Allied Telesis, Inc.; Local Area Network Multimedia Concentrators; LAN; Automatic Data Processing Machine; Control or Adapter Units; HQ 952659

HQ 953204 April 28, 1993 CLA-2 CO:R:C:M 953204 MBR CATEGORY: Classification TARIFF NO.: 8471.99.15 Mr. John J. Marshall "K" Air Brokerage, Inc. 40-A Broderick Road Burlingame, CA 94010 RE: Allied Telesis, Inc.; Local Area Network Multimedia Concentrators; LAN; Automatic Data Processing Machine; Control or Adapter Units; HQ 952659 Dear Mr. Marshall: This is in response to your letter of January 7, 1993, requesting classification of the local area network ("LAN") Multimedia Concentrators, under the Harmonized Tariff Schedule of the United States (HTSUS). FACTS: The CentreCOM Multimedia Concentrator ("Concentrator"), identified in the submitted literature as model AT-5000, is described as an article used to provide a versatile network expansion system. The Concentrator creates networks utilizing different media, supporting any mix of thicknet, thinnet and fiber optics within a single enclosure. The submitted literature also states that the concentrators provide unmatched flexibility in network design, with up to nine individual modules installed in one concentrator. These concentrators may be used as either a stand alone network for a cluster of stations or as a concentrator for multiple stations accessing a single network. The importer also states that the Concentrators are used in a LAN to connect terminals or computers to a data processing network, and are designed to connect equipment utilizing coaxial cable with an Ethernet LAN utilizing twisted pair cabling. ISSUE: Are LAN Concentrators classifiable under subheading 8517.82.00, HTSUS, which provides for electrical apparatus for line telegraphy, or are they classifiable under subheading 8471.99.15, HTSUS, which provides for ADP "control or adapter units"? -2- LAW AND ANALYSIS: Since the HTSUS came into effect there has been a great deal of controversy regarding the classification of LAN equipment. 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. In HQ 952659, dated October 8, 1992, regarding LAN boards, we cited Legal Note 5(B) to chapter 84, HTSUS, which provides guidance regarding the classification of 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 instant Concentrators are connectable to the CPU either directly or through one or more units. Furthermore, the Concentrators are designed to be a constituent unit of an ADP system, and are able to accept and deliver data. In HQ 952659 we also cited the Harmonized Commodity Description and Coding System Explanatory Notes (ENs), pages 1299- 1300, which describe the classification scope of the ADP unit provisions, in pertinent part, 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. -3- We agree that the principal function of the instant Concentrator is, in fact, to effectuate the interconnection of the CPU unit to other units or ADP machines, thereby serving "control" and "adaption" functions. HOLDING: The Allied Telesis, Inc., LAN Multimedia Concentrators, model number AT-5000 (Concentrator with modules), is classifiable under 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