HQ 950869: Protest No. 0901-9X-XXXXXX; IBM Token Ring Adapter Cards; TRACs; Local Area Networking; ADP Machine; Control And Adapter Unit; HQ 951331; HQ 952659

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                           HQ 950869
                                
                        October 15, 1992
                               
CLA-2 CO:R:C:M  950869 MBR

CATEGORY:  Classification

TARIFF NO.:  8471.99.15

District Director
U.S. Customs Service
111 West Huron St.
Buffalo, New York 14202

RE:  Protest No. 0901-9X-XXXXXX; IBM Token Ring Adapter Cards;
     TRACs; Local Area Networking; ADP Machine; Control And Adapter
     Unit; HQ 951331; HQ 952659

Dear Sir:

     This is in response to the request for further review of
Protest No. 0901-9X-XXXXXX, dated August 22, 1991, regarding the
classification of IBM Token Ring Adapter Cards ("TRACs"), under the
Harmonized Tariff Schedule of the United States (HTSUS).

     We have recently reconsidered the classification of Local Area
Network (LAN) equipment in general, and Network Interface Boards
in particular. See HQ 951331, dated September 18, 1992, as modified
by HQ 952659, dated October 7, 1992. 

FACTS:

     IBM Token Ring Adapter Cards ("TRACs) are printed circuit
boards or cards with components mounted thereon.  The mounted
components consist of microprocessors, integrated circuit ("I/C")
memory (random access memory, or "RAM," read-only memory, or "ROM,"
read-only storage or "ROS") and other active circuit components. 
TRACs are designed for physical incorporation and installation
within IBM automatic data processing ("ADP") machines and units,
such as IBM personal computers ("PCs"), communications controllers,
and cluster controllers. 

ISSUE:

     Whether the IBM Token Ring Adapter Cards ("TRACs") are
classifiable under headings 8471 and 8473, HTSUS, which provide for
automatic data processing machines and parts thereof, or under
heading 8517, HTSUS, which provides for "[e]lectrical apparatus for
line telephony or telegraphy"?

                               -2-

LAW AND ANALYSIS:

     Since the HTSUS came into effect there has been a great deal
of controversy regarding the classification of LAN boards. 
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.  

     However, Legal Note 5(B) to chapter 84, HTSUS, provides
guidance regarding 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 TRACs are essential to the ADP systems with
which they are integrated because they process and format the data
of the computers they serve. 

     The Harmonized Commodity Description and Coding System
Explanatory Notes (ENs), pages 1299-1300, describe separately
presented ADP units 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.

     After extensive research and analysis, it is now our opinion
that the principal function of the TRAC is, in fact, to effectuate
the interconnection of the CPU unit to other units or ADP machines,
thereby serving "control" and "adaption" functions, as described
by

                               -3-

the ENs.  Therefore, the TRACs are properly classifiable in
subheading 8471.99.15, HTSUS, which provides for "Control or
adapter units." 
 
HOLDING: 

     The IBM Token Ring Adapter Cards ("TRACs"), are classifiable
in 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.
 
     The protest should be allowed in full.  A copy of this
decision should be attached to the Customs Form 19 and provided to
the protestant as part of the notice of action on the protest.

                              Sincerely,




                              John Durant, Director
                              Commercial Rulings Division

ATTACHMENT:    HQ 951331