C-339/98

PEACOCK

OPINION OF ADVOCATE GENERAL JACOBS delivered on 28 October 1999 *

1. This case concerns the customs classifi- forming subdivisions specific to the CN. cation of electronic circuits, referred to Since the CN and the HS refer to computers variously as network cards, boards or as 'automatic data-processing machines', I adapters, designed to be installed in perso- shall use the same term or the abbreviation nal computers ('PCs') in order to enable 'ADP machine'. them to exchange information or data with other computers — PCs or file servers — over a local area network ('LAN') of which they all form part. I shall refer to them as 'network cards'.

3. The goods with which the main proceed- ings are concerned were imported between 1990 and 1995. During that period, head- ings 8471, 8473 and 8517 of the CN and of the HS were worded as follows:

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pally with machines of heading 6. After the importations in issue in the Nos 8469 to 8472; main proceedings, Regulation No 1165/95 3 classified under CN heading 8517 goods of the following description, which apparently corresponds to that of the goods in issue in the present case:

8517 Electrical apparatus for line tele- phony or line telegraphy, including such apparatus for carrier-current line systems.

'An adapter card for incorporation in cable linked [ADP] machines enabling the exchange of data over a [LAN] without using a modem.

4. Headings 8471 and 8473 fall within Chapter 84 of the CN, Note 5(B) to which states that separately housed units of an ADP machine in the form of a system may be regarded as being a part of the complete system, but excludes from heading 8471 machines working in conjunction with an ADP machine and performing a specific function, which are to be classified under With such a card, an ADP-machine can be the headings appropriate to their functions used as an input-output device for another or, failing that, under residual headings. machine or a central processing unit.

The factual and procedural background to holding that network cards were to be the main proceedings classified under heading 8517. The appli- cant appealed against that decision to the Finanzgericht (Finance Court) Düsseldorf, which seems inclined to favour the appeal but has requested the Court to rule on the following question: 7. According to the order for reference, Peacock AG ('the applicant'), a German company, imported large quantities of net- work cards from the United States of America and other non-member countries 'Is Note 5(B) to Chapter 84 of the Com- between July 1990 and May 1995, having bined Nomenclature in the version which them cleared through customs under CN was in force from 1990 to 1995 to be subheading 8473 3000 as 'electronic cir- interpreted as meaning that the transmis- cuits, for use solely as parts for computers sion of data using the network cards falling under heading 8471 (cards)'. 4In described in more detail in the grounds of 1993, the applicant and two of its subsidi- this order is not to be regarded as a specific aries received binding customs tariff infor- function but as data processing, so that the mation ('BTIs') from the Danish, Nether- network cards are to be classified under lands and United Kingdom customs autho- heading 8473?' rities, to the effect that such network cards were to be classified under heading 8473 of the CN.

9. The national court has not sought a ruling on the validity of Regulation No 1165/95, which came into force after the importations with which the main proceedings are concerned, but has expressed the view that a ruling that the 8. The Hauptzollamt (Principal Customs network cards were to be classified under Office) Paderborn ('the defendant'), how- heading 8473 would indirectly entail its ever, subsequently issued amendment invalidity in so far as it classified them notices and claimed the extra customs duty elsewhere. which should have been paid had the goods been classified under what it considered to be the correct CN heading, namely 8517. The applicant challenged both those notices and the group customs declarations which it had made in compliance with them. By decision of 11 September 1995 the defen- The wider context dant rejected the objections as unfounded,

12. Telecommunications technology has also developed in recent years, and trans- mission over telephone networks now often takes place in digital form, although con- version from and into analogue form is necessary at each end of a voice telephony communication. In order to communicate over the telephone network, for example via the Internet or for electronic mail purposes, digital ADP machines need to use a modem (modulator-demodulator) which converts signals to and from analo- gue form. With effect from 1 January 1996, the wording of CN heading 8517 was 11. LANs are a relatively recent develop- expanded 5to include a reference to tele- ment in information technology. They fol- communication apparatus for digital line low on from earlier systems in which a systems. central 'mainframe' computer performing all the data-processing operations was accessed from remote terminals having no independent data-processing capacity. A LAN links a number of PCs which are capable of processing data independently, together with other ADP machines, includ- ing file servers and more powerful main- frame computers, and computer periph- 13. The development of LANs and the erals, such as printers, in such a way that convergence of the technology used in data may be transferred between them and computer data transmission and telephony that, at least in 'distributed networks', each have engendered uncertainty as to where ADP machine within the LAN may to some exactly the distinction is to be drawn extent make use of the processing capacity between the two types of system. This of others. Although ADP machines may be distinction is clearly important for the analogue or digital, the types of LAN in purpose of customs classification, a matter issue are based on digital principles and which is in turn of some economic impor- data is transferred digitally. LANs are generally limited to a discrete area such as an office building or complex, although 5 — By Commission Regulation (EC) No 3009/95 of 22 Decem- larger areas may be covered by networks ber 1995 amending Annex I to Council Regulation No 2658/87, OJ 1995 L 319, p. 1. That regulation reflected known as WANs (wide area networks) and a substantial revision of the HS.

15. The United States customs authorities classified LAN equipment under HS head- 17. Related cases are, for example, pending ing 8517 until 1992 and subsequently before this Court and the Court of First under heading 8471; as a result of the Instance. In Case C-463/98 Cabletron v negotiations to set up the North American Revenue Commissioners, the Appeal Com- Free Trade Association (NAFTA), Canada missioners, Ireland, have sought a preli- followed suit in 1995. In the early 1990s, minary ruling on the classification of a customs authorities of various Community variety of LAN equipment, including net- Member States issued conflicting BTIs work cards, and on the validity of Regula- classifying items of LAN equipment var- tions No 1638/94 7 and No 1165/95. In iously under headings 8471, 8473 and Cases T-133/98 and T-134/98 Hewlett 8517. When the proposal for Regulation Packard France v Commission, brought No 1165/95 was considered by the Cus- before the Court of First Instance, the toms Code Committee, 6no opinion was applicant seeks annulment of a Commis- delivered on the classification of network sion decision ordering the revocation of BTIs classifying under heading 8471 6 — Set up in accordance with Article 247 of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code, OJ 1992 L 302, p. 1. The 7 — Commission Regulation (EC) No 1638/94 of 5 July 1994 Customs Code Committee must be consulted before the concerning the classification of certain goods in the adoption of such regulations — see Article 10(1) of Reg- combined nomenclature, OJ 1994 L 172, p. 5, which ulation No 2658/87, cited in note 1, as amended by classifies certain other items of LAN equipment under CN Article 252(2) of Regulation No 2913/92. heading 8517.

21. In April 1997, following questions raised in 1996, the HS Committee decided, by varying majorities, to classify commu- nication controllers or routers, cluster con- trollers, multistation access units and opti- cal fibre converters — all items of LAN The WCO and the WTO equipment — under heading 8471. In November 1998, following a reservation entered by the European Community, the committee confirmed those classifications. At the same meeting, it classified Ethernet

19. Even more significantly, perhaps, the disagreements over the correct customs 8 — See the HS Convention cited in note 2, Article 7. 9 — Ibid., Article 8. classification of LAN equipment, including 10 — The Court has consistently held the HSENs to be a network cards, have been raised in the fora valuable aid to the interpretation of the CN. However, at paragraphs 22 to 24 of its judgment in Case C-280/97 of the World Customs Organisation ROSE Elektrotechnik v Oberfinanzdirektion Köln [1999] (WCO) and the World Trade Organisation ECR I-689, it declined to follow the HSENs on the ground that 'they are contrary to the actual wording of heading (WTO). 8536 and alter its meaning'.

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23. While the WCO is responsible for customs classification matters, it does not have any say as to the tariffs applied, which are negotiated (and any disputes in relation to which are decided) in the context of the WTO.

25. On that specific ground, the WTO panel upheld the United States' claim on 5 February 1998, although it found in favour of the European Community on 24. In the course of the Uruguay Round negotiations, which culminated in 1994 with the revised General Agreement on 11 — See paragraph 15.

