HQ W968075

February 5, 2008

**CLA-2 OT:RR:CTF:TCM** W968075 HkP

**CATEGORY:** Classification

**TARIFF NO.:** 8504.40.95

Margaret M. Gatti, Esq.

Gatti & Associates

Attorneys at Law

44 Tanner Street

Haddonfield, NJ 08033

**RE**: DC to DC converters from China and Malaysia; reconsideration of
NY L88686

Dear Ms. Gatti:

This is in response to a letter from your client, C&D Technologies, Inc.
("C&D"), dated December 14, 2005, requesting reconsideration of New York
Ruling Letter ("NY") L88686, dated December 1, 2005. The request for
reconsideration was forwarded to this office for a response.

In reaching our decision, we also considered the arguments made in
several telephone conversations between C&D and U.S. Customs and Border
Protection ("CBP") during February 2006; an additional submission made
by C&D, dated March 9, 2006; a teleconference between yourself, C&D, and
CBP on March 14, 2006; and, a submission dated April 18, 2006, made by
you on behalf of your client. For the reasons set forth in this
decision, we hereby affirm NY L88686. We apologize for our delay in
responding to you.

**FACTS**:

The subject merchandise is direct current-to-direct current (DC-to-DC)
converters, specifically products UWR-5/1000-D24, UWR-12/420-D24,
UWR-15/335-D24 of the UWR series, and the entire WP06R series,
manufactured by C&D. The converters measure approximately 1"x1"x 0.5",
are low power (5 watts), and are fully regulated and isolated. The UWR
series of converters converts direct current input voltage ranges of
18-36V or 36-72V into 5V, 12V, or 15V direct current outputs, and the
WP06R series converts direct current input voltage ranges of 9-18V,
18-36V, or 34-75V into 5V, 12V, or 15V direct current outputs. In NY
L88686, CBP classified the DC-to-DC converters at issue in subheading
8504.40.95, Harmonized Tariff Schedule of the United States Annotated
("HTSUSA"), which provides for: "Electrical transformers, static
converters (for example rectifiers) and inductors; ...: Static
converters ... : Other."

In the technical paper, *The Data Processing Function, Primary Use and
End-Use Applications of C&D Technologies' UWR-Series and WP06 Series
DC/DC Converters*, by John Wanes, submitted as an appendix to C&D's
letter of March 9, 2006, DC-to-DC converters were described as follows:

> DC to DC converters (also commonly known as "DC to DC power supplies")
> are widely used in distributed power or intermediate buss
> architectures, where system voltages require conversion to a higher or
> lower voltage to power components such as microprocessors, memory
> chips, analog and other integrated circuits. ... Each electronic
> system may be composed of either individual electronic integrated
> circuits (ICs) or a collection of ICs and associated electronic
> components. Each system is designed to employ a system "buss voltage"
> which provides power to the systems constituent circuit boards which
> perform various signal and data processing functions. ...

Essentially, therefore, DC to DC converters convert high buss voltages
to lower voltages that are suitable to power ICs. ...

According to the data sheets for the products at issue, the UWR models
of converters are specifically designed for distributed power
architectures in aerospace, marine, telecom and computer applications,
while the WP06R series applications include telecommunications, battery
powered systems, portable instruments, process control equipment,
transportation equipment and distributed power systems.

In the original request for reconsideration (December 14, 2005), C&D
asked CBP to reclassify the product at issue in subheading 8504.40.6001,
HTSUSA, because C&D was of the opinion that the DC-to-DC converters were
suitable for physical incorporation into automatic data processing (ADP)
machines and they are rated at 5 Watts of power. C&D stated, "\[a\]
review of HTS 8504.40.9580 makes it clear, however, that
[principal]{.underline} use in automatic data processing machines is not
a requirement of this classification. Instead HTS 8504.40.9580 requires
merely that the subject power supplies be [suitable]{.underline} for
physical incorporation into automatic data processing machines"
(original emphasis, internal quotation marks omitted). In a March 9,
2006, submission to this office, C&D reiterated this belief and stated
that "DC-to-DC converters are primarily used to power Integrated Circuit
Chips (ICs) that perform automatic data processing functions in
electronic systems." Insofar as the DC-to-DC converters may also be
required to power capacitors, resistors, inductors, or discrete
semiconductor elements, C&D argued that these components are passive,
the sole purpose of which is to support the data processing ICs by
insuring the reliability of the intended functions by means of signal
protection, signal scaling and other methods. However, C&D argued, the
fact that the DC-to-DC converters also power other electronic components
does not lead to the conclusion that the converters have a principal
function other than powering ICs.

