Reconsideration of Headquarters Ruling Letter 085404, dated July 20, 1990; Mobile Radio Data terminals; communications systems; transmission apparatus for radiotelegraphy; automatic data processing machines and units thereof; input/output units; unfinished or incomplete goods; Section XVI, Note 3; Chapter 84, Note 5; Chapter 84, Note 7; Additional U.S. Rule of Interpretation 1(a); separately housed unit; Explanatory Note 84.71; Explanatory Note 85.25; principal function; principal purpose

HQ 087984 September 13, 1991 CLA-2 CO:R:C:M 087984 MBR CATEGORY: Classification TARIFF NO.: 8525.10.80, 8525.20.60 Steven W. Baker, Esq. Bellsey and Baker 100 California Street, Suite 670 San Francisco, CA 94111 RE: Reconsideration of Headquarters Ruling Letter 085404, dated July 20, 1990; Mobile Radio Data terminals; communications systems; transmission apparatus for radiotelegraphy; automatic data processing machines and units thereof; input/output units; unfinished or incomplete goods; Section XVI, Note 3; Chapter 84, Note 5; Chapter 84, Note 7; Additional U.S. Rule of Interpretation 1(a); separately housed unit; Explanatory Note 84.71; Explanatory Note 85.25; principal function; principal purpose Dear Mr. Baker: This is in response to your September 21, 1990, request for the reconsideration of Headquarters Ruling Letter 085404 ("HQ 085404"), dated July 20, 1990. This ruling concerned the classification of certain Mobile Radio Data Terminals imported by Mobile Data International, Inc. ("MDI"). Since the issuance of HQ 085404 MDI has been acquired by Motorola Canada Ltd. and is operated as a division thereof. MDI Systems, Inc., a United States company and wholly owned subsidiary of Motorola, Inc. in the United States will likely be absorbed and operated by its parent in the United States. The completed and contemplated acquisitions among these companies require that this ruling be effective with regard to Mobile Data International, MDI Systems, Motorola of Canada, Ltd., and Motorola, Inc. FACTS: The articles in question are described as Mobile Radio Data Terminals ("MDTS"). The MDTs are part of various communications systems. This equipment enables field personnel to transmit and receive information from their remote position to a headquarters or base office by the use of a radio link. The MDTs are used by an organization's field personnel, and are of both the mobile (mounted in the vehicle) and portable (carried with the person) varieties. The units have a number of different applications -2- including public safety agencies such as the police, fire and ambulance departments; courier pick-up and delivery; electrical and gas utilities; taxis; and companies with field sales and repair staff. Incoming messages initiated by the field personnel on the MDTs are received by the modulator of the mobile radio for transmission over the radio link. A simple modification of the radio equipment allows the MDT to bypass the bandwidth-limiting audio circuitry, thus requiring that the data signal be injected directly into the modulator. The signal is received at a base radio site. The digital message is reconstructed by a radio/data interface. This interface may be at the computer site or at a remote location from the host computer. The signal is transmitted to the communications controller over a telephone or microwave link via a data modem. The Communications Controller decodes and translates the data into standard computer-input format and then passes the message to the host computer. The host computer is not sold or imported with the MDTs. The host computer is then able to display the field message on output terminals at the base or headquarters office for personnel to view. Should the base or headquarters personnel wish to send messages to the field personnel, they simply input the message into their terminals and the process works in reverse. The field personnel may also have the ability to access the host computer directly from the MDT for specific data if the system with which the MDT operates is programmed for such access. Your literature states that the digital communication provided by this system offers a number of advantages over voice radio communications. Radio channels are becoming increasingly scarce and the use of MDTs allows five to ten times as many users on the same channels. The MDT digital communications allows messages to be exchanged faster, with greater accuracy and with greater privacy since a decoder is necessary to understand the message. The MDTs allow direct access to data bases by personnel in the field without assistance of a dispatcher. The MDTs also allow the field personnel to update files within a data base from the field without going through a dispatcher. Preformatted messages may be developed for the most frequently used messages so that a single keystroke and fill-in-the blank forms guide the user through any data entry