HQ H014068

October 9, 2007

**CLA-2 OT:RR:CTF:TCM** H014068 HkP

**CATEGORY:** Classification

**TARIFF NO.:** 9030.40.0000

Ms. Melissa Hoffman

Compliance Import Specialist

Ericsson, Inc.

6300 Legacy Drive

Mailstop EVW 1-B-5

Plano, TX 75024

**RE:** Classification and Country of Origin of the "TEMS™ Pocket"
device

Dear Ms. Hoffman:

This is in response to your request submitted on May 31, 2007, to the
National Commodity Specialist Division of U.S. Customs and Border
Protection ("CBP ") requesting a binding ruling on behalf of Ericsson,
Inc. At issue is the proper classification and country of origin of the
"TEMS™ Pocket" device under the Harmonized Tariff Schedule of the United
States ("HTSUS "). Your request was forwarded to this office for a
response. In reaching our decision we have taken into consideration
additional information and the sample provided by you to this office in
August 2007, as well as information provided during a teleconference on
September 19, 2007.

**FACTS:**

TEMS™ is an Ericsson company which develops, markets, and sells testing
equipment for wireless networks. TEMS is not an acronym.

The TEMS Pocket is a commercially available fully functional cellular
phone onto which TEMS network testing software has been loaded.
According to the information submitted, TEMS software allows a cellular
phone to function as a testing tool for telecommunication networks. The
TEMS Pocket is used by network engineers to verify, maintain and
troubleshoot mobile networks as well as for basic cell planning tasks.
Collected data can be stored in the handset for later transfer to a
computer. The product literature lists some of the key features of the
TEMS Pocket as:

-   Includes a Sony Ericsson K790i, K790a, K800i or Nokia N80 mobile
    phone

-   Measures WCDMA[^1] 2100 MHz and GSM/GPRS[^2]/EDGE[^3]
    850/900/1800/19000 MHz

-   Records logfiles for later post-processing analysis

-   Generates network event notifications

-   Clearly presents essential network information on the mobile standby
    display. Also displays channel information and performance
    measurements during WAP browsing

-   Measures EGPRS[^4] and WCDMA data performance

-   Provides cell control options including locking on RAT[^5], locking
    on cell, channel and band, and modifying cell barred behavior

-   Supports FTP[^6] for networking troubleshooting and logfile transfer

-   Automates call handling, logfile recording, and transfer to server
    via FTP

-   Allows data collection in places that are hard to reach with
    traditional drive-test tools and methods

The cellular phone handset is designed in Sweden and is typically
assembled in China or Malaysia. The phone incorporates a camera, music
and video player, and an FM radio, and can connect to the Internet.
After assembly, the handset is shipped to Sweden where the TEMS software
is loaded on to it and tested. According to Ericsson, the TEMS software
adds approximately \$2500 worth of value to the phone. A sample of the
TEMS Pocket has been provided for our review.

During our teleconference, Ericsson informed CBP that the TEMS Pocket
connects to a cellular network as an ordinary phone and that this is the
only way in which it can connect to the network to be tested. When the
phone is turned on, technical information concerning the network is
immediately displayed. CBP was also informed that some of the displayed
information is calculated aggregated data. For example, information
concerning signal strength for a particular channel is shown as a ratio
of signal strength to interference. In order to use the TEMS Pocket as a
cellular phone, the TEMS software has to be manually disabled.

According to the product literature, the TEMS Pocket has several data
presentation views. Combined views display information valid for all
radio access technology. For example, the PDP[^7] context view displays
PDP addresses and PDP context settings for each address, including the
NSAPI[^8] and APN[^9]. The WCDMA views display cell and network identity
along with Universal Terrestrial Radio Access (UTRA) carrier RSSI
(Received Signal Strength Indication)[^10]. For example, the WDCMA Cells
view displays UARFCN[^11], cell status, scrambling code, RSCP[^12],
Ec/No and path loss for each cell in active set and serving/monitored
cells. The GSM/GPRS views contain serving cell ARFCN, BSIC[^13] and
RxLev[^14], and cell and network identity in addition to other
information listed in the literature.

