Madge Local Area Network Interface Boards; NIBs; ADP Machine; Control And Adapter Unit; HQ 951331; HQ 952659

HQ 952680 October 14, 1992 CLA-2 CO:R:C:M 952680 MBR CATEGORY: Classification TARIFF NO.: 8471.99.15 Donald L. Fischer, Esq. Horton, Whitely & Cooper 1900 Embarcadero, Suite 201 Oakland, California 94606 RE: Madge Local Area Network Interface Boards; NIBs; ADP Machine; Control And Adapter Unit; HQ 951331; HQ 952659 Dear Mr. Fischer: This is in response to your letter of September 29, 1992, requesting classification of the Madge Networks Network Interface Boards, under the Harmonized Tariff Schedule of the United States (HTSUS). We have recently reconsidered the classification of LAN equipment in general, and Network Interface Boards in particular. See HQ 951331, dated September 18, 1992, as modified by HQ 952659, dated October 7, 1992. FACTS: You state that these Local Area Network (LAN) Interface Boards are identical to those classified under HQ 951331, dated September 18, 1992. Specifically, these LAN boards are printed circuit boards designed for physical incorporation into a personal computer or into an ADP system. As such, they are connectable to other PC's and units thereof, over a variety of LAN media, including coaxial cables and twisted pair wire. Madge's LAN network interface boards (NIBs) convert, process, and format data in order that several ADP machines or systems are able to communicate and share data. ISSUE: Whether the Madge Network Interface Boards are classifiable under headings 8471, HTSUS, which provide for automatic data processing machines, or under heading 8517, HTSUS, which provides for "[e]lectrical apparatus for line telephony or telegraphy"? -2- LAW AND ANALYSIS: Since the HTSUS came into effect there has been a great deal of controversy regarding the classification of LAN boards. However, there is no clear classification guidance from either the HTSUS or the Harmonized Commodity Description and Coding System Explanatory Notes (ENs), primarily due to the technological advancements in this area. However, Legal Note 5(B) to chapter 84, HTSUS, provides guidance regarding units of automatic data processing machines. It states: Automatic data processing machines may be in the form of systems consisting of a variable number of separately housed units. A unit is to be regarded as being a part of the complete system if it meets all of the following conditions: (a) It is connectable to the central processing unit either directly or through one or more other units; and (b) It is specifically designed as part of such a system (it must, in particular, unless it is a power supply unit, be able to accept or deliver data in a form (code or signals) which can be used by the system). We agree that the NIBs are essential to the ADP systems with which they are integrated because they process and format the data of the computers they serve. The Harmonized Commodity Description and Coding System Explanatory Notes (ENs), pages 1299-1300, describe separately presented ADP units as follows: This heading also covers separately presented constituent units of data processing systems. Constituent units are those defined in Parts (A) and (B) above as being parts of a complete system. Apart from central processing units and input and output units, examples of such units include: (4) Control and adaptor units such as those to effect interconnection of the central processing unit to other digital data processing machines, or to groups of input or output units which may comprise visual display units, remote terminals, etc. After extensive research and analysis, it is now our opinion that the principal function of the NIBs is, in fact, to effectuate the interconnection of the CPU unit to other units or ADP machines, thereby serving "control" and "adaption" functions, as described by -3- the ENs. Therefore, the NIBs are properly classifiable in subheading 8471.99.15, HTSUS, which provides for "Control or adapter units." HOLDING: The Madge Network Interface Boards are classifiable in subheading 8471.99.15, HTSUS, which provides for: "[a]utomatic data processing machines and units thereof: [o]ther: [o]ther: [c]ontrol or adapter units." The rate of duty is Free. Sincerely, John Durant, Director Commercial Rulings Division ATTACHMENT: HQ 951331 HQ 952659