function. This type of data entry reduces paperwork by eliminating the need for written reports. The MDTs at issue include the following models: 6031, 6100, 7031, 7100, 9031, 9035, 9036, 9100 and the KDT series (800, 840, 880, 480C). HQ 085404 addressed the 6100, the 7031, the 9031 and the 9100. This ruling addresses all these models of MDTs as they have all been discussed with this office and may continue to be imported. The descriptions of these models are -3- taken from your January 31, 1991, submission and prior submissions for HQ 085404. All of the MDTs are rugged units designed to be water resistant and dust-proof. The 6031, 7031 and the 9031 units were the original, pre- Motorola, MDI data terminals. All three units utilize 4.0 MHz Z80 microprocessors and small amounts of RAM and ROM memory. The 6031: The 6031 is a portable unit with an integral RF transceiver. No other information was submitted regarding this model. The 7031: The 7031 is a small vehicle mounted unit used primarily in taxi services. The unit is 2.6 x 11.4 x 5.5 inches in size and weighs 2.75 pounds. The 7031 has a Liquid Crystal Display ("LCD") screen capable of displaying two lines of text with 40 characters per line. The 7031 has a 64 character ASCII upper case character set. The keyboard has eight single-stroke keys, six defined key sequences (F plus another key), 0-9 numeral keys, a "TX" key which initiates transmissions, a "Nm" key which displays the next message, a "MDI" key which is an emergency or automatic transmit key, and a "F" key which initiates a multikey sequence. The 7031 has a modem data rate of 4800 bits per second ("bps") with a FM modulation baseband. It contains 16k bytes of Random Access Memory ("RAM") and 48K bytes of Programmable Read Only Memory ("PROM"). The 7031 does not have an integral transceiver, but the radio modem chip used with the 7031 interfaces directly with an associated mobile radio. This model can be configured for both standard communications and specific message formats. However, because of its small size its use is essentially limited to pre-defined procedures. The 9031: The 9031 is a single-piece vehicle mounted unit designed for public safety agencies, public utilities, and courier services. The unit is 9.9 x 10.6 x 7.6 inches in size and weighs 7.7 pounds. It has a five inch amber Cathode Ray Tube ("CRT") display for sixteen lines and 32 characters per line. The display screen has five areas: message display, operations indicator area, status identifier area, prompt field, and memory indicator area. Standard characters sets in the 9031 include the 64 normal upper case ASCII characters plus an additional 64 character graphics set. The keyboard is a standard typewriter ("QWERTY") keyboard with a function key cluster. The 9031 features a 40K bytes RAM and 20K bytes of RAM, and has a memory capacity of 100 message lines of 32 characters per line, with an additional 64 lines of downloadable local forms storage. The unit has an integral 4800 bps modem and a universal RS-232C serial interface that can support a printer. However, the 9031 does not have an integral transceiver. The 9031 transmits and receives on a FM baseband via a MDI radio, an 800 MHz frequency synthesized radio. The radio is generally mounted in the -4- vehicle's trunk. The 9031 can be configured for both use in different types of systems and for individual uses within a single system. Configuration possibilities include user- specified messages such as electronic mail, a maximum of sixteen fill-in forms, and programs to establish operational and message priorities. A 9031 user has direct access to a central computer for both input and output. The 9031 can relay both voice and data messages depending on the type of radio used with the unit. The 9031 was modified into the 9035 and the 9036. The first round of upgrades produced the 6100, the 7100-10 and the 9100-10. These units are similar to the prior models. They incorporate 4.0 MHz Z80 microprocessors, but their internal memory and off-line processing and data entry functions have been upgraded. The 6100: The 6100 is a small, compact portable terminal. It is 9.75" x 2.5" x 2.25" in size and weighs 3.5 pounds. The 6100 has a 5 x 2.6 inch LCD screen capable of displaying eight lines with 40 characters per line. The screen of the 6100 is hinged to the keyboard so that the two components fold together. The adjustment angle of the display ranges from zero degrees when closed to 135 degrees when fully open. The unit's keyboard has 60 keys including 40 alpha-numeric keys, 11 keys for editing and local terminal operations, and six keys whose functions change under software control (soft keys). The 6100 uses the standard ASCII character set and a set of special graphic characters. The single logic board of the 6100 contains two communications chips, and two microprocessors, one for communications and input/output