In addition, the TEMS Pocket has several functions that allow the user
to control the operation of the phone. According to the literature,
these functions are essential for troubleshooting and verification in
the field. From the Cell Control menu the user can select multiple
actions such as:

\- Lock to RAT (Off/WCDMA/GSM)

\- Lock Cell WCDMA (Off/Set UARFCN/SC)

\- Lock ARFCN GSM (Off/Set ARFCN)

\- Lock to Band GSM (Off/850/900/1800/1900)

\- Ignore cell barred (Off/On)

\- Reset control settings to default off state

The TEMS Pocket is imported packaged together with a memory stick,
battery and charger, USB cable, lanyard, hands free headset and software
user guides.

Ericsson contends that the correct classification of the TEMS Pocket is
subheading 9030.40.0000, HTSUSA, which provides for telecommunication
testing equipment.

**ISSUE:**

What is the correct classification of the TEMS Pocket device under the
HTSUS?

What is the country of origin of the TEMS Pocket device?

**LAW AND ANALYSIS:**

[Classification]{.underline}

Classification under the HTSUS is made in accordance with the General
Rules of Interpretation (GRIs). GRI 1 provides that the classification
of goods shall be determined according to the terms of the headings of
the tariff schedule and any relative section or chapter notes. In the
event that the goods cannot be classified solely on the basis of GRI 1,
and if the headings and legal notes do not otherwise require, the
remaining GRIs 2 through 6 may then be applied in order.

The HTSUS provisions under consideration are as follows:

8517 Telephone sets, including telephones for cellular networks or for
other wireless networks; other apparatus for the transmission or
reception of voice, images or other data, including apparatus for the
communication in a wired or wireless network (such as a local or wide
area network), other than transmission or reception apparatus of heading
8443, 8525, 8527 or 8528; parts thereof:

> Telephone sets, including telephones for cellular networks or for
> other wireless networks:
>
> \* \* \*

8517.12.00 Telephone sets for cellular networks or for other wireless
networks .....

9030 Oscilloscopes, spectrum analyzers and other instruments and
apparatus for measuring or checking electrical quantities, excluding
meters of heading 9028; ... :

> \* \* \*

9030.40.0000 Other instruments and apparatus, specially designed for
telecommunications (for example, cross-talk meters, gain measuring
instruments, distortion factor meters, psophometers) .....

Legal Note 3 to Chapter 90 provides that note 3 to Section XVI also
apply to Chapter 90. Note 3 to Section XVI provides:

> Unless the context otherwise requires, composite machines consisting
> of two or more machines fitted together to form a whole and other
> machines designed for the purpose of performing two or more
> complementary or alternative functions are to be classified as if
> consisting only of that component or as being that machine which
> performs the principal function.

The Harmonized Commodity Description and Coding System Explanatory Notes
("ENs") constitute the official interpretation of the HTSUS at the
international level. While not legally binding nor dispositive, the ENs
provide a commentary on the scope of each heading of the HTSUS and are
generally indicative of the proper interpretation of these headings.
[See]{.underline} T.D. 89-80.

EN 90.30(B) explains, in relevant part, that heading 9030 "includes a
wide range of electrical or electronic instruments used in
radio-communications or telecommunications." Included in this range are
instruments and apparatus such as transmission level indicators,
instruments for measuring interference, and cross-talk meters, which are
used on telephone circuits for measuring various quantities.

It is your contention that principal function of this device is to test
mobile networks. As such, you believe that it is properly classified in
subheading 9030.40.0000, HTSUSA, as instruments and apparatus for
measuring or checking electrical quantities, specially designed for
telecommunications, and not as a cellular phone.

We agree. The TEMS Pocket measures the performance of data and signal
transmissions (EGPRS and WCDMA) and displays system data for cell
access, selection and location, serving cell, ARFCN of traffic channel,
used timeslots and coding schemes, along with uplink and downlink (logic
link control) LLC and RLC (radio link control) performance, among other
functions. In addition, through the operation of the TEMS software,
certain functions of the phone can be turned off in order to assist in
the testing process. For example, the TEMS Pocket can be instructed to
"Lock to RAT", that is, turn off or select WCDMA or GSM (data and signal
transmissions) or to "Lock to Band GSM", that is, turn off or select a
certain GSM frequency band. Finally, although the TEMS Pocket is also a
fully functional cellular phone, the phone's principal function in this
device is to enable the TEMS software to connect with the cellular
network to be tested.