During our teleconference on March 14, 2006, we directed C&D's attention
to Legal Note 5 to Chapter 84, which defines an ADP machine and system
for tariff purposes, as well as to Legal Note 5 (now, Note 8, HTSUS
(2008)) to Chapter 85, which defines, among other things, electronic
integrated circuits.

Based on your April 18, 2006, submission to this office, it is now C&D's
view that the converters at issue are properly classified under heading
8542, HTSUS, specifically in subheading 8542.39.0000, HTSUSA (2008),
"electronic integrated circuits, other", (formerly, 8542.60.0095,
HTSUSA, "hybrid integrated circuits, other") because they meet the
requirements of Legal Note 8(b) (formerly, Note 5(b)) to Chapter 85,
HTSUS (2008). However, C&D also believes that classification under
heading 8542 is correct because the "converters are circuit-board
mounted power supplies that power integrated circuits in electronic
assemblies. As such, they represent parts of integrated circuits and are
subject to classification in accord with HTS Section XVI Note 2", that
is, in subheading 8542.90.0000, HTSUSA. In addition, it is now C&D's
position that heading 8504 does not specifically provide for DC-to-DC
converters.

**ISSUE**:

What is the correct classification of the DC-to-DC converters?

**LAW AND ANALYSIS**:

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 subheading under which you claim classification, 8542.60.0095
(hybrid integrated circuits, other) became 8542.39.0000 (electronic
integrated circuits, other) under the 2007 HTSUS, effective February 3,
2007[^1]. In addition, Legal Note 5 to Chapter 84, which defines ADP
units, was non-substantively amended and Legal Note 5 to Chapter 85 was
renumbered as Legal Note 8 to that chapter.

The 2008 HTSUS provisions under consideration are as follows:

**8504** Electrical transformers, static converters (for example,
rectifiers) and inductors; parts thereof:

8504.40 Static converters:

> \* \* \*
>
> Power supplies for automatic data processing machines or units thereof
> of heading 8471; power supplies for goods of subheading 8443.31 or
> 8443.32; power supplies for monitors of subheading 8528.41 or 8528.51
> or projectors of subheading 8528.61:

8504.40.60 Suitable for physical incorporation into automatic data
processing machines or units thereof of heading 8471 \...

\* \* \*

95. Other .....

**8542** Electronic integrated circuits; parts thereof:

> Electronic integrated circuits:
>
> \* \* \*

8542.39.0000 Other .....

Legal Note 5 to Chapter 84, HTSUS, provides, in relevant part:

> \(A\) For purposes of heading 8471, the expression \"automatic
>
> data processing machines\" means machines capable of:
>
> \(i\) Storing the processing program or programs and at least the data
> immediately necessary for execution of the program;
>
> \(ii\) Being freely programmed in accordance with the requirements of
> the user;
>
> \(iii\) Performing arithmetical computations specified by the user;
> and,
>
> \(iv\) Executing, without human intervention, a processing program
> which requires them to modify their execution, by logical decision
> during the processing run.
>
> \(B\) Automatic data processing machines may be in the form of systems
> consisting of a variable number of separate units.
>
> \(C\) Subject to paragraphs (D) and (E) below, a unit is to be
> regarded as being a part of a complete system if it meets all the
> following conditions:

(a) It is of a kind solely or principally used in an automatic data
    processing system;

(b) It is connectable to the central processing unit either directly or
    through one or more other units; and

(c) It is able to accept or deliver data in a form (codes or signals)
    which can be used by the system.

> \* \* \*

Legal Note 2 to Chapter 85, HTSUS, provides, in relevant part: "Headings
8501 to 8504 do not apply to goods described in heading 8511, 8512,
8540, 8541 or 8542."

Legal Note 8(b) to Chapter 85, HTSUS, provides in relevant part:

"[Electronic integrated circuits]{.underline}" are:

\* \* \*

> \(ii\) Hybrid integrated circuits in which passive elements
> (resistors, capacitors, inductances, etc.) obtained by thin- or
> thick-film technology, and active elements (diodes, transistors,
> monolithic integrated circuits, etc.) obtained by semiconductors
> technology, are combined to all intents and purposes indivisibly, by
> interconnections of interconnecting cables, on a single insulating
> substrate (glass, ceramic, etc.). These circuits may also include
> discrete components. ...
>
> \* \* \*
>
> For the classification of articles defined in this note, headings 8541
> and 8542 shall take precedence over any other heading in the
> Nomenclature, except in the case of heading 8523, which might cover
> them by reference to, in particular, their function."

It is your view that the converters at issue are classifiable as hybrid
integrated circuits under heading 8542, HTSUS. You cite Notes 2 and 8(b)
(previously, Note 5(b)) to Chapter 85, HTSUS, as well as NY K83213,
dated March 10, 2004, as justification for this position.

In your April 18, 2006, submission you informed CBP that "\[t\]he design
and manufacture of Ericsson's DC to DC converters, as described in
Ruling #NY K83213, is virtually identical to the design and manufacture
of C&D's DC to DC converters. Ericsson's converters (namely, the PKM,
PKL, PKJ and PKB series) are manufactured on Fire Retardant, Level 4
printed circuit board (PCB) material onto which capacitors, resistors,
diodes, transistors, integrated circuits and other parts are soldered."

In order to be considered a "hybrid integrated circuit", Note 8(b) to
Chapter 85, HTSUS, requires (1) the passive elements to be obtained by
thin- or thick- film technology, and (2) the active elements to be
obtained by semiconductor technology. We find that the DC-to-DC
converters at issue are not hybrid integrated circuits because their
passive elements are not manufactured using thin- or thick- film
technology. They also do not conform to any other definition of
"electronic integrated circuit" provided by Note 8 to Chapter 85. In
addition, we note that NY K83213 was revoked by HQ W968273, dated
October 12, 2006, because it incorrectly classified DC-to-DC converters
as hybrid integrated circuits. We incorporate by reference the Law and
Analysis of HQ W968273 into this ruling.

Further, we find that the converters cannot be classified as "parts"
suitable for use solely or principally with integrated circuits because
in addition to powering integrated circuits they are also generally used
to power capacitors, resistors, inductors and other discrete
semiconductor elements. Note 2(a) to Section XVI provides, in relevant
part, that "parts which are goods included in any of the headings of
chapter 84 or 85 ... are in all cases to be classified in their
respective headings." Accordingly, Note 2(a) precludes classification of
the converters under heading 8542 as a "part", if they are described by
the terms of a heading.

C&D has noted that on many occasions in the past, CBP has classified
DC-to-DC converters under heading 8504, HTSUS. However, you contend that
the DC-to-DC converters at issue are not classifiable in heading 8504,
HTSUS, because they are not rectifiers or inductors and therefore are
not specifically included in that heading.

Heading 8504, HTSUS, is an *eo nomine* provision for, "electrical
transformers, static converters (including rectifiers) and inductors".
It is a well-established classification principle that *eo nomine*
provisions usually include all forms of the named article unless
specifically excluded. [Nootka Packing Co. v. United
States]{.underline}, 22CCPA 464, T.D. 47464 (1935).

The Harmonized Commodity Description and Coding System Explanatory Notes
("ENs") constitute the official interpretation of the HTSUS. 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 at the international level.
[See]{.underline} T.D. 89-80. Explanatory Note 85.04 (II)(D) explains
that direct current converters, by which direct current is converted to
different voltages, are included in the group "electrical static
converters". DC-to-DC converters are within the terms of heading 8504,
as indicated by EN 85.04 (II)(D), and consequently must be classified
under heading 8504, HTSUS, as if provided for by name. We find that your
argument precluding classification under heading 8504, HTSUS, is
unpersuasive.

The remaining subheadings in contention are both under heading 8504,
HTSUS. GRI 6 provides that the classification of goods in the
subheadings of a heading shall be determined according to the terms of
those subheadings and any related subheading notes and, *mutatis
mutandis*, to GRIs 1 through 5, on the understanding that only
subheadings at the same level are comparable. GRI 1, by application of
GRI 6, requires us to classify merchandise according to the terms of the
subheadings.

