HQ 086105

May 7, 1990

CLA-2 CO:R:C:G 086105 AJS

CATEGORY:, Classification

TARIFF NO.:, 8471; 8517

Mr. Irving W. Smith, Jr.

George R. Tuttle Law Offices

1331 Pennsylvania Avenue, N.W.

Suite 1200F

Washington, D.C. 20004

RE: Networking Interface Boards

Dear Mr. Smith:

Your letter of December 5, 1989, requesting a tariff

classification under the Harmonized Tariff Schedule of the United

States Annotated (HTSUSA), has been referred to this office for

reply.

FACTS:

The articles in question are network interface boards

(NIBs). They are designed for either physical incorporation into

a personal computer (PC) or into other units of an automatic data

processing (ADP) system. NIBs are connectable to other PCs and

units (e.g., input units, output units, storage units and gateway

equipment) over a variety of local area network (LAN) media

including coaxial cables and twisted pair wire. The NIBs

convert, process and format data so that several data processing

machines are able to function as a single ADP system, known as a

LAN. A LAN is described as a system consisting of a set of nodes

(e.g., terminals, micro-computers, minicomputers, mainframes,

printers, hard disks, or work stations) that are interconnected

by a set of links (e.g., coaxial cable, twisted-pair wires or

fiber optic cable). McGraw-Hill Encyclopedia of Electronics and

Computers, (2nd ed. 1988), p. 505.

The NIBs allow PCs to off-load their interface

responsibilities so that they can instead concentrate on data

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processing. These interface responsibilities involve the

performance of two major functions. First, the NIBs receive

binary information from a PC and convert this into digital data

so that it can be used at other locations within the LAN.

Examples of this conversion are character format conversion and

file conversion. Once converted, this data is either formatted

separately or grouped into units of data known as packets. This

data is then transmitted to different locations within the LAN.

Once received by another NIB, the packets are converted into a

form usable by the destination device. In sum, the NIBs essent-

ially process, translate, convert and transmit data for use

within the LAN. The NIBs also perform such additional functions

as encoding/ decoding, LAN protocol implementation, temporary

memory storage, control logic for access to host computer, and

LAN processor local memory.

The NIBs themselves consist of various programmed chips

(including microprocessors), resistors, transistors and logic

devices which operate with the network transmission and protocol

software.

ISSUE:

Whether the articles in question are classifiable within

heading 8471, HTSUSA, which provides for ADP machines and units

thereof; or classifiable within heading 8517, HTSUSA, which

provides for electrical apparatus for line telephony or line

telegraphy.

LAW AND ANALYSIS:

Classification of merchandise under the HTSUSA is governed

by the General Rules of Interpretation (GRI\'s). GRI 1 provides

that classification is determined first in accordance with the

terms of the headings of the tariff and any relative section or

chapter notes.

Heading 8471 provides for ADP machines and units thereof.

ADP machines are devices \"which, by logically interrelated

operations performed in accordance with pre-established

instructions (programs), furnish data which can be used as such

or, in some cases, serve in turn as data for other data

processing operations.\" Explanatory Note (EN) 84.71(I); see also

Chapter 84, Note 5(A). NIBs clearly do not satisfy this

description. However, ADP machines may be in the form of a

system consisting of a variable number of separately-housed

units.

In order for an article to be classifiable as a separately-

housed unit of an ADP system it must satisfy the following

description:

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\(a\) It is connectable to the central processing unit (CPU)

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). Chapter 84,

Note 5(B).

The NIBs are connectable to the CPU of a PC as well as other

units of an ADP system. In addition, they are also specifically

designed to operate as part of an ADP system. However, they are

not a separately-housed unit but instead a networking board

suitable for physical incorporation into an ADP machine or unit

thereof.