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certain other aspects. Its decision was, The ITA however, overturned on 5 June 1998 by the WTO Appellate Body, essentially on the ground that the panel had mistakenly assumed that GATT 1994 could be read in the light of the 'legitimate expectations' of a single party thereto rather than of the common intentions of all the parties. 12 27. Lastly, mention should be made of the Agreement on Trade in Information Tech- nology Products ('ITA'). 13

13—Approved on behalf of the Community by Council 12 — The Appellate Body's decision has been produced before Decision 97/359/EC of 24 March 1997 concerning the the Court; the WTO panel report, although not produced, elimination of duties on information technology products, is a public document and available, inter alia, on the OJ 1997 L 155, p. 1. Internet. 14 — See Attachment A to the Annex to the ITA.

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devices and input or output — including a joint suggestion could be made to the adapters, hubs, in-line repeaters, conver- WCO with regard to updating existing HS ters, concentrators, bridges and routers and nomenclature or resolving divergence in printed circuit assemblies for physical interpretation of the HS nomenclature.' incorporation into automatic data-proces- sing machines and units thereof', wherever they are classified in the HS. 15

The place of the present case within the wider context

29. Such network equipment is stated in the EC-ITA Schedule CXL, appended to the 31. It is clear that there is a wide-ranging ITA, to fall under HS headings 8471 and conflict of views as to the correct customs 8517. In response to a question from the classification of LAN equipment in general, Court, however, the Commission has stated of which network cards such as those in that those headings are given for purposes issue in the present case form one example. of information only and are not binding. The difference of opinion dates from at least the early 1990s, although a solution should not now be long in forthcoming.

36. I shall thus proceed on the basis that the present case is to be approached within the circumscribed context of the specific 34. The present case, however, concerns product and time-scale to which the main the customs classification of imports made proceedings relate, although it will clearly between 1990 and 1995, at a time when the not be possible to ignore entirely the rate of duty claimed by the defendant under broader considerations. In particular, I shall heading 8517 (apparently 7.5%, the same not consider the question of the status of as the duty imposed in accordance with Regulation No 1165/95, which it will be Regulation No 1165/95) was some 2.5 to 4 more appropriate to examine in the context percentage points higher than the various of Cabletron. rates which might have been levied under headings 8471 or 8473. Those imports were made, moreover, at a time before Regulation No 1165/95 was adopted, clas- sifying network cards under heading 8517, before the revision of the HS and CN in 1996 and before the WCO classification opinions and the WTO rulings in 1997 and 1998. 37. A further consideration is that this Court is a court of law, specifically of Community law. Its role clearly includes the task of interpreting, as a matter of law, the terms of the CN. It is not a technical body qualified to settle disputes on purely technical matters, nor should it intervene in any way in a process of technical negotia- 35. The Court will also have to answer tion concerning the content of various HS similar questions in Cabletron, with regard headings, in which those with the appro- to a wider range of LAN equipment priate expert knowledge will be seeking imported over a period extending from international agreement on what is clearly 1993 onwards and thus including those a vexed and highly technical question. That events. In order to avoid prejudging those process may involve amendments clarifying questions, which include that of the validity the wording of the HS and is the most

40. It appears from the national court's explanations that all communication pro- 17 —International Standards Organisation. cesses within a LAN conform to the same 18 — Institute of Electrical and Electronics Engineers.

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are accepted only by those whose addresses are to be classified under the heading which they contain. 19 occurs last in numerical order among those which equally merit consideration. Those last two rules might seem relevant but, as will appear below, I do not consider that they come into play in the present case.

44. The terms of headings 8471, 8473 and 8517 have been set out above. 21 42. Of those 'following provisions', Rules 2, 3(b), 4 and 5 do not appear applicable to the present case; Rule 6 applies to classifi- cation under a subheading, whereas the issue here is that of the correct heading. However, under Rule 3(a), when goods are prima facie classifiable under two or more 45. Chapters 84 and 85, of which those headings, the heading which provides the headings form part, fall within Sec- most specific description is to be preferred, failing which, according to Rule 3(c), they 20 — See, for example, the judgments in Case C-67/95 Rank Xerox v Inspecteur der Invoerrechten en Accijnzen [1997] ECR I-5401, paragraph 17, and Case C-382/95 Techex v 19 — This latter detail is apparently true specifically of the Hauptzollamt München [1997] ECR I-7363, paragraph 'Ethernet' system, whilst other types of LAN technology 12. operate on a slightly, though not materially, different basis. 21 — See paragraph 3.