functions, and the other for applications configuration and message management. Program memory for the unit resides in EPROM, while the communications related variables are stored in Electrically Erasable Programmable Read-Only Memory ("EEPROM"). Message data and application configuration data are stored in RAM. The 6100 has a message capacity of up to 40 characters x 50 lines, or up to 20000 characters. The unit also contains a serial port for connection to peripheral devices. The unit transmits data at 4800 bps on a FM baseband. The 6100 has a built-in MHz radio transmitter and receiver with an internal antenna. It transmits at a frequency of 806 MHz to 821 MHz and receives at a frequency of 851 MHz to 866 MHz. The 7100-10: The 7100-10 is a small mobile terminal specifically designed for dispatching services. The unit is 23.4 x 16.3 x 3.5 cm in size and weighs 1kg. The 7100-10 has a LCD screen that displays four lines of text with 40 characters per line. The keyboard of the 7100-10 is a numeric keyboard with a number of special function keys. The unit has a 64 ASCII character set. The 7100-10 can support six messages of up to 10 lines of 32 character per line in its local message storage area for recall, up to 16 predefined messages, and up to 16 fill-in- -5- the-blank forms. The 7100-10 functions with an MDI 8300 radio to transmit over FM radio channels at a rate of 4800 bps. The unit has 64K bytes of EPROM, 24K bytes of RAM, and 1K of E2 PROM. The unit has a serial RS-232C connection at the unit's base that can support external devices such as a printer or a bar-code reader. The 7100-10 comes in two forms: the 7100-10 with a small, full keyboard, and the 7100D with a limited keyboard. The 9100-10: The 9100-10 is similar to the prior models. It is a single-piece mobile terminal with a QWERTY keyboard, a function key cluster and a five inch amber CRT screen which displays 10 lines of 32 characters per line. The 9100-10 has a memory capacity of 100 message lines of 32 characters per line, along with 3K bytes of downloadable local forms storage. The unit incorporates 4.0 MHz Z80 microprocessors. The unit has a message transmission rate of 4800 bps, and transmits on a FM baseband with a frequency range of 806 to 825 MHz. Messages are received on a frequency range of 851 to 870 MHz. Messages may be retransmitted automatically up to four times if necessary. The second round of upgrades occurred after Mobile Data International was acquired by Motorola. The 6000 series models were replaced by the existing Motorola KDT series, the 800, 840, 880 and the 480C. These KDT units use Motorola processors, the 68HC11 eight-bit processor. KDT 800, 840 and 880: The 800, 840 and 880 KDTs are portable models of 7.8 x 4.0 x 1.43 inches in size and a weight of approximately 30 oz. The 800, 840 and 880 models have a 7 x 4.8 inches LCD screens. The 800 model displays two lines of 27 characters per line. The 840 and 880 models display four lines of 40 characters per line. The units have QWERTY keyboards with editing keys and function key clusters. The models have two on- board processors, one used for data processing functions and the other for communications. The 800 model has 32K bytes of ROM and 24K bytes of RAM. The 840 and 880 have 128K bytes of ROM and 32K bytes of RAM. The KDTs have an integral RF transceiver. All three models operate on a FM baseband at a rate of 4800 bps, with a transmitter frequency range of 806-821 MHz, and a receiver frequency range of 851-866 MHz. The units have interface ports capable of supporting peripheral devices. KDT 480C: The 480C is a mobile component system with a detachable keyboard, a CRT display mounted in the passenger compartment of the vehicle, and a housing containing the processor, memory and radio modem, which will ordinarily be trunk mounted in the vehicle. The system can accommodate voice as well as data communication. The display unit is 5 x 10.7 x 9 inches in size with a CRT viewing area of 8 x 3 inches. The 480C displays 14 lines of characters per line. The display unit is -6- mounted in the passenger compartment of the vehicle. The keyboard is 10.7 x 1.5 x 6.3 inches in size and is connected to the display unit in the passenger compartment. The keyboard has 12 programmable function keys, 41 alpha-numeric and punctuation keys, 8 editing keys, and 6 terminal operations keys. The unit supports the full 96 character ASCII set, plus a 32 graphic display character set. The logic unit containing the processor, memory and radio modem is 11.5 x 7.2 x 2.7 inches in size and connects to the keyboard and display by cables. The 480C has 32K bytes of ROM and 24K bytes of RAM. The unit has interface ports capable of supporting peripheral devices. Further upgrades have occurred on the 7100 and the 9100. These series were upgraded to include the 7100-11 and the 9100- 11. The upgraded models have essentially the same