You claim that NIBs are control or adapter units. EN 84.71

I(D)(4) states that control and adapter units effect the inter-

connection of the CPU to other digital data processing machines,

groups of input units, or output units. This category includes

channel to channel adapters used to connect two digital systems

to each other. Control units are described as intermediary

control devices which link peripheral units to the CPU. C.J. and

R.J. Sippl, Computer Dictionary and Handbook (Computer D & H),

(3rd ed. 1980), p. 115. Control units are used to interface

(i.e., interact or interconnect) computers and peripheral

devices. Myles E. Walsh, Understanding Computers: What Managers

Need to Know, (1981), p. 36. They contain the electronics which

control the operation of the peripheral devices. Id. p. 37.

Adapter units which are also referred to as display adapter

units, control the transmission of data, unit control

information, and the sequencing and synchronizing of the various

units. Computer D & H, p. 161. Channel adapters are devices

which permit connections between various data channels of

differing equipment. Id. p. 65. The NIBs in question do not

satisfy any of these descriptions, and therefore are not

classifiable as control or adapter units.

Subheading 8471.99.60, HTSUSA, provides for other units

suitable for physical incorporation into ADP machines or units

thereof. NIBs are units of an ADP system in that they are

connectable to the CPU of an ADP system and specifically designed

as part of such system. They are also physically incorporated

into an ADP machine or unit thereof, and involved in furthering

the data processing of these machines. Thus, NIBs are class-

ifiable within subheading 8471.99.60.

NIBs are not classifiable as an accessory of an ADP machine.

In order to be considered an accessory of an ADP machine, an

article must be designed to be mounted on the machine. EN 84.73.

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NIBs are designed to be mounted in an ADP machine or unit

thereof. Accessories covered by heading 8473 are interchangeable

parts or devices designed to be mounted on a machine to adapt it

for a particular operation, or to perform a particular service

relative to the main function of the machine, or to increase its

range of operations. EN 84.73. The NIBs do not satisfy this

description, and therefore they are not classifiable as an

accessory to an ADP machine.

Heading 8517, HTSUSA, provides for electrical apparatus for

line telephony or line telegraphy. EN 85.17 states that the

electrical apparatus of this heading encompass \"apparatus for the

transmission between two points of speech or sound (or symbols

representing written messages, images or other data), by

variation of an electric current or of an optical wave flowing in

a metallic or dielectric (copper, optical fibers, combination

cable, etc.) circuit connecting the transmission station to the

receiving station.\"

NIBs partially involve the transmission of digital signals

over lines between different PCs and other units within a LAN.

However, this transmission function is a secondary function whose

purpose is to further data processing within a LAN. GRI 1

requires classification to be determined according to the terms

of the headings and relevant legal notes. In this instance, the

NIBs are most accurately described by the terms of heading 8471

because of their processing, translation and conversion

functions. They do more than transmit a signal by variation as

described in the ENs to heading 8517. Instead, they aid in the

performance of logically interrelated operations which furnish

data (i.e., automatic data processing) that can be used as such

or which serves as data for other data processing operations.

In HQ 083074 ( March \_\_, 1990), Customs considered the

classification of devices called protocol converters. These

devices are similar to NIBs in that they provide translation,

processing and transmission functions for the networking of

different types of data processing machines. We ruled that these

devices were classifiable within the ADP machine heading under

the Tariff Schedules of the United States (TSUS) and not the

telephone and telegraph heading. While this decision is not

binding under the HTSUSA, Congress has indicated that prior TSUS

decisions should be considered instructive in interpreting the

HTSUSA. H. Rep. No. 100-576, 100th Cong., 2D Sess. 548 (1988) at

550\. We consider this decision instructive in supporting the

classification of the articles in question within heading 8471.

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HOLDING:

The network interface boards in question are classifiable

within subheading 8471.99.60, HTSUSA, which provides for units

suitable for physical incorporation into ADP machines or units

thereof, duty free.

Sincerely,

Jerry Laderberg

Acting Director

Commercial Rulings Division