# HQ 965367

September 26, 2002

# CLA-2 RR:CR:GC 965367TPB

> **CATEGORY:** Classification
>
> **TARIFF NO.: 8517.50.90**
>
> Port Director
>
> U.S. Customs Service
>
> 4341 International Parkway
>
> Suite 600
>
> Atlanta, GA 30354
>
> **RE:** Protest 1704-01-100192; Transponders**;** Optical Amplifiers;
> Circuit
>
> Packs
>
> Dear Port Director:
>
> This is our decision on Protest 1704-01-100192, filed on behalf of
> Cisco Systems, Inc. ("Protestant") against your classification of
> transponders and optical amplifiers used in long-haul
> telecommunication systems, under the Harmonized Tariff Schedule of the
> United States ("HTSUS"). The entries were liquidated on March 23,
> 2001, and this protest filed on June 20, 2001.
>
> **FACTS:**
>
> The merchandise at issue are transponders and optical amplifiers used
> in long-haul telecommunications systems. Protestant claimed these
> devices were to be classified under subheading 8517.50.90 or
> 8517.90.66, HTSUS. Your office classified the merchandise under
> subheading 9013.80.90, HTSUS.
>
> Long-haul telecommunications systems involve the transmission of data
> over long distances by the use of electrical signals travelling over
> either copper cables or an optical network that can carry vastly
> increased amounts of information. An optical signal is essentially
> information in the form of on-off flashes of light carried on a given
> light wavelength and travelling down a glass rod.

An optical network consists of optical fibers (thin strands of glass)
geographically connected over long distances through a number of devices
designed to facilitate and maximize the transmission of data. The
optical fiber is bound and protected in a surrounding cable and then
usually laid underground or underwater. It uses wavelengths of light as
the carrier medium for the transmission of any type of voice or data
communication such as phone calls, videos, music and live television
transmissions.

In long-haul systems, the standard incoming and outgoing signal is
referred to as a Short Reach Synchronous Optical Network or Synchronous
Digital Hierarchy ("SONET/SDH") terminal. SONET/SDH is the term
representing the standard telecommunications signal that travels through
intranet or Internet traffic.

The external source providing this information may be a phone company or
an Internet service provider and may be regular voice or data
information. In the instant case, the incoming SONET signal is digital.

# Transponders

The transponders are independent modules that, together with other
components, including optical amplifiers, are used solely in long-haul
digital telecommunications transmission systems. In this case, the
transponders are the medium through which the incoming SONET signal is
converted from an optical signal to an electrical signal and then into
the final output optical signal. The transponder is comprised of four
main components: a receiver; a de-multiplexer/multiplexer; a modulator;
and a laser. The transponder's components are housed in a standard metal
mechanical box that is approximately 18 inches tall, 12 inches deep and
1 inch wide. It has a streamlined rack design with front and rear access
fiber network connections, becoming a component of "central office"
equipment.

When the SONET signal enters the receiver component of the transponder,
the receiver decodes the incoming optical signal, converting it from
optical to electrical so that it can be regenerated. The incoming
(optical) light wave signal arrives with "peaks." As the decoding from
the optical to an electrical radio frequency ("RF") signal occurs, the
transponder measures the peak amplitude (time distance) between the
first and second peaks of the incoming optical signal. The transponder
corresponds this measurement to the RF signal in order to assign "0's"
and "1's" to maximize the integrity of the signal.

A multiplexing component then corrects the errors in the signal
conversion. It then continues on to the modulator component of the
transponder, which dedicates the digitalized information to a particular
beam of light in the form of "0's" and "1's." There are two different
types of modulators used in a transponder, the Mach Zehnder and the
Electro-absorption Modulator ("EAM"). In either case, the modulator
effects or splits the wavelength so that it can be dedicated to a
specific beam of light provided by the laser housed within the
transponder.

The next step incorporates the use of a DFB or DBR wavelength laser that
continuously emits light as a carrier medium to support the signal
conversion to the given optical channel.

