Ericsson’s merchandise is considerably more complex than devices of heading 8541, performing functions of complete telecommunications line apparatus necessary for a signal to move on a line system such as transmitting/receiving, modulation/demodulation, coding/decoding, multiplexing/demultiplexing, signal amplification/regeneration, and synchronization.

Counsel claims that Customs has classified merchandise similar to the instant goods in heading 8541, citing NY 816354, dated December 27, 1995, HQ 088495, dated April 12, 1991, HQ 088628, dated August 20, 1991 and HQ 951572, dated May 20, 1992. Regarding NY 816354, we have reviewed that matter, found that the Lucent merchandise is quite similar, and have revoked NY 816354 in HQ 962957, dated October 23, 2000, published in the Customs Bulletin of November 8, 2000. The remaining rulings cover various photosensitive and light emitting devices. These rulings are not on point because Ericsson’s merchandise is considerably more complex than such devices, as noted above. Further, we believe our interpretation of heading 8541 is in agreement with that expressed in Mitsui Petrochemicals (America), Ltd., v. U.S., 21 CIT 882 (1997).

Counsel correctly notes that the HTSUS was amended in 1996, in pertinent part, to include in the heading 8517 text telecommunication apparatus for digital line systems, and that this change in text was not a change in scope of heading 8517. Due to this heading text amendment, counsel suggests that the
classification of Ericsson’s merchandise in heading 8517 would change the scope of heading 8517 and therefore such action is prohibited. No such linkage exists. Customs is free to reconsider its classification of merchandise whether or not the tariff has been amended.

Counsel’s second argument is that the transmitters and receivers are parts rather than apparatus, and are therefore classified in subheading 8517.90, as parts of telecommunications apparatus. Two rulings are noted, HQ 085661, dated February 14, 1990, and HQ 958720, dated March 28, 1996. In both rulings, the goods are technically different and involve different headings than the complete transmitters and receivers at issue. As HQ 085661 notes, in classifying a channel unit as part of a channel bank, tariff terms are construed in accordance with their common and commercial meaning. Nippon Kogasku (USA), Inc. v. U.S., 673 F.2d 380 (Fed. Cir. 1982). Commercially, these goods are known as electro-optical converters, or transmitters and receivers, of telecommunication signals, not merely photosensitive devices or laser diodes. EN (III) to heading 8517, discussed above, specifies electro-optical converters as apparatus of line systems. In HQ 958720, an unfinished modem board was not classified as a modem board, an apparatus of heading 8517, because it could not do its essential function of modulating and demodulating a signal. The apparatus at issue here are complete as imported and capable of performing several of the following major transmission/reception functions: transmitting/receiving, modulation/demodulation, coding/decoding, multiplexing/demultiplexing, signal amplification/regeneration, and synchronization.

As a result, the Ericsson fiber optic module series 5000 transmitters and receivers are apparatus of subheading 8517.50. Counsel states that section XVI, note 2(a), HTSUS, and Nidec Corporation v. U.S., 68 F. 3d 1333 (Fed. Cir. 1995). control the classification for the subject modules. We believe that our result is in agreement with both. The goods at issue are completely and specifically described as electro-optical transmitters and receivers of telecommunications line systems, included as apparatus of heading 8517, and are not described accurately or completely as photosensitive and light-emitting diode devices of heading 8541. Subheading 8517.50 covers other apparatus, for carrier-current line systems or for digital line systems.


The Ericsson Fiber Optic Modules, series 5000, optical transmitter and optical receiver modules are classified at GRI 3(a) in subheading 8517.50.50, HTSUS, which provides for electrical apparatus for line telephony or line telegraphy, other apparatus, for carrier-current line systems or for digital line systems, other, telephonic.

This ruling is effective for goods entered or withdrawn from warehouse on or after January 8, 2001, as determined in HQ 962957, dated October 23, 2000.

Sixty days from the date of the decision, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.gov, by means of the Freedom of Information Act, and other methods of public distribution.


John Durant, Director

Previous Ruling Next Ruling

See also: