HQ 952876: Revocation of NY 871080; ETRADEAL; Digital Telephone Network; Data Network; Local Area Network; LAN; Functional Unit; ADP Machine

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 952876
                                                               
                        February 19, 1993

CLA-2 CO:R:C:M  952876 MBR

CATEGORY:  Classification

TARIFF NO.:  8517.81.00

Mr. Daniel F. Callahan
Director of Operations
ETRALI Advanced Turret Systems
747 Third Avenue
New York, NY 10017

RE:  Revocation of NY 871080; ETRADEAL; Digital Telephone Network;
     Data Network; Local Area Network; LAN; Functional Unit; ADP
     Machine

Dear Mr. Callahan:

     This is in reply to your letter of September 29, 1992, to the
Area Director of Customs in New York, regarding NY 871080 of
February 28, 1992, concerning the tariff classification of the
ETRADEAL digital telephone network, under the Harmonized Tariff
Schedule of the United States (HTSUS).  Your letter was referred
to this office for response.

FACTS:

     The "ETRADEAL" digital telephone and data network is designed
for installation at financial trading market locations, brokerage
offices, command and control centers, utilities, airlines, etc. 
It is designed principally for telephonic communication, however,
it also provides access to data.

     The hardware consists of LCD touch screens and a local area
network (LAN) for systems administration.  ETRADEAL's architecture
is based on a dual 80 megabit (MB) bus connecting workstations to
Input/Output (I/O) ports.  The bus structure is delivered in
redundant form via twinax, twisted pair, or fiber optic cable,
utilizing  Motorola 68000 32-bit processors.  The bus is supported
by a VME type backplane.  The bus is interfaced to the distribution
ring via AMD 7968/7969 Taxi chips to convert parallel data to
serial data.  The peripheral control utilizes another Motorola
processor, the MC68HC11, to allow workstations access to all ports
delivered by the bus.  Voice is encoded into data at 64 kbits/sec
and data is delivered at 9600 bits/sec.

                               -2-

ISSUE:

     Is the "ETRADEAL" digital telephone and data network
classifiable as units of ADP machines, or is it classifiable as
telephonic apparatus, under the Harmonized Tariff Schedule of the
United States (HTSUS)?

LAW AND ANALYSIS:

     The General Rules of Interpretation (GRI's) to the HTSUS
govern the classification of goods in the tariff schedule.  GRI 1
states, in pertinent part:

     ...classification shall be determined according to the terms 
    of the headings and any relative section or chapter notes...

     Based upon the prior information submitted and the belief that
the "ETRADEAL" digital system did not carry voice transmissions,
NY 871080, dated February 20, 1992, held that the "ETRADEAL" system
was classifiable in subheading 8517.82.00, HTSUS, which provides
for other telegraphic apparatus. 

     However, new information provided delineates the fact that the
"ETRADEAL" system is a functional unit with the principal function
of telephonic communication.  Therefore, the ETRADEAL digital
telephone and data communication system is prima facie classifiable
in the following headings: 

     8471      Automatic data processing machines and units
               thereof:

*    *    *    *    *    *    *    *    *    *    *    *    *

     8517      Electrical apparatus for line telephony or
               telegraphy, including such apparatus for carrier
               current line systems

     The ETRADEAL system includes a number of ADP machines, and
units thereof.  Chapter 84, legal note 5(B), defines "units" of
automatic data processing (ADP) systems.  Legal Note 5(B) 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...

          (b)  It is specifically designed as part of such asystem...



                               -3-

     The Harmonized Commodity Description and Coding System
Explanatory Notes (EN), for heading 8471, page 1299, state:

     (D) SEPARATELY PRESENTED UNITS

     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. (emphasis added).

     The ENs which provide for "Separately Presented Units" of ADP
machines, page 1300, include:

     (5)  Signal converting units.  At input, these enable an
          external signal to be understood by the machine, while
          at output, they convert the output signals that result
          from the processing carried out by the machine into
          signals which can be used externally. 

     However, HQ 086851, dated April 9, 1990, held that a
Chromatograph and a Computer, imported together, were a "functional
unit" intended to contribute to the clearly defined function of
Chromatography.

     Section XVI, Note 4, requires the classification of
"functional units" to be within the heading appropriate to the
function of the unit.  Section XVI, Note 4, states:

     Where a machine...consists of individual components
     (whether separate or interconnected by piping, by
     transmission devices, by electric cables or by other
     devices) intended to contribute together to a clearly
     defined function covered by one of the headings in
     chapter 84 or chapter 85, then the whole falls to be
     classified in the heading appropriate to that function. 
 