You contend that the converters should be classified in subheading
8504.40.6001, HTSUSA, because they are suitable for physical
incorporation into ADP machines or its units. In its ruling request of
October 31, 2005, C&D stated, "the converters are designed to be
principally used in computers as well as any device, equipment or system
which uses a microprocessor (more specifically, on circuit boards which
are installed in such devices), which all are essentially automatic data
processing systems." In a letter dated December 14, 2005, C&D stated
further:

> The ruling request indicates C&D's belief that HTS 8504.40.6001 is the
> appropriate HTS number for C&D's DC to DC Converters ... because its
> DC to DC Converters are rated at 5 Watts of power and because they are
> suitable for physical incorporation into automatic data processing
> machines. ... because in accord with General Rule of Interpretation
> 3A, this was the most specific description of the DC to DC Converters.

Subheading 8504.40.60, HTSUSA, is comprised of two parts, a superior
subheading ("power supplies for automatic data processing machines or
units thereof of heading 8471") and the tariff rate line ("suitable for
physical incorporation into automatic data processing machines or units
thereof"); subheading 8504.40.6001 is a statistical breakout based on
watts of power. In order to be classified under subheading 8504.40.60, a
device must first meet the terms of the subheading superior to the
tariff rate line and then meet the description provided in the tariff
rate line. Only then can it be classified at the 10-digit subheading
level.

C&D has argued that subheading 8504.40.60 is not a principal use
provision. However, we find that this assertion is contrary to the
language of the subheading, in that, the defining feature of the devices
in the superior subheading is implied by their use. Additional U.S. Rule
of Interpretation 1(a) states that, in the absence of special language
or context which otherwise requires, a tariff classification controlled
by use (other than by actual use) is to be determined is accordance with
the use in the United States at, or immediately prior to, the date of
importation, of goods of that class or kind to which the imported goods
belong, and the controlling use is the principal use. The Court of
International Trade has stated that principal use is the use "which
exceeds any other single end use". [Minnetonka Brands, Inc. V. United
States]{.underline}, 24 CIT 645, 651, 100 F. Supp. 2^nd^ 1020, 1027
(2000). According to the submitted information:

> C&D sells the majority of its UWR and WP06 power supplies to Original
> Equipment Manufacturers (OEMs) of electronic products which
> incorporates them into a wide variety of products and applications ...
> C&D customers include OEMs of telecommunication equipment, computer
> and networking equipment, office equipment, military equipment,
> industrial automation systems and test instrumentation.

More generally, our research on the Internet revealed that DC-to-DC
converters are used to power capacitors, resistors and discrete
semiconductor components, among other things, and have no principal use.
In light of these facts, we find that the DC-to-DC converters are
precluded from classification in subheading 8504.40.6001 because they
are not principally used as power supplies for ADP machines or for units
of ADP machines. In addition, ADP systems and units of such systems are
specifically defined by Note 5 to Chapter 84. According to the submitted
information, the converters at issue are used to power printed circuit
boards ("PCBs"), not ADP machines or ADP units.

In light of these facts, we conclude that the DC-to-DC converters are
precluded from classification in subheading 8504.40.6001, HTSUSA, on two
grounds. One, they have no principal use and two, they are not power
supplies for units of ADP machines. We find that the converters are
properly classified as "other" static converters of subheading
8504.40.95, HTSUSA.

**HOLDING**:

By application of GRI 1 and GRI 6, the subject DC-to-DC converters are
classified in heading 8504, and are specifically provided for in
subheading 8504.40.95, HTSUSA, which provides for: "Electrical
converters, static converters (for example, rectifiers) and inductors;
parts thereof: Static converters: Other." The column one, general rate
of duty is 1.5% *ad valorem*. Duty rates are provided for your
convenience and are subject to change. The text of the most recent HTSUS
and the accompanying duty rates are provided on the internet at
www.usitc.gov.

**EFFECT ON OTHER RULINGS:**

NY L88686, dated December 1, 2005, is hereby affirmed.

Sincerely,

Myles B. Harmon, Director Commercial and Trade Facilitation Division

[^1]: ^\*^ Pursuant to title 19 United States Code, Section 3005, the
    Harmonized Tariff Schedule of the United States was amended to
    reflect changes recommended by the World Customs Organization. The
    proclaimed changes are effective for goods entered or withdrawn from
    warehouse for consumption on or after February 3, 2007.
    [See]{.underline} Presidential Proclamation 8097, 72 FR 453, Volume
    72, No. 2 (January 4, 2007).