microprocessors and operating systems. The units have similar capabilities, differing only in screen and memory sizes. The 7100-11 has a smaller memory capacity than the 9100-11 and a smaller screen. However, the 7100-11 allows for "windowing" around the full size screen. The current top of the line model is the 9100-20 mobile unit which incorporates a 16 bit processor, the Motorola 68000 microprocessor. Motorola expects volume importation of the 7100, the 9100 and the KDT series units. Although some of the listed models are no longer currently marketed, they continue to be sold to the companies for which they were designed. The units currently being imported are produced in Singapore. The procedure for importation is to import the units complete with microprocessors and with all electronic components on board except for the applications programming in the form of RAM and EPROM plug-ins. In their condition as imported the units are also without the RF transceiver for the portable units. Once in the United States the EPROM and RAM is programmed, incorporated into the unit and the unit is then tested and parameter set for the particular end user application. You state that at the time of entry the units are substantially complete to be classified as the finished units. HQ 085404 classified the 6100, the 7031, the 9031 and the 9100 under heading 8525, Harmonized Tariff Schedule of the United States Annotated ("HTSUSA"), as "Transmission apparatus for radiotelephony, radiotelegraphy, radio-broadcasting or television, whether or not incorporating reception apparatus..." The 6100 was classified in subheading 8525.20.60, HTSUSA, as "...Transmission apparatus incorporating reception apparatus... Other...Other..." The 7031, 7100-10, and the 9100 were classified in subheading 8525.10.80, HTSUSA, as "...Transmission apparatus...Other...Other..." -7- You believe that the all of the units are input/output units of data processing systems, and that the units are properly classified under subheading 8471.92.10, HTSUSA, as "Automatic data processing machines and units thereof...Other...Input or output units, whether or not entered with the rest of the system and whether or not containing storage units in the same housing...Combined input/output units..." Alternatively, you believe that the units are classified in subheading 8471.20.00, HTSUSA, as "...Digital automatic data processing machines containing in the same housing at least a central processing unit and an input and output unit, whether or not combined..." You also suggest subheading 8471.91.00, HTSUSA, which describes "...Other..digital processing units, whether or not entered with the rest of a system, which may contain in the same housing one or two of the following types of units: storage units, input units, output units..." ISSUE: Whether the mobile data terminals imported by Motorola are automatic data processing machines and units thereof under heading 8471, HTSUSA, or transmission apparatus for radiotelephony, radiotelegraphy, radio-broadcasting or television, whether or not incorporating reception apparatus under heading 8525, HTSUSA. LAW AND ANALYSIS: The classification of merchandise under the HTSUSA is governed by the General Rules of Interpretation ("GRIs"). GRI 1, HTSUSA, states in part that "for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes and... according to the following provisions." GRI 2, HTSUSA, one of "the following provisions" requires that references in a heading to an article include references to that article in an incomplete, unfinished, unassembled, or disassembled state, as long as the incomplete, unfinished, unassembled, or disassembled article has the essential character of the finished article. We accept your assertion that these articles have the essential character of the finished articles. Although the MDTs are entered in an incomplete state, they are classified as though they were complete. The headings in contention are heading 8471 and 8725, HTSUSA. These headings describe the following: 8471 Automatic data processing machines and units thereof... * * * * * * * * * * * * * -8- 8525 Transmission apparatus for radiotelephony, radiotelegraphy, radio-broadcasting or television, whether or not incorporating reception apparatus... GRI 1 indicates that along with the terms of the headings, any applicable section or chapter notes must be utilized. Both headings are found within Section XVI of the tariff. Furthermore, heading 8471 is within Chapter 84, HTSUSA, and heading 8525 is within Chapter 85, HTSUSA. Thus the Section XVI, Chapter 84, and Chapter 85 notes must be examined. The relevant notes include Section XVI, Note 3, HTSUSA and Chapter 84, Note 5, HTSUSA. Chapter 84, Note 5 provides the meaning of the term "automatic data processing machines" as used within the tariff. This definition is expressed in terms of the abilities an automatic data processing mac