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HQ 967795




November 14, 2005

CLA-2 RR: CTF: TCM 967795 DBS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8517.50.9000

ARRIS International, Inc.
(formerly ARRIS Interactive)
3871 Lakefield Drive
Suwannee, GA 30024

RE: Revocation of NY C87716; Network Interface Unit

Dear Sir or Madam:

On May 18, 1998, the Director, National Commodity Specialist Division (NCSD), issued to your then-agent, C.H. Powell Company, New York Ruling Letter (NY) C87716, classifying a Network Interface Unit (NIU) in subheading 8525.10.3035, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), as transmission apparatus for television because both cable video and telephone signals were routed through the unit. In light of new information submitted to this office by an agent of ARRIS International, Inc., about the function of the NIU, we have found the classification to now be incorrect. This ruling sets forth the correct classification.

Pursuant to section 625(c), Tariff Act of 1930 (19 U.S.C. 1625(c)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act, Pub. L. 103-182, 107 Stat. 2057, 2186 (1993), notice of the proposed revocation of the above-identified ruling was published on October 5, 2005, in the CUSTOMS BULLETIN, Volume 39, Number 41. No comments were received in response to the notice.

FACTS:

Based on the information submitted in the ruling request, NY C87716 described the NIU’s functions as splitting off an RF (radio frequency) video signal and transmitted it to a customer's television unit, and converted the RF signal back to a telephony signal and transmitted it to the customer's telephone unit. As it transmitted both cable and telephone signals, CBP classified the good according to these multiple functions.

CBP has now been informed that at the time of the ruling request, the product was still under development and had not yet been distributed or sold. After the product was released for general sale and distribution, the NIU became the Voice Port. The Voice Port enables digital telephonic communication over a standard Hybrid-Fiber-Coax network. The NIU is situated on a cable television line where it receives and demodulates incoming digital RF carrier telephony signals delivered by the cable provider, and it converts the signal to voice or voiceband data (fax). It does not transmit or receive cable television signals. Descriptive product literature indicates that the system in which this good operates is for line telephony. The unit has not been physically modified in any material aspect between the issuance of NY C87716 and now.

ISSUE:

Whether the new information about the function of the NIU warrants a change in the classification as “telecommunication apparatus for digital line systems” under heading 8517, Harmonized Tariff Schedule of the United States (HTSUS).

LAW AND ANALYSIS:

Classification under the HTSUS is made in accordance with the General Rules of Interpretation. 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.

In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes (ENs) may be utilized. The ENs, though not dispositive or legally binding, provide commentary on the scope of each heading of the HTSUS, and are the official interpretation of the Harmonized System at the international level. CBP believes the ENs should always be consulted. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).

The HTSUS headings at issue are as follows:

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; parts thereof: 8525 Transmission apparatus for radiotelephony, radiotelegraphy, radiobroadcasting or television, whether or not incorporating reception apparatus or sound recording or reproducing apparatus; television cameras; still image video cameras and other video camera recorders; digital cameras.

EN 85.17 (IV) describes apparatus for carrier current line systems or for digital line systems in relevant part as follows:

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 (characters, graphics, images, or other data, etc.).

The NIU falls squarely within heading 8517, HTSUS, because it is apparatus for line telephony, receiving and demodulating incoming digital RF carrier telephony signals.

EN 85.25 (B) describes transmission apparatus for radio-broadcasting or television as having to be for the transmission of signals by means of electro-magnetic waves transmitted through the ether without any line connection, but that television apparatus falls here whether the transmission is by electro-magnetic waves or by line.

Contrary to the suggestion by ARRIS International, Inc., apparatus of heading 8525, HTSUS, may use a line connection if it is for television. As we believed the NIU to transmit cable television signals, it was also covered by the terms of heading 8525, HTSUS. Section XVI, Note 3 provides that apparatus designed for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that which performs the principal function. At the time NY C87716 was issued, no information was available to determine the principal function of the NIU. Section XVI, General EN (VI) directs that “where it is not possible to determine the principal functionit is necessary to apply General Interpretative Rule 3(c).” Therefore, GRI 3(c), which states that a good was be classified under the heading which occurs last in numerical order among those which equally merit consideration, was applied to classify the apparatus in heading 8525, HTSUS.

CBP has now learned from ARRIS that the NIU does not, in fact, transmit or receive cable television signals. A review of the product literature establishes that the apparatus is only a telecommunication device though it uses coaxial cable lines. It is apparent now that the initial ruling request was based upon a theoretical application of the apparatus. Heading 8525, HTSUS, is no longer relevant to the classification of the good. As the NIU receives, modulates, demodulates and transmits voice or voiceband data (fax), it is wholly covered by the terms of heading 8517, HTSUS, and is classified therein. Accordingly, NY C87716 is incorrect. CBP has classified other such apparatus that are part of a telephony distribution system designed to deliver integrated line telephony over hybrid fiber-coax networks. See NY J83173 (May 7, 2003); NY J83595 (May 7, 2003) and NY J83596 (May 7, 2003). Though the units classified therein had four lines of telephony and may be provisioned for cable TV service and data transmission (via a specialized feature), heading 8517, HTSUS, was determined to be the appropriate classification. Other devices that transmit communications signals through coaxial cable lines are also classified in heading 8517, HTSUS. See HQ 964524 (October 22, 2001) (classifying cable modems).

Next, to determine the proper subheading under heading 8517, we apply GRI 6, which allows for the application of the legal notes at the subheading level, unless context otherwise requires. Only subheadings at the same level are comparable. The NIU is clearly provided for in the 6-digit subheading 8517.50, HTSUS, which provides for “Other apparatus, for carrier-current line systems or for digital line systems.” As the unit transmits voice and data, it is covered by the 8-digit subheadings for telephonic apparatus and for telegraphic apparatus, we must apply Note 3 to Section XVI, supra.

In reviewing the descriptive literature, we cannot determine which is the principal function. Therefore, we apply GRI 3(c), as discussed above, to classify the unit in subheading 8517.50.90, which provides for “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; parts thereof: Other apparatus for carrier-current line systems or for digital line systems: Other: Telegraphic.” This is consistent with NY J83173, NY J83595 and NY J83596, supra.

HOLDING:

The Network Interface Unit, now known as the Voice Port, is classified in heading 8517, HTSUS. It is specifically provided for in subheading 8517.50.9000, HTSUSA, as “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; parts thereof: Other apparatus for carrier-current line systems or for digital line systems: Other: Telegraphic: Other.” The 2005 column one rate of duty is free.

Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov.

EFFECT ON OTHER RULINGS:

NY C87716, dated May 18, 1998, is hereby REVOKED. In accordance with 19 U.S.C 1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.

Sincerely,

Myles B. Harmon, Director
Commercial and Trade Facilitation Division


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