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(2) being freely programmed in accordance with the require- ments of the user; '5. For the purposes of these notes, the expression "machine" means any machine, machinery, plant, equipment, 22 — See paragraph 4.

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(3) performing arithmetical computa- a form (code or signals) which can tions specified by the user; and be used by the system).

(4) executing, without human inter- Such units presented separately are also vention, a processing program to be classified within heading which requires them to modify No 8471. their execution, by logical decision during the processing run;

Heading No 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 the headings appropriate to their respective functions or, failing that, in residual headings.'

'Digital data-processing machines usually consist of a number of separately housed These systems may include remote input or interconnected units. They then form a output units in the form of data terminals. "system".

Such systems may also include peripheral units, apart from the input or output units, A complete digital data-processing system designed to increase the capacity of the must comprise, at least: system, for instance, by expanding one or more of the functions of the central unit (see Part (D) below).'

(1) A central processing unit which gener- ally incorporates the main storage, the arithmetical and logical elements and The note goes on to state: the control elements; in some cases, however, these elements may be in the form of separate units.

'Appliances such as measuring or checking instruments adapted by the addition of devices (signal converters, for example) which enable them to be connected directly (2) An input unit which receives input data to a data-processing machine, are, in parti- and converts them into signals which cular, not to be regarded as specifically can be processed by the machine. designed as parts of automatic data-proces-

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PEACOCK

machine, or to increase its range of opera- heading 8517 but also with heading tions'. The only example which it gives of 8471 — when answering that question. particular relevance to ADP machines is that of diskettes for cleaning disk drives.

57. I shall look first at the relevance of the distinction between data processing and telecommunications techniques, then at the definition of a machine performing a spe- 55. With regard to heading 8517, the cific function within the meaning of Note HSENs state: 'The term "electrical appara- 5(B) and finally at the distinction between tus for line telephony or line telegraphy" units, parts and accessories of an ADP means apparatus for the transmission machine. between two points of speech or other sounds (or of symbols representing written messages, images or other data), by varia- tion 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.' The relevance of the distinction between data processing and telecommunications

58. The issue has been raised, and dis- cussed in some detail both before the national court and here, as to whether network cards are to be regarded as data- Analysis processing or telecommunications equip- ment.

56. Although the national court expressly seeks a ruling on the interpretation of Note 59. The applicant argued before the 5(B) to Chapter 84 of the CN with regard national court that network cards do not to classification under heading 8473, the use telecommunications technology, which real question is what the correct heading involves transformation, amplification and for the classification of network cards was modulation over the carrying medium, at the material time. In order to give a requiring a live wire; they function in the useful reply, it may therefore be helpful to same way as other computer input or examine all relevant headings and notes — output equipment such as a keyboard or comparing heading 8473 not only with screen. Data is not modulated or demodu-

60. In its observations to the Court, the applicant considers that the exchange of data between different levels, its formatting into data frames and its transmission by cables corresponds to the definition of data processing given in the HSENs as 'handling information of all kinds, in pre-established logical sequences and for a specific pur- pose'. The fact that such handling or processing includes transmission is of no consequence, since transmission within a LAN is an essential part of the data processing by the LAN and by the ADP machine, and is strictly comparable to the transmission between the various units (keyboard, screen, printer, central proces- sing unit, or 'CPU') of an ADP machine, to which ISO standard IS 7498 also applies 61. The defendant's arguments before the and where conversion into data frames also national court emphasised that IEEE stan- takes place. 24 Note 5(B)(b) to CN Chapter dard 802 relates to telegraphic transmis- 84 states that an ADP machine must be sion, covering up to 4 000 metres, rather able to 'accept or deliver data in a form than the 25 to 30 metres possible between (code or signals) which can be used by the computer interfaces. Network cards are system'. Thus, network cards do not per- form any function other than that of data processing. The fact that communication 2 5 — Cited in note 20, paragraph 19 of the judgment: 'The C o u r t observes that such an appraisal [although it can take place over distances of up to 4 000 processes information, a Vista board performs a specific function within the meaning of the last paragraph of Note metres is due to the use of ancillary 5(B) to Chapter 84 of the Combined Nomenclature because it enables an automatic data-processing machine to perform a specific technical function, namely process images] is not based on the objective characteristics and properties of the unit in question but on the functions 24 — Although this last detail was denied by the Netherlands which the unit enables an entire automatic data-processing Government at the hearing. machine to perform.'