In a separate but simultaneous activity with modulation, the modulator
places the information on the laser beams light, operating at the
1550-nm wavelength range. In the DBR mechanism, an electrical current is
used to adjust the wavelength to its desired properties. In contrast,
the DFB mechanism uses temperature control to adjust the wavelength.
Since the transponder is converting signals into as many as 64 different
channels or wavelengths, each laser is programmed to operate and adjust
the parameters of a specific wavelength or channel.

# Circuit Packs

The optical amplifiers, referred to hereafter as "circuit packs," are
independent modules as well. They are located approximately every 80
kilometers within a long-haul telecommunication transmission system.
Circuit packs are used to extend the range of a telecommunication signal
transmitted via optical fiber cable. The module components include a
coupler; pump laser; erbium-doped fiber ("EDF"); and a multiplexer.
These components are also contained within a metal mechanical box that
is designed for use in a rack system.

At this point in the transmission, the signal, having been multiplexed
on to one wavelength, must now be boosted. As the signal enters the
amplifier, it enters the coupler (a small tube) which splits the signal
into two: one part of the wavelength is directed to a photodiode which
lets the amplifier know that a signal is being received; the other to an
isolator which preserves the signal for onward transmission. If the
amplifier does not detect an incoming optical signal the unit will not
operate and will act to absorb any light.

From the coupler the signal passes through the EDF. While the signal
passes through the EDF, it will be boosted. The EDF can be from 3m to
30m long, consisting of optical fiber doped with erbium. As the signal
continues through the EDF, light from an electrically powered "pump"
laser excites or stimulates the erbium ions to release their stored
energy that the signal then absorbs. Chemically, the light's one and
only purpose is to stimulate the erbium, whose molecular structure
renders it easily stimulated.

The "excited" particles release or transfer their energy to the signal
by relaxing or becoming de-excited. As the incoming signal induces
relaxation, the transfer of energy is synchronized to that of the
incoming signal, resulting in an increase or power boost of the signal
data. The signal continues through the EDF where the process is repeated
on an atomic scale. As this process continues down the fiber, the signal
grows stronger, up to 35dB. Finally, once amplified, the signal enters a
multiplexing component within the amplifier which a) guards against
unwelcome signals or noise as the signal leaves the amplifier; and b)
isolates a portion of the signal to "back propagate" or recharge the
amplifier.

The module operates using an external power supply which connects to the
circuit pack through attached voltage pins.

**ISSUE:**

What is the classification of the transponders and circuit packs?

**LAW AND ANALYSIS:**

Initially we note that the protest was timely filed (i.e., within 90
days after but not before the notice of liquidation; (see 19 U.S.C.
§1514(c)(3)(A)) and the matters protested before the matters protested
are protestable (see 19 U.S.C. §1514(a)(2) and (5)).

Merchandise is classifiable under the Harmonized Tariff Schedule of the
United States (HTSUS) in accordance with the General Rules of
Interpretation (GRIs). GRI 1 states in part that for legal purposes,
classification shall be determined according to the terms of the
headings and any relative section or chapter notes, and provided the
headings or notes do not require otherwise, according to GRIs 2 through
6. GRI 2(a) states in part that incomplete or unfinished articles are to
be classified as complete or finished if, as imported, they have the
essential character of the complete or finished article. GRI 6 permits
the comparison of same-level subheadings within the same heading, in
part by application of Rules 1 through 5, applied by appropriate
substitution of terms.

The Harmonized Commodity Description and Coding System Explanatory Notes
(ENs) constitute the official interpretation of the Harmonized System at
the international level. While not legally binding, the ENs provide a
commentary on the scope of each heading of the Harmonized System and are
thus useful in ascertaining the classification of merchandise under the
HTSUS. Customs believes the ENs should always be consulted. *See* T.D.
89-80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).

