Intel Singapore, Ltd. v. US

• Decision Date: 04 May 1995
• Docket Number: Slip Op. No. 95-83. Court No. 90-12-00624.
• Citation: 886 F. Supp. 39
• Parties: INTEL SINGAPORE, LTD., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

886 F. Supp. 39

INTEL SINGAPORE, LTD., Plaintiff, v. UNITED STATES, Defendant.

Slip Op. No. 95-83. Court No. 90-12-00624.

United States Court of International Trade.

May 4, 1995.

Rode & Qualey, New York City (John S. Rode and Eleanore Kelly-Kobayashi), for plaintiff.

Frank W. Hunger, Asst. Atty. Gen., Joseph I. Liebman, Atty. in Charge, Intern. Trade Field Office, Commercial Litigation Branch, Civ. Div., U.S. Dept. of Justice (John J. Mahon), Stephen Berke, Office of Asst. Chief Counsel, U.S. Customs Service, Washington, DC, of counsel, for defendant.

MEMORANDUM OPINION AND ORDER

DiCARLO, Chief Judge:

Plaintiff, Intel Singapore, Ltd. (Intel) seeks to overturn the U.S. Customs Service's classification of certain imported merchandise. Customs classified the merchandise under Item 676.15, Part 4, Schedule 6, of the Tariff Schedules of the United States (TSUS) (1987), as "accounting, computing, and other data-processing machines."¹ Intel claims the merchandise is properly classifiable under Item 676.54, Part 4, Schedule 6, TSUS (1987), as "parts of automatic data-processing machines and units thereof, other than parts incorporating a cathode ray tube."² The court has jurisdiction pursuant to 28 U.S.C. § 1581(a) (1988). The court finds the Boards possess the capability to perform the functions necessary for their classification as a computing machine and affirms Customs' classification of the merchandise under Item 676.15, TSUS.

BACKGROUND

In 1988, Intel imported eleven models of populated printed circuit board products from Singapore into the United States. There are three types of Boards at issue: (1) central processing unit boards (CPU Boards); (2) local area network interface boards (LAN Boards); and (3) accelerator boards (Inboards) (collectively "Board(s)"). Each Board consists of a single printed circuit board populated with electronic components. (Pretrial Order, Schedule C, Uncontested Facts, ¶ 7.) A marketable "computing unit," to be of optimal use to the consumer, contains a number of Boards, in addition to other components such as a monitor, a keyboard, a hard drive, a disk drive, a chassis, a power supply, a cooling system, cables, connectors, and fasteners. (R. at 17-29.) Additional memory and software is routinely installed as part of a computer setup. (R. at 108.)

The three types of Boards at issue perform separate functions. The CPU Boards direct execution of commands pursuant to fixed programs, installed after sale, which interpret, translate, and manipulate data. (Def.'s Ex. W, IEEE Standard Dictionary of Electrical and Electronics Terms, at 93); (see also Pl.'s Ex. 4, OEM Boards and Systems Handbook, at 3-54—3-62) (noting capabilities of iSBC 86/35 CPU board.) The LAN Boards facilitate communication between two or more personal computers by setting standards that describe how nodes are connected and what protocol should be followed in transferring data between otherwise incompatible personal computers. (R. at 67-69); Van Nostrand's Scientific Encyclopedia 1728 (7th ed. 1989); (see also Pl.'s Ex. 3, OEM Systems Handbook, at 8-12 — 8-23 (noting capabilities of iSBC 186/51 LAN Board.) This permits multiple personal computers to share resources such as printers and mass storage devices. See id. Inboards are accelerator boards that supplement the existing personal computer architecture. (R. at 76.) They replace the original microprocessors in a personal computer, performing functions similar to those performed by the CPU Boards, and improve the computer's memory and computational speed. Id. All Boards contain a processor, (R. at 192), which governs the interpretation and execution of instructions pertinent to the Boards' function, (Def.'s Ex. W at 93.)

Customs classified the CPU Boards and the Inboards as "computing" or "other dataprocessing machines" under Item 676.15, TSUS, assessing a duty of 3.9% ad valorem. It now claims the LAN Boards are also properly classified under Item 676.15, TSUS, and has abandoned its original classification for those Boards under Item 684.67, TSUS, as "electrical telegraph (including printing and type-writing) and telephone apparatus and instruments, and parts thereof: Other: Other." Item 684.67, Part 5, Schedule 6, TSUS (1987). Intel claims the Boards are properly classifiable as "parts of automatic data-processing machines and units thereof, other than parts incorporating a cathode ray tube, duty free" under Item 676.54, TSUS. Intel seeks an order requiring Customs to reliquidate the Boards and refund duties paid. Trial was held in Portland, Oregon.

