Telesystems SLW Inc.; ARLAN; Multiple Port Network Unit; Wireless Data Network; Repeater; Router; Local Area Network Interface Cards; Transmission Module; Transceiver; LAN; Automatic Data Processing Machine; Control or Adapter Units; Radiotelegraphy; Radio; 8471.99.15; HQ 951331; HQ 952659; HQ 087984; HQ 085404

HQ 953330 May 14, 1993 CLA-2 CO:R:C:M 953330 MBR CATEGORY: Classification TARIFF NO.: 8471.99.15 Mr. Bruce A. Johnson Unicity Customs Brokers Ltd. 6358 Viscount Road Mississauga, Ontario L4V 1H3 RE: Telesystems SLW Inc.; ARLAN; Multiple Port Network Unit; Wireless Data Network; Repeater; Router; Local Area Network Interface Cards; Transmission Module; Transceiver; LAN; Automatic Data Processing Machine; Control or Adapter Units; Radiotelegraphy; Radio; 8471.99.15; HQ 951331; HQ 952659; HQ 087984; HQ 085404 Dear Mr. Johnson: This is our reply to your letters of January 25, 1993, and April 28, 1993, on behalf of Telesystems SLW Inc., requesting classification of a "Wireless Data Network" and constituent units thereof, under the Harmonized Tariff Schedule of the United States (HTSUS). Your letters were forwarded to this office for reply. FACTS: The instant ruling request pertains to the following wireless Local Area Network (LAN) units: -ARLAN 100 Wireless Data Network -ARLAN 120 Multiple Port Network Unit -ARLAN 130 Single Port Network Unit -ARLAN 150 Repeater -ARLAN 410 T Router -ARLAN 411 T Spread Spectrum LAN Card Router -ARLAN 650 & 670 Wireless Network Interface Cards -ARLAN 091 T Spread Spectrum Transmission Module The ARLAN 100 family of data networking products offers wireless connectivity for automatic data processing machines (ADP). The ARLAN 100 is a high capacity system capable of supporting a large number of users within a single building or throughout a multi-building campus. This system is comprised of a centrally -2- located Network Controller and an associated set of outlying Network Units. Radio transmission and reception is performed at 915 MHz. The purpose of a wireless LAN system is to avoid costly wiring and to provide mobility to the users. ISSUE: What is the classification of the ARLAN 100 wireless LAN network and units thereof ("Wireless LAN Units")? Is classification appropriate under subheading 8471.99.15, HTSUS, which provides for ADP "control or adapter units," as asserted by the importer, or are they classifiable under subheading 8525.20.60, HTSUS, which provides for radiotelegraphy transmission apparatus incorporating reception apparatus, as classified by the port? LAW AND ANALYSIS: Section 177.1(a), Customs Regulations, provides: The issuance of rulings generally--(1) Prospective transactions....Generally, a ruling may be requested under the provisions of this part only with respect to prospective transactions--that is, transactions which are not already pending before a Customs Service office by reason of arrival, entry, or otherwise. The correct procedure for obtaining classification advice regarding ongoing transactions is under the Internal Advice procedure governed by Section 177.11, Customs Regulations. Since the HTSUS came into effect there has been a great deal of controversy regarding the classification of LAN equipment. 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. In HQ 951331, dated September 18, 1992, (modified by HQ 952659, dated October 7, 1992), we cited Legal Note 5(B) to chapter 84, HTSUS, which 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 -3- (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 instant Wireless LAN Units are essential to the ADP systems with which they are integrated because they process and format the data of the computers they serve. In HQ 951331 we also cited the Harmonized Commodity Description and Coding System Explanatory Notes (ENs), pages 1299- 1300, which describe separately presented ADP units, in pertinent part, 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. We also concur that the Wireless LAN Units are control or adapter units designed to effect interconnection of the CPU to other digital data processing machines, or to groups of input or output units which may comprise visual display units, remote terminals, etc. However, since the Wireless LAN Units incorporate electromagnetic transceivers, they are also prima facie classifiable under subheading 8525.20.60, HTSUS, which provides for radiotelegraphy transmission apparatus incorporating reception apparatus. The Legal Notes to section XVI, which encompass both heading 8471, HTSUS, and heading 8525, HTSUS, provide the following guidance regarding the classification of composite machines: 3. Unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines adapted for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function. -4- LAN units perform two major functions. They receive binary information from a PC and convert this to digital data so that it can be used at other locations within the LAN. Examples of this conversion are character format conversion and file conversion. Once converted, this data is either formatted separately or grouped into units of data known as packets. This data is then transmitted to different locations within the LAN. Once received by another LAN unit, the packets are converted into a form usable by the destination device. Thus, LANs process, translate, convert, and transmit data for use within the LAN system. LAN units also perform such additional functions as encoding, decoding, LAN protocol implementation, temporary memory storage, control logic for access to the host computer, and processing local memory. It is Customs position that the local area networking function is the principal function of the instant Wireless LAN Units, not merely the transmission and reception of radiotelegraphy. In HQ 085404, dated July 20, 1990, which was reconsidered and affirmed in HQ 089356, dated September 13, 1991, we held that Mobile Radio Data Terminals were composite machines with the principal function of radiotelegraphy, and were therefore classifiable under subheading 8525.20.60, HTSUS. The instant case is distinguishable from HQ 085404 because the Mobile Data Terminals were simply automated replacements for voice transmission radio communications systems. The data processing function was a secondary, ancillary function to that of the radio transmission. Whereas, the instant Wireless LAN Units operate as standard LAN units with the addition of a radio transceiver. Customs has consistently held that LAN units, utilizing a variety of media for interconnection, were classifiable under subheading 8471.99.15, HTSUS. HOLDING: The ARLAN 100 Wireless Data Network Units are classifiable under 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. Sincerely, John Durant, Director