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

HQ 953206 April 28, 1993 CLA-2 CO:R:C:M 953206 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 Multiport AUI Fanouts; 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 local area network ("LAN") Multiport AUI Fanouts, under the Harmonized Tariff Schedule of the United States (HTSUS). FACTS: The CentreCOM Multiport Fanouts ("Fanouts"), model numbers AT- 280 (two port fanout), and the AT-480 (four port fanout), are data terminal equipment (DTE) powered, multiport units for users of Ethernet LANs. These fanouts provide network managers with additional Attachment Unit Interface (AUI) ports from a single port transceiver that is currently installed on the Ethernet coaxial cable. ISSUE: Are LAN Multiport AUI Fanouts 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"? 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 -2- 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 Fanouts are connectable to the CPU either directly or through one or more units. Furthermore, the Fanouts 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. We agree that the principal function of the instant Fanouts is, in fact, to effectuate the interconnection of the CPU unit to other units or ADP machines, thereby serving "control" and "adaption" functions. -3- HOLDING: The Allied Telesis, Inc., LAN Multiport AUI Fanouts, model numbers AT-280 (two port fanout), and AT-480 (four port fanout), are 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