     The Harmonized Commodity Description and Coding System
Explanatory Notes (ENs), page 1133, state that a "functional unit"
covers only those "machines and combination of machines essential
to the performance of the function specific to the functional unit
as a whole..."  The principal function specific to the importations
in question is digital telephonic communication.  The importer has
stated that each importation is configured pursuant to a customer

                               -4-

order and is complete and ready for installation.

     Furthermore, chapter 84, legal note 5 goes on to state that:
"[h]eading 8471 does not cover machines incorporating or working
in conjunction with an automatic data processing machine and
performing a specific function.  Such machines are classified in
headings appropriate to their respective functions or, failing
that, in residual headings."

     Additional U.S. Rule of Interpretation 1(a) states: "[i]n the
absence of special language or context which otherwise requires-
-

     (a)  a tariff classification controlled by use (other than
          actual use) is to be determined in accordance with the
          use in the United States at, or immediately prior to, the
          date of importation, of goods of that class or kind which
          the imported goods belong, and the controlling use is the
          principal use.


     The importer has stated that the principal use of the ETRADEAL
digital telephonic and data network is for telephonic
communication.  The Harmonized Commodity Description and Coding
System Explanatory Notes (ENs), regarding electrical apparatus for
line telephony or line telegraphy, page 1360, state:

     The term "electrical apparatus for line telephony or line
     telegraphy" means apparatus for the transmission between two
     points of speech or other sounds (or of symbols representing
     written messages, images or other data), by variation of an
     electrical current or of an optical wave flowing in a metallic
     or dielectric (copper, optical fibres, combination cable,
     etc.) circuit connecting the transmitting station to the
     receiving station.

     The ETRADEAL digital telephonic and data network meets this
definition.  Therefore, it is classifiable pursuant to its
principal function in subheading 8517.81.00, HTSUS, which provides
for: "[e]lectrical apparatus for line telephony or telegraphy,
including such apparatus for carrier current line systems: [o]ther
apparatus: [t]elephonic."

HOLDING:

     The ETRADEAL digital telephonic and data network functional
unit is classifiable pursuant to its principal function in
subheading 8517.81.00, HTSUS, which provides for: "[e]lectrical
apparatus for line telephony or telegraphy, including such
apparatus for carrier current line systems: [o]ther apparatus:
[t]elephonic."  The rate of duty is 8.5% ad valorem.



                               -5-

     When the ADP machine(s) are imported separately, they are
classifiable under heading 8471, HTSUS.  The other constituent
units, imported separately, would be separately classifiable.  You
should seek another ruling for that merchandise if you intend to
import it separately in the future.

     Pursuant to chapter 85, legal note 6, recorded software of
heading 8524.90.40, HTSUS, remains classifiable in that heading,
even if it is imported with the apparatus with which it is
intended.  The general rate of duty is 9.7 cents per square meter
of recording surface.

     As provided in 19 CFR 177.9, generally, a ruling letter is
effective on the date it is issued and may be applied to all
entries which are unliquidated, or other transactions with respect
to which the Customs Service has not taken final action on that
date.  Further, a ruling letter modifying or revoking an earlier
ruling letter is generally effective on the date it is issued.  
     
     However, the Customs Service may, upon application or on its
own initiative, delay the effective date of such a ruling for a
period of 90 days from the date of issuance.  Such a delay may be
granted with respect to the party to whom the ruling letter was
issued or to any other party, provided such party can demonstrate
to the satisfaction of the Customs Service that they reasonably
relied on the earlier ruling to their detriment.

     The documentation required to show detrimental reliance
consists of contracts, purchase orders, invoices, buying agent
instructions and other materials which tend to establish that the
future transactions (the pending transactions you referenced) were,
in fact, based on the asserted reliance.  Also required is
information regarding the quantity of merchandise that was actually
imported during the requested delayed effective date, and the dates
of importation. 

     Therefore, if you wish to request detrimental reliance you
should submit the above documentation to this office, which
demonstrates that you actually relied on NY 871080, to your
detriment.  

EFFECT ON OTHER RULINGS:

     Based upon new information that the "ETRADEAL" digital network
is a functional unit with the principal function of telephonic 








                               -6-

communication, NY 871080, dated February 20, 1992, is revoked under
authority of section 177.9(d), Customs Regulations.

                              Sincerely,




                              John Durant, Director