The HTSUS provisions under consideration are as follows:

> Section XVI, note 1(m), HTSUS, provides, in pertinent part, as
> follows:

1.  This section does not cover:

> ...
>
> \(m\) Articles of chapter 90;
>
> ...

8517. Electrical apparatus for line telephony or line telegraphy,
      including line telephone sets with cordless handsets and
      telecommunication apparatus for carrier-current line systems or
      for digital line systems; videophones; parts thereof:

```{=html}
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9013. Liquid crystal devices not constituting articles provided for more
      specifically in other headings; lasers, other than laser diodes;
      other optical appliances and instruments, not specified or
      included elsewhere in this chapter; parts and accessories thereof:

The ENs for heading 85.17 provide, in pertinent part, as follows:

(III) APPARATUS FOR CARRIER-CURRENT LINE SYSTEMS OR FOR DIGITAL LINE
      SYSTEMS

> These systems are based on the modulation of... a light beam by...
> digital signals. .... These systems are used for the transmission of
> all kinds of information (words, data, images, etc.)
>
> These systems include all categories of multiplexers and related line
> equipment for metal or optical-fibre cables. "Line-equipment" includes
> transmitters and receivers or electro-optical converters.

The merchandise before us fits within the terms of the heading of 8517,
HTSUS. The transponders and circuit packs are apparatus used in digital
line systems. The ENs to 85.17 support this finding.

The transponders presently before us function in the same manner as
merchandise recently ruled on by Customs. In NY H82800, dated July 3,
2001, Customs ruled that certain transponders were classified in
subheading 8517.50, HTSUS. Smaller devices such as optical transmitters
and receivers, which converted optical signals into electrical, or the
reverse, were classified under subheading 8517.50, HTSUS, as well. See
HQ 961518 dated January 23, 2002 and HQ 962957, dated October 23, 2000.
For those reasons, we find that the transponders are classifiable under
subheading 8517.50.90, HTSUS, which provides for other apparatus for
digital line systems.

Circuit packs are complete devices used exclusively in long-haul digital
telecommunication systems. Sealed within the mechanical box are the
components necessary to boost an incoming optical signal in order to
increase that signal's range. These components include laser pumps,
optical amplifiers, photodiodes, control circuits, supervisory circuits
and power supply circuits. Heading 8517, HTSUS, captures goods
principally used for digital line system transmission.

The circuit packs contain optical amplifiers, which may, if principally
used in other applications, be classified in heading 9013, which covers,
in pertinent part, other optical appliances and apparatus not classified
elsewhere in chapter 90. The instant circuit packs are not classified in
chapter 90, as they are solely used in telecommunication digital line
system, and contain other equipment as noted above. Thus, at GRI 1, the
circuit packs are specifically provided for in heading 8517, HTSUS.
Section XVI, note 1(m), which excludes goods of chapter 90, does not
operate in this instance.

**HOLDING:**

For the above reasons, the transponders and circuit packs are classified
in subheading 8517.50.90, HTSUS, which provides for: "Electrical
apparatus for line telephony or line telegraphy, including line
telephone sets with cordless handsets and telecommunication apparatus
for carrier-current line systems or for digital line systems;
videophones; parts thereof: other apparatus for carrier-current line
systems or for digital line systems: Other: Telegraphic: Other." The
protest should be **ALLOWED**. In accordance with Section 3A(11)(b) of
Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised
Protest Directive, you are to mail this decision, together with the
Customs Form 19, to the protestant no later than 60 days from the date
of this letter. Any reliquidation of the entry or entries in accordance
with the decision must be accomplished prior to mailing the decision.

Sixty days from the date of the decision the Office of Regulations and
Rulings will make the decision available to Customs personnel, and to
the public on the Customs Home Page on the World Wide Web at
www.customs.gov, by means of the Freedom of Information Act, and other
methods of public distribution.

Sincerely,

Myles B. Harmon, Acting Director

Commercial Rulings Division