Taxan USA Corporation; Local Area Network Micro Repeaters; LAN; Automatic Data Processing Machine; Control or Adapter Units; HQ 952659; Unfinished

HQ 953212 April 30, 1993 CLA-2 CO:R:C:M 953212 MBR CATEGORY: Classification TARIFF NO.: 8471.99.15 Mr. John J. Marshall "K" Air Brokerage, Inc. 40-A Broderick Road Burlingame, CA 94010 RE: Taxan USA Corporation; Local Area Network Micro Repeaters; LAN; Automatic Data Processing Machine; Control or Adapter Units; HQ 952659; Unfinished Dear Mr. Marshall: This is in response to your letter of January 7, 1993, requesting classification of unfinished local area network ("LAN") Micro Repeaters, model numbers AT-MR111T and AT-MR112T, under the Harmonized Tariff Schedule of the United States (HTSUS). FACTS: The instant Micro Repeaters, model numbers AT-MR111T (AUI to RJ45) and AT-MR112T (BNC to RJ45), are two port media converters/media extenders which are designed for coax media and Unshielded Twisted Pair (UTP) media. These repeaters provide for connection to UTP (10Base-T), thin coax (10Base2), and thick coax (10Base5), in any combination of media. The instant Repeaters are imported without the chassis and housing. Additionally, the AT-MR112T is imported without the internal power supply. ISSUE: Are unfinished LAN Micro Repeaters ("Repeaters") 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 Repeaters are connectable to the CPU either directly or through one or more units. Furthermore, the Repeaters 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 Repeaters is, in fact, to effectuate the interconnection of the CPU unit to other units or ADP machines, thereby serving "control" and "adaption" functions. The instant Repeaters will be imported without the chassis and the housing. Additionally, model AT-MR112T will be imported without an internal power supply. GRI 2(a) provides guidance for the classification of incomplete and unfinished articles. It states, in pertinent part: Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article.... It is Customs position that the unfinished Micro Repeaters, entered without the chassis and housing (and internal power supply for model AT-MR112T), but complete in every other aspect, contain all the functional elements, and as such, do have the essential character of the finished article. HOLDING: The Taxan USA Corporation unfinished LAN Micro Repeaters, model numbers AT-MR111T and AT-MR112T, 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