Component Parts for Automatic Data Processing Machines; Printed Circuit Boards; CPUs; Chapter 84, Note 5(A)(a); HQ 950922; HQ 951443; HQ 950672; HQ 951065; Essential Character; GRI 2(a); Explanatory Notes (V) and (VIII), GRI 2(a); Unassembled Digital Processing Unit

HQ 951713 August 4, 1992 CLA-2 CO:R:C:M 951713 DWS CATEGORY: Classification TARIFF NO.: 8471.91.00; 8473.30.40 Michael P. Maxwell, Esq. Suite 250 10100 Santa Monica Boulevard Los Angeles, CA 90067 RE: Component Parts for Automatic Data Processing Machines; Printed Circuit Boards; CPUs; Chapter 84, Note 5(A)(a); HQ 950922; HQ 951443; HQ 950672; HQ 951065; Essential Character; GRI 2(a); Explanatory Notes (V) and (VIII), GRI 2(a); Unassembled Digital Processing Unit Dear Mr. Maxwell: This is in response to your letters of April 21, 1992, and June 18, 1992, written on behalf of AST Research, Inc., concerning the classification of component parts for automatic data processing (ADP) units under the Harmonized Tariff Schedule of the United States (HTSUS). FACTS: The subject merchandise consists of various component parts for automatic data processing units, including printed circuit boards both with and without central processing units (CPUs). It is claimed that the components are imported for inventory purposes. ISSUE: Whether, for classification purposes, the subject merchandise imparts the essential character of finished digital processing units under the HTSUS? LAW AND ANALYSIS: Classification of merchandise under the HTSUS is in accordance with the General Rules of Interpretation (GRI's), taken in order. GRI 1 provides that classification is determined according to the terms of the headings and any relative section or chapter notes. It is claimed that the printed circuit boards with CPUs are classifiable as unfinished Digital processing units under subheading 8471.91.00, which provides for: "[a]utomatic data processing machines and units thereof: [o]ther: [d]igital processing units, whether or not entered with the rest of a system, which may contain in the same housing one or two of the following types of units: storage units, input units, output units." It is also claimed that the rest of the components, including the printed circuit boards without CPUs, are classifiable under subheading 8473.30.40, HTSUS, which provides for: "[p]arts and accessories suitable for use solely or principally with machines of headings 8469 to 8472: [p]arts and accessories of the machines of heading 8471: [n]ot incorporating a cathode ray tube." Chapter 84, Note 5(A)(a), HTSUS, states that: (A) For purposes of heading 8471, the expression "automatic data processing machines" means: (a) Digital machines, capable of (1) storing the processing program or programs and at least the data immediately necessary for execution of the program; (2) being freely programmed in accordance with the requirements of the user; (3) performing arithmetical computations specified by the user; and, (4) executing, without human intervention, a processing program which requires them to modify their execution, by logical decision during the processing run. GRI 2(a) provides that: [a]ny reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule) entered unassembled or disassembled. In HQ 950221, dated November 22, 1991, it was held that "'[m]otherboards' for ADP systems have been consistently deemed to possess the essential character of an ADP processing unit. Therefore, the 'motherboard' containing a CPU is properly classifiable under subheading 8471.91.00, HTSUS . . . " Also in that ruling, it was held that a motherboard, imported without a CPU unit, did not have the essential character of a finished ADP processing unit. See HQ 950672, dated February 20, 1992, and HQ 951443, dated April 13, 1992. Therefore, under HQ 950221, it is our position that the printed circuit boards with CPU units are classifiable under subheading 8471.91.00, HTSUS, and the printed circuit boards without CPU units are classifiable as parts under subheading 8473.30.40, HTSUS. There is no question that the rest of the components are imported for inventory purposes and do not impart the essential character of finished ADP processing units. In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes may be utilized. The Explanatory Notes, although not dispositive, are to be used to determine the proper interpretation of the HTSUS. 54 Fed. Reg. 35127, 35128 (August 23, 1989). Explanatory Notes (V) and (VII), GRI 2(a) (p. 2), HTSUS, state that: (V) The second part of Rule 2(a) provides that complete or finished articles presented unassembled or disassembled are to be classified in the same heading as the assembled article. When goods are so presented, it is usually for reasons such as requirements or convenience of packing, handling or transport. (VII) For the purposes of this Rule, "articles presented unassembled or disassembled" means articles the components of which are to be assembled either by means of simple fixing devices (screws, nuts, bolts, etc.) or by riveting or welding, for example, provided only simple assembly operations are involved. First, the subject component parts were not shipped unassembled for convenience of packing, handling, or transport, but as inventory for a manufacturing operation. Second, the creation of the computers in the United States is not a simple assembly operation. Complex operations are performed in the United States after importation. See HQ 951065, dated February 21, 1992. Therefore, under the Explanatory Notes to GRI 2(a), the component parts are clearly not unassembled digital processing units for classification purposes. HOLDING: The printed circuit boards with CPU units are classifiable under subheading 8471.91.00, HTSUS. The general, column one rate of duty is 3.9 percent ad valorem. The rest of the components, including the printed circuit boards without CPU units, are classifiable under subheading 8473.30.40, HTSUS. Merchandise classifiable under this provision receives duty free treatment. Sincerely, John Durant, Director