Based on the foregoing, we find that the TEMS Pocket meets the terms of
heading 9030, HTSUS, as explained by EN 90.30(B), because it is a device
used for measuring or checking electrical quantities, specifically in
telecommunication networks. It is classified in subheading 9030.40.0000,
HTSUSA, as other instruments and apparatus specially designed for
telecommunications.

The TEMS Pocket is imported packaged together with a memory stick,
battery and charger, USB cable, lanyard, hands free headset and software
user guides. GRI 3(b) provides that goods put up in sets for retail sale
shall be classified as if they consisted of the material or component
which gives them their essential character. EN (X) to GIR 3(b)
explains:    

> For the purposes of this Rule, the term "goods put up in sets for
> retail sale" shall be taken to mean goods which:
>
> \(a\) Consist of at least two different articles which are, *prima
> facie*, classifiable in different headings. Therefore, for example,
> six fondue forks cannot be regarded as a set within the meaning of
> this Rule;
>
> \(b\) Consist of products or articles put up together to meet
> particular need or carry out a specific activity; and
>
> \(c\) Are put up in a manner suitable for sale directly to users
> without repacking (e.g., in boxes or cases or on boards).

EN (VIII) to GIR 3(b) explains that "the factor which determines
essential character will vary as between different kinds of goods. It
may, for example, be determined by the nature of the material or
component, its bulk, quantity, weight or value, or by the role of a
constituent material in relation to the use of the goods."

All the items under consideration here are classifiable in different
headings, are "put up together" to enable a user to conduct testing of
telecommunication networks, and are offered for sale directly to users
without repacking. Consequently, the items may not be classified
separately under their respective classifications. Furthermore, CBP
finds that the item which imparts the essential character of this set is
the TEMS Pocket. It is the dominant component, by use and cost in
relation to the other constituent components of the set. It is also the
reason why a consumer would purchase the set.

[Country of Origin]{.underline}

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. §1304),
provides that, unless excepted, every article of foreign origin (or its
container) imported into the United States shall be marked in a
conspicuous place as legibly, indelibly and permanently as the nature of
the article (or its container) will permit, in such a manner as to
indicate to the ultimate purchaser in the United States the English name
of the country of origin of the article. Congressional intent in
enacting 19 U.S.C. §1304 was \"that the ultimate purchaser should be
able to know by an inspection of the marking on the imported goods the
country of which the goods is the product. The evident purpose is to
mark the goods so that at the time of purchase the ultimate purchaser
may, by knowing where the goods were produced, be able to buy or refuse
to buy them, if such marking should influence his will.\" [United States
v. Friedlaender & Co.]{.underline}, 27 CCPA 297, 302, C.A.D. 104 (1940).
Part 134, U.S. Customs and Border Protection Regulations (19 C.F.R.
§134) implements the country of origin marking requirements and
exceptions of 19 U.S.C. §1304.

Section 134.1(b), CBP Regulations (19 C.F.R. § 134.1(b)), defines
\"country of origin\" as "the country of manufacture, production, or
growth of any article of foreign origin entering the United States.
Further work or material added to an article in another country must
effect a substantial transformation in order to render such other
country the 'country of origin' within the meaning of \[the marking laws
and regulations\]." For country of origin marking purposes, a
substantial transformation of an article occurs when it is used in
manufacture, which results in an article having a name, character, or
use differing from that of the article before the processing. However,
if the manufacturing or combining process is merely a minor one that
leaves the identity of the article intact, a substantial transformation
has not occurred. [Uniroyal, Inc. v. United States]{.underline}, 3 CIT
220, 542 F. Supp. 1026, 1029 (1982), [aff'd]{.underline}, 702 F.2d 1022
(Fed. Cir. 1983).

CBP has long held that the installation (downloading) of software onto a
computer diskette amounted to substantial transformation of the diskette
because the character of the diskette had changed from one of a blank
storage medium to one with a predetermined electronic pattern encoded
onto it. The use of the diskette had changed from a meaningless article
of software to that of an encoded instruction guide that enabled a
computer to perform various commands. [See]{.underline} **HQ 732087**,
February 7, 1990. [See also]{.underline}, **HQ 735027** (September 7,
1993) concerning the country of origin marking requirements for
"MemoPlugs", the hardware of which was imported into the U.S. and then
programmed with anti-piracy software. [See generally]{.underline} **HQ
968000** (February 14, 2006) regarding substantial transformation of
components of foreign origin used in the assembly of various electronic
components.

