Telecommunications Equipment; Other Telephonic Apparatus; Automatic Data Processing (ADP) Machines; Computers; Software; Legal Note 6 to Chapter 85; EN 85.17; HQs 952154, 950925, 955273

HQ 957509 April 17, 1995 CLA-2 R:C:M 957509 RFA CATEGORY: Classification TARIFF NO.: 8517.81.00, 8524.90.40 Mr. Steve Agnew Border Brokerage Company P.O. Box 3549 Blaine, WA 98231 RE: Telecommunications Equipment; Other Telephonic Apparatus; Automatic Data Processing (ADP) Machines; Computers; Software; Legal Note 6 to Chapter 85; EN 85.17; HQs 952154, 950925, 955273 Dear Mr. Agnew: This is in response to your letter dated December 8, 1994, to the Regional Commissioner of Customs in New York, on behalf of Dees Communications Engineering, Ltd., concerning the tariff classification of telecommunications products under the Harmonized Tariff Schedule of the United States (HTSUS). Your letter was referred to this office for response. FACTS: The merchandise is available in five different configurations. Configuration 1 consists of the Mediator Answering Position (MAP), model 1020, which is designed to integrate the operation of a telephone answering position (i.e., the telephone switchboard for an office) onto a personal computer (PC). The MAP 1020 enables the user to process (i.e., answer, make or transfer) telephone calls on a PC with the use of a headset. The MAP 1020 is a stand alone unit that connects the PC and the telephone line. This configuration will consist of the telephony/computer interface hardware module, the MAP software diskette, model 1021 and user guide documentation. Configuration 2 consists of the MAP software, model 1021, imported without the hardware. Configuration 3 consists of the Mediator Automatic Call Distribution (MACD), model 1030, which is a stand alone device unit that connects the PC to the telephone line. The MACD 1030 automatically distributes telephone calls to various telephone stations on an equitable basis. It also queues up extra calls until a person is available to answer them. The MACD 1030 also keeps track of the number of calls received and the time spent answering them. This configuration will consist of the MACD 1030 telephony/computer interface hardware module, the MACD software diskette, and user guide documentation. Configuration 4 consists of the MAP software, model 1031, imported without the hardware. Configuration 5 consists of the Mediator Software Development Kit (MSDK), model 1011, which is the application software recorded on a diskette. The MSDK 1011 is a software development tool which allows individual companies to develop software for Mediator applications. ISSUE: What is the proper classification for the five different configurations of the Mediator telecommunications products under the HTSUS? LAW AND ANALYSIS: Classification of merchandise under the HTSUS is in accordance with the General Rules of Interpretation (GRI's). GRI 1 provides that classification shall be determined according to the terms of the headings and any relative section or chapter notes. Initially, we note that Legal Note 6 to chapter 85, HTSUS, states that: "[r]ecords, tapes and other media of heading 8523 or 8524 remain classified in those headings, whether or not they are entered with the apparatus for which they are intended." In classifying retail sets containing media of heading 8523 or 8524, HTSUS, Customs has interpreted the meaning of Legal Note 6 to Chapter 85, HTSUS, as requiring that software is to be broken out from a retail set and classified separately. See HQ 952154 (November 17, 1992); HQ 950925 (May 12, 1992). CONFIGURATION 1: Configuration 1 consists of the MAP 1020 telephony/computer interface hardware module, the MAP software diskette, model 1021 and user guide documentation. We note that the classification of the software is excluded from classification of this configuration based upon Legal Note 6 to chapter 85, HTSUS. The MAP 1021 software is classified under subheading 8524.90.40, HTSUS, as other recorded media. In HQ 955273, dated March 7, 1994, Customs determined the classification of a fax option kit for a PC which contained the following components: a stuffed printed circuit board; a cable; screws; an installation guide; a fax label and fax logo; and a floppy disk containing software. In that ruling, Customs separately classified the software pursuant to Legal Note 6 to Chapter 85, HTSUS. Customs further determined that the stuffed printed circuit board was the principal component of the fax option kit. Customs concluded that the stuffed printed circuit board was classifiable under heading 8517, HTSUS, as other telegraphic apparatus. In determining whether or not the stuffed printed circuit board was provided for as telegraphic apparatus or as a unit for an automatic data processing (ADP) machine or a part of an ADP machine, Customs consulted the Harmonized Commodity Description and Coding System Explanatory Notes (EN) which constitute the Customs Cooperation Council's official interpretation of the HTSUS. While not legally binding, 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. See T.D. 89-80, 54 FR 35127, 35128 (August 23, 1989). EN 85.17, page 1360, defines the term "electrical apparatus for line telephony or line telegraphy" as an 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 electric 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. . . . * * * * * * * (II) TELEGRAPHIC APPARATUS This is essentially designed for converting texts or images into appropriate electrical impulses, for transmitting those impulses, and at the receiving end, receiving these impulses and converting them either into conventional symbols or indications representing the text, or into the text or image itself. Customs determined that the principal function of the stuffed printed circuit board was the transmission of data between two points (telegraphy), and that it was unlike the LAN boards of HQ 952659 [October 7, 1992], because it did not have data processing capabilities. According to the information provided, the MAP 1020 is designed to integrate the operation of a telephone answering position (i.e., the telephone switchboard for an office) onto a PC. The MAP 1020 enables the user to process (i.e., answer, make or transfer) telephone calls on a PC with the use of a headset. We believe that the principal function of the MAP 1020 is telephonic apparatus of heading 8517, HTSUS, because it allows a personal computer to be used as a telephonic switchboard for an office environment. See HQ 955273. It is provided for under subheading 8517.81.00, HTSUS, as other telephonic apparatus. CONFIGURATIONS 2, 4, and 5 Based upon Legal Note 6 to chapter 85, HTSUS, we find that the MAP software, model 1021, the MACD software model 1031, and the MSDK software model 1011, are classifiable under subheading 8524.90.40, HTSUS, as other recorded media. CONFIGURATION 3 Configuration 3 consists of the MACD 1030 telephony/computer interface hardware module, the MACD software model 1031 diskette, and user guide documentation. Based upon the analysis in Configuration 1, we find that the MACD 1030 is classifiable under heading 8517, HTSUS, because it automatically distributes telephone calls to various telephone stations on an equitable basis and queues up extra calls until a person is available to answer them. The MACD 1030 is classifiable under subheading 8517.81.00, HTSUS, as other telephonic apparatus. The MACD 1031 software is separately classified under subheading 8524.90.40, HTSUS, as other recorded media. HOLDING: CONFIGURATIONS 1 and 3: The MAP 1020 interface and the MACD 1030 interface are classifiable under 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 general, column one rate of duty is 8.5 percent ad valorem. The MAP 1021 software and the MACD 1031 software are classifiable under subheading 8524.90.40, HTSUS, which provides for: "[r]ecords, tapes, and other recorded media for sound or other similarly recorded phenomena . . . : [o]ther: [o]ther. . . . " The general, column one rate of duty is 7.8 cents per square meter of recording surface." CONFIGURATIONS 2, 4, and 5: The MAP software, model 1021, the MACD software model 1031, and the MSDK software model 1011, are classifiable under subheading 8524.90.40, HTSUS, which provides for: "[r]ecords, tapes, and other recorded media for sound or other similarly recorded phenomena . . . : [o]ther: [o]ther. . . . " The general, column one rate of duty is 7.8 cents per square meter of recording surface." Sincerely, John Durant, Director Commercial Rulings Division