DISCUSSION

The court reviews Customs' classification de novo, National Advanced Systems v. United States, 12 Fed.Cir. (T) ___, ___, 26 F.3d 1107, 1109 (1994), with the presumption that Customs' classification of the imported merchandise is correct; Intel bears the burden of overcoming this presumption.³ 12 Fed.Cir. (T) at ___, 26 F.3d at 1109-10; Marcel Watch Co. v. United States, 11 Fed. Cir. (T) ___, ___, 11 F.3d 1054, 1056 (1993); see also 28 U.S.C. § 2639(a)(1) (1988).

Intel's chief contention is that the Boards do not function as "computers," and therefore are not properly classified as such.⁴ According to Intel, the Boards are of no use to consumers unless they are connected to other devices; accordingly, they must be classified as "parts of automatic data-processing machines and units thereof." Item 676.54, TSUS. Intel seeks to distinguish National Advanced Systems, which the government argues is controlling here, from the instant case. In National Advanced Systems the Federal Circuit, in affirming the Court of International Trade, found the processing unit at issue was properly classified as a computer even though, by itself, it could not perform useful work. 12 Fed.Cir. (T) at ___, 26 F.3d at 1110

The merchandise imported in National Advanced Systems was an "Additional Instruction Processor" (AIP), a component utilized to upgrade the Hitachi R-9 line of mainframe computers by giving the mainframe multitasking and parallel processing capability. National Advanced Sys., 12 Fed. Cir. (T) at ___, 26 F.3d at 1108. Like the Boards, the AIP could not perform useful work until placed within the mainframe system. The AIP was "structurally and functionally similar to the R-9's primary instruction processor;" its function was to enhance the mainframe's existing processing capacity. 12 Fed.Cir. (T) at ___, 26 F.3d at 1108.

According to Intel, the two products are distinct. Intel cites differences in size, cost, structure, use, environment, and that the AIP appeared to have been finished, physically ready for use in the performance of computations, while the Boards must be further manufactured and assembled to become useful. As to this latter argument, Intel contends the lack of a Read-Only Memory Basic Input/Output System (ROM BIOS) on the Boards — individualized fixed software instructions programmed on the processor from which the computer takes its initial commands — precludes comparison between the Boards and the AIP.

These arguments are unpersuasive. "Item 676.15 is an eo nomine designation which includes all forms of the article." National Advanced Sys. v. United States, 12 Fed.Cir. (T) at ___, 26 F.3d at 1111 (quoting Hasbro Indus. v. United States, 7 Fed.Cir. (T) 110, 112, 879 F.2d 838, 840 (1989)). It is not confined by particular specifications such as the type or amount of memory, input/output capacity, or processing power. See National Advanced Sys., 17 CIT 641, 644, 1993 WL 235613 (1993), aff'd, 12 Fed.Cir. (T) ___, 26 F.3d 1107 (1994); see also Burroughs Corp. v. United States, 11 CIT 291, 297, 664 F.Supp. 507, 513 (1987), aff'd, 6 Fed.Cir. (T) 117, 845 F.2d 321, cert. denied, 488 U.S. 854, 109 S.Ct. 140, 102 L.Ed.2d 113 (1988) (noting large amount of memory or storage capacity unnecessary for classification under Item 687.15, TSUS). The AIP performs essentially the same role as a processor chip found in personal computers. National Advanced Sys., 17 CIT at 642. Therefore, while the AIP may be distinguished as "a large machine weighing hundreds of pounds, and comprised of many components," id., the AIP is undifferentiated from the Boards in their fundamental purpose — to compute.

Moreover, that the fixed instructions (ROM BIOS) have yet to be installed does not preclude the Court from concluding that the Boards compute. (See R. at 179) (noting first general purpose computer lacked stored program capability). The court explores, rather, the fundamental capabilities of the Boards once such instructions — like other types of software — are in place. See generally Nord Light, Inc. v. United States, 49 C.C.P.A. 12, 15, C.A.D. 786, 1961 WL 8691 (1961) (noting no requirement of self-activation for classification as machine); (see also R. at 203) (defining ROM BIOS as part of software provided to make programming easier by end user). Accordingly, the reasoning applied to uphold the classification of the AIP in National Advanced Systems applies with equal force to the classification of the Boards.

The Federal Circuit in National Advanced Systems found "the term `computing machine' in Item 676.15 does not require stand-alone capability." National Advanced Systems, 12 Fed.Cir. (T) at ___, 26 F.3d at 1111. Accordingly, whether Intel's Boards need be attached to other components to be "useful" is irrelevant. 12 Fed.Cir. (T) at ___, 26 F.3d at 1111; see Burroughs Corp., 11 CIT at 297, 664 F.Supp. at 513 (noting need to install keyboard, monitor, and other peripherals in order to create usable consumer product immaterial). The court does not agree with plaintiff's assertion that, for a computer to be as classified under Item 676.15, TSUS, it must be a completed product as found upon a showroom wall. The concepts of both computer and consumer are not static, and are not relevant to the classification process. The basic inquiry is whether the Boards compute.

For a device to compute, it must be capable...