65. What is essential, as the national court 63. The Netherlands Government consid- has recognised, is the interpretation of Note ers network cards to form part of the 5(B) to Chapter 84 of the CN. I shall LAN — which it appears to regard as an therefore first consider whether network entity in its own right, separate from the cards are 'machines incorporating or work- machines which it links together — rather ing in conjunction with an automatic data- than of the ADP machines in which they processing machine and performing a spe- are installed. A LAN, it reasons, transmits cific function' within the meaning of that data and does not process it, so that network cards should be classified, with 26 — See paragraph 43 above and paragraph 19 of the judgment the LAN, as telecommunications equip- in Techex, quoted in note 25. ment under heading 8517. 27 — See above, paragraphs 35 and 36.

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note. If they are, then it must be decided in the headings of Chapter 84 or 85'. what heading is appropriate to that func- Network cards are not 'cited' there. 29 tion and, if not, it must be decided what they actually are in relation to an ADP machine.

68. Quite apart from such a literal exegesis, a consideration of the note in its context argues against the Commission's interpre- Machines performing a specific function tation.

— Machines

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The German version refers specifically to ary meaning includes, I consider, at least the notes to Section XVI. the presence of moving, movable, remova- ble or interchangeable parts, in other words, some mechanical feature. On that basis, I am satisfied that it does not cover elements such as network cards.

70. But even the English version is not capable of extending the definition to Note 5(B) to Chapter 84. If 'machine' in the latter context were to be taken to refer only to items cited in the headings of Chap- 72. The relevant paragraph of Note 5(B) is, ters 84 and 85, as must be the case in Note I consider, designed rather to exclude from 5 to Section XVI, then Note 5(B) would not heading 8471 all machines, in the normal exclude appliances such as measuring or sense of the word, regardless of where they checking instruments (Chapter 90) working may be classified under the CN, which in conjunction with an ADP machine, incorporate an ADP machine (which is which it would be absurd not to exclude certainly not the case for network cards) on its terms and which are specifically or which operate on their own but are in mentioned as being excluded in the HSENs. some way connected to an ADP machine. Moreover, the notes to Chapter 84 (in particular Note 1(b)) specifically refer to 'machinery' falling within Chapter 69, a fact which argues strongly against the use of the more formal definition in the context of the chapter notes. Finally, the HSENs 32 formulate the exclusion as relating to 'machines, instruments or apparatus' and not to 'items to be classified in Chapters 84 — Specific function or 85'.

74. In the case of machines incorporating entity in its own right performing a specific an ADP machine, the reference to a specific task which either could also be performed, function presumably relates to machines albeit more laboriously, without an ADP which use an ADP machine to help them machine or is in any event quite distinct carry out a particular task other than data from data processing. processing. One might think, for example, of an automated industrial production line. Similarly, for a machine working in con- junction with an ADP machine, I take it to mean that the former is designed to per- form a specific function, and is capable of doing so, but that in fact some advantage is derived from its being linked to an ADP 76. That is not the case with network machine. A good example here is given in cards. There is no specific function which the HSENs — a measuring machine linked they can perform without an ADP machine by a signal converter to an ADP machine, or which is distinct from data processing, presumably for the purpose of allowing the since the function which they do perform is ADP machine to process the data from the to convert signals sent or received by the measurements, and perhaps thus to provide ADP machines in which they are installed feedback as to which measurements are to in the course of, or with a view to, be made. There are many instances in processing. In that, they are comparable industry and elsewhere 33 of such compu- to any other means whereby ADP machines ter-assisted technology. accept or deliver data but cannot sensibly be described as machines performing a specific task in conjunction with an ADP machine.