As was stated in HQ 968000, in order to determine whether a substantial
transformation occurs when components of various origins are assembled
into completed products, CBP considers the totality of the circumstances
and makes such determinations on a case-by-case basis. The country of
origin of the item's components, extent of the processing that occurs
within a country, and whether such processing renders a product with a
new name, character, or use are primary considerations in such cases.
Additionally, factors such as the resources expended on product design
and development, extent and nature of post-assembly inspection and
testing procedures, and worker skill required during the actual
manufacturing process will be considered when determining whether a
substantial transformation has occurred; however, no one factor is
determinative.

After considering all the circumstances, we find that the installation
in Sweden of the TEMS software into the pre-existing cellular phones
assembled in China or Malaysia substantially transformed the use and
function of these phones. Once the TEMS software was installed into the
phones in Sweden the phones, although still operational as such, became
devices that are substantially used to measure and check
telecommunication networks. We note that the concept of substantial
transformation does not mandate "absolute" transformation, but only that
an article gain a new name, character and use as a result of processing.
This was accomplished once the TEMS software was loaded onto the phones
in Sweden. As a result, we find that the country of origin of the TEMS
Pocket is Sweden.

**HOLDING:**

By application of GRI 3(b), Legal Note 3 to Chapter 90, we find that the
TEMS Pocket is classified in heading 9030, HTSUS. It is specifically
provided for in subheading 9030.40.0000, HTSUSA, which provides for:
Oscilloscopes, spectrum analyzers and other instruments and apparatus
for measuring or checking electrical quantities, excluding meters of
heading 9028 ...: Other instruments and apparatus, specially designed
for telecommunications (for example, cross-talk meters, gain measuring
instruments, distortion factor meters, psophometers). The 2007 column
one, general rate of duty is free.

Duty rates are provided for your convenience and subject to change. The
text of the most recent HTSUS and the accompanying duty rates are
provided on the World Wide Web at www.usitc.gov.

Based on the facts of this case, we find that the country of origin of
the TEMS Pocket for marking purposes is Sweden.

A copy of this ruling letter should be attached to entry documents filed
at the time the goods are entered. If the documents have been filed
without a copy, this ruling should be brought to the attention of the
CBP officer handling the transaction.

> Sincerely,
>
> Gail A. Hamill, Chief
>
> Tariff Classification and Marking Branch

[^1]: Wideband CDMA. A 3G high-speed digital data service provided by
    cellular carriers that use TDMA (Time Division Multiple access --
    technology that interleaves multiple digital signals onto a single
    high-speed channel) or GSM (Global System for Mobile Communication)
    technology. [TechEncyclopedia]{.underline} *available at*
    www.answers.com.

[^2]: General Packet Radio Service. Technology in which a
    packet-switched channel is added to GSM, which uses dedicated,
    circuit-switched channels for voice conversations

[^3]: Enhanced Data Rates for Global Evolution. A 2.5G high-speed
    digital data service provided by cellular carriers that use GSM
    technology. Also called Enhanced GPRS (EGPRS).

[^4]: Enhanced GPRS. See notes 2 and 3.

[^5]: Radio Access Technology, for e.g., GSM.

[^6]: File Transfer Protocol.

[^7]: Policy Decision Points are servers which store policy data. PDPs
    are a part of Common Open Policy Service (COPS), which is a standard
    for exchanging policy information in a network. [See
    TechEncyclopedia]{.underline} at www.techweb.com

[^8]: NetScape API. A programming interface on Netscape's Web Server.
    Using NSAPI function calls, Web pages can invoke programs on the
    server, typically to access data in a database. [Id.]{.underline}

[^9]: Access Point Name or Access Point Number.

[^10]: RSSI is a measurement of the received radio signal strength
    (energy integral, not the quality).

[^11]: UTRA ARFCN (Absolute Radio Frequency Channel Number). ARFCN
    specifies a certain radio frequency used for transmission and
    reception within wireless networks (GSM).

[^12]: Received Signal Code Power.

[^13]: Base Station Identity Code. A GSM code.

[^14]: Received Signal Level.