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HQ 965047




June 19, 2002

CLA-2 RR: CR: GC 965047 TPB

CATEGORY: CLASSIFICATION

TARIFF NO.: 8517.50.9000

Ms. Kimberly M. Novak
Emery Customs Brokers
6940A Engle Road
Middleburg Heights, OH 44130

RE: BXR-48000 Broadband Switch Router; Network Equipment; WAN Devices.

Dear Ms. Novak:

This is in response to your letter dated April 18, 2001, on behalf of Marconi Communications (“Marconi”), to the Director, Customs National Commodity Specialist Division (“NCSD”), New York, requesting classification of the BXR-48000 Broadband Switch Router, under the Harmonized Tariff Schedule of the United States (“HTSUS”). Your letter was referred to this office for reply. We regret the delay in responding.

FACTS:

The BXR-48000 is a single network solution for service providers (“SPs”) that can simultaneously support new differentiated internet protocol (“IP”) services and existing revenue generating services. The BXR enables SPs to redefine service differentiation for new predictable IP services, as well as simultaneously support existing multiservice offerings on a single platform.

The BXR-48000 is a carrier-class single-stage, deterministically non-blocking, multiservice platform that scales from 40 Gbps to 480 Gbps. The BXR-48000 has concurrent support of connectionless IP routing, multiprotocol label switching (“MPLS”) and asynchronous transfer mode (“ATM”) switching. The BXR-48000 simultaneously supports IP (IS-IS, OSPF, BGP-4), MPLS (RSVP-TE, CR-LDP0, and ATM (UNI-PNNI) control planes. At the physical layer, the BXR-48000 supports IP packets, packet over SONET/SDH (POS), ATM “frames” and ATM cells.

The BXR-48000 has been engineered to perform the functions of both IP/MPLS routers and ATM switches by natively aggregating, switching and routing traffic from multiservice assess and edge vehicles. The BXR-48000 combines the functions of IP/MPLS core routers and ATM core switches. Its design provides scalable multiservice switch routers. The BXR-48000 is scalable in throughput, interfaces, connections, signaling and routing performance. This allows support of on-demand, connection-oriented services, such as Voice over Internet Protocol (“VoIP”), Voice over ATM (“VoATM”), 3G mobile, and video. Also, the BXR-48000’s port capacity supports up to 768 OC-12c/STM-4 ports, 192 OC-48c/STM-16 ports and 48 OC-192c/STM-64 ports in the 480 Gbps configuration. Each of these ports supports full line-rate performance for all interface rates.

ISSUE:

Is the Marconi BXR-48000 classifiable under heading 8471, HTSUS, as a control or adapter unit, or heading 8517, as a telegraphic apparatus for a digital line system?

LAW AND ANALYSIS:

Classification under the HTSUS is made in accordance with the General Rules of Interpretation (“GRIs”). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative Section or Chapter Notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs may then be applied.

The HTSUS provisions under consideration are as follows:

Automatic data processing machines and units thereof; . . .:

Other units of automatic data processing machines:

8471.80.10 Control or adapter units . . . .

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 system; . . .:

Other apparatus, for carrier-current line systems or for digital line systems:

Other:

Telegraphic:

8517.50.90 Other. . . .

To be classified in heading 8471, as an automatic data processing (“ADP”) unit, the merchandise must meet all three requirements of Legal Note 5(B) to Chapter 84, HTSUS, which provides that:

Automatic data processing machines may be in the form of systems consisting of a variable number of separate units. Subject to paragraph (E) below, a unit is to be regarded as being a part of a complete system if it meets all the following conditions:

It is of a kind solely or principally used in an automatic data processing system;

It is connectable to the central processing unit either directly or through one or more other units; and

It is able to accept or deliver data in a form (codes or signals) which can be used by the system.

Often, networked equipment can meet the requirements of Legal Note 5(B)(b) and 5(B)(c) to chapter 84, for the following reasons: they are connectable to the central processing unit either directly or through one or more other units; and, they are able to accept or deliver data in a form (codes or signals) which can be used by the system. Classification determinations often turn on whether networked equipment meet the terms of Legal Note 5(B)(a) to chapter 84, HTSUS. That is, Customs must determine whether the networked equipment is of a kind solely or principally used in an ADP system.

In resolving this issue, importers must provide evidence of sole or principal use. An unsupported claim that these goods are solely or principally used in an ADP system is not evidence. The courts have provided the following factors to apply, which are indicative but not conclusive, when determining the principal use of merchandise: general physical characteristics; expectation of the ultimate purchaser; channels of trade; environment of sale (accompanying accessories, manner of advertisement and display); use in the same manner as merchandise which defines the class; economic practicality of so using the import; and recognition in the trade of this use. See Lenox Collections v. United States, 19 Ct. Int'l Trade 345, 347 (1995); Kraft, Inc. v. United States, 16 Ct. Int'l Trade 483 (1992); G. Heileman Brewing Co. v. United States, 14 CIT 614 (1990). See also United States v. Carborundum Company, 63 CCPA 98, C.A.D. 1172, 536 F.2d 373 (1976), cert. denied, 429 U.S. 979 (1976). Even if an importer is able to meet the terms of Legal Note 5(B)(a), classification under Legal Note 5(E) to chapter 84 may still be applicable.

In applying the Lenox factors to the Marconi BXR-48000, we note that it is an IP and multiservice switch router that provides backbone support and control over Internet services (WAN). It transfers fixed-sized packets of video, audio and computer data over a telephone line network. The expectations of the purchaser is to transmit voice, video and data over a public or private telephone line system. It has not been demonstrated that this apparatus is used solely or principally to interconnect units within a LAN. Based on these facts, and the Lenox factors, we find that the BXR-48000 is not of a kind solely or principally used in an ADP system. Therefore, it does not meet the definition of an ADP unit as defined in Legal Note 5(B) and is precluded from classification under heading 8471, HTSUS.

Heading 8517, HTSUS, provides for electrical apparatus for line telephony or telegraphy, including telecommunication apparatus for digital line systems. The Harmonized Commodity Description and Coding System Explanatory Notes (EN) constitute the official interpretation of the HTSUS. While not 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). EN 85.17, page 1472, states, in pertinent part, as follows:

[t]he term "electrical apparatus for line telephony or line telegraphy" means apparatus for the transmission between two points of speech or other sounds (or of symbols representing written messages, images or other data), by variation of an electric current or of an optical wave flowing in a metallic or dielectric (copper, optical fibres, combination cable, etc.) circuit connecting the transmitting station to the receiving station.

The heading covers all such electrical apparatus designed for this purpose, including the special apparatus used for carrier-current line systems.

(III) APPARATUS FOR CARRIER-CURRENT LINE SYSTEMS OR FOR DIGITAL LINE SYSTEMS

These systems 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.

The Marconi BXR-48000 provides single, deterministically non-blocking switching and routing. It optimizes throughput and multicast performance for all traffic and connection types.

Because the BXR-48000 functions as an apparatus for the transmission between two points of data, words, images, sounds or symbols over a public or private telephone line, it is classifiable at GRI 1 in heading 8517, HTSUS, specifically under subheading 8517.50.90, HTSUS.

HOLDING:

For the reasons stated above, Marconi BXR-48000 is to be classified under subheading 8517.50.90, HTSUS, which provides for [e]lectrical apparatus for line telephony or line telegraphy, including line telephone sets with cordless handsets and telecommunications apparatus for carrier-current line systems or for digital line systems: [o]ther apparatus, for carrier-current line systems or for
digital line systems: [o]ther: telegraphic: other.

Sincerely,

John Durant, Director

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