themselves perform a data-processing func- 79. However, I think it worth pointing out tion in converting data between a form that the definition in Note 5(A)(a) is of an usable by the ADP machine and a form ADP machine, and not of the function of which can be transmitted over the LAN. data processing. Moreover, it is noteworthy On the one hand, it is said that such that the HSENs use the term 'handling' (in conversion meets the HSENs' definition of French 'mise en œuvre') which to me 'handling information of all kinds, in pre- includes lesser degrees of intervention than established logical sequences and for a transformation through arithmetical or specific purpose or purposes'. On the other, logical operations. The conversion effected it does not involve any arithmetical com- by network cards, as described in the order putation or logical decision, nor are net- for reference and the submissions before work cards freely programmable, as the Court, may in my view be included in required by Note 5(A)(a) to Chapter 84. the definition given in the HSENs.

80. Finally, at paragraph 20 of its judgment in Techex, 35 the Court found that Vista boards, whose function is to convert exter- nal signals into a form which can be processed by the ADP machine in which they are incorporated and to represent the results of that processing on screen, per- form no function other than data proces- sing. That finding seems equally applicable to the function performed by network cards.

78. In view of my conclusion as to what is meant by 'specific function' in the context of the last paragraph of Note 5(B), it might be thought unnecessary to answer this last question. Whether the function performed by network cards is that of 'data proces- sing' or not, I take the view that it is not a 'specific function' for the purposes of that 81. As regards Note 5(B) to Chapter 84 of note. It is not necessary to establish that the CN, therefore, I conclude that network each and every component of a computer cards are not 'machines ... performing a system processes data before it can be specific function', within the meaning of classified as a unit, part or accessory of an ADP machine — power supply units in particular do not perform such a function. 35 — Cited in note 20.

85. If component elements of an ADP machine are to be divided into those three 83. It should be pointed out here that units, categories, the first which I would eliminate parts and accessories of ADP machines are is that of 'parts'. expressly mentioned in those two headings. Thus, in accordance with Note 2(a) to Section XVI, there is no need for any recourse to Notes 2(b) or (c), which relate to parts for which there is no specific heading. The same is true of Section Notes 3 and 4, which are clearly intended to 86. The Netherlands Government submit- afford guidance as to the classification of ted at the hearing, and the Commission the elements of combined or composite appeared to agree, that part of the defini- machines where there is no express provi- tion of a 'part' must be that it is essential sion in headings or subheadings. 3 6It is for the operation of the whole. The appli- scarcely conceivable that the authors of the cant, on the other hand, argued that the essence of a 'part' was that it must be incorporated (as network cards are) into 36 — See paragraphs 45 and 46 above. the machine and could not 'stand alone'.

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87. It seems to me that, since a network of 'interchangeable parts or devices' — in card is not essential to the operation of an French 'organes d'équipements inter- ADP machine, it should not be regarded as changeables' — 'designed to adapt a a 'part' within the meaning of heading machine for a particular operation, or to 8473, regardless of whether it can or perform a particular service relative to the cannot stand alone. On the latter point, it main function of the machine, or to appears from a document produced by the increase its range of operations'. That too Commission in response to a request for could apply to network cards as they have information from the Court that network been described in the present proceedings. cards may come in various configurations, such as 'a slot-in card, a stand-alone unit or a credit-card-like device' which slips into a computer (my emphasis).

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both pursuant to its commitments under machine into, inter alia, coded data for the HS Convention 39 and because those further use. 4 0 Other examples given notes are drawn up by the committee which include additional input and output units, has the most detailed responsibility for control and adaptor units connecting the determining the interpretation of the HS, CPU to other ADP machines (including on which the CN is based, the Community channel to channel adaptors used to con- and its Member States being represented on nect two digital systems to each other) and that committee and taking part in its signal converting units which enable an deliberations. external signal to be understood by the machine or convert output signals into signals which can be used externally. 41 Those functions appear very closely com- parable to those of the network cards in issue in the present case.

91. The HSENs give only one example of an accessory for an ADP machine covered by heading 8473 — diskettes for cleaning disk drives — and it is clearly of a very 93. It might be objected that network cards different nature from that of network are not 'separately housed units' according cards. The descriptions given of units to the terms of Note 5(B) to Chapter 84 of included under heading 8471, on the other the CN (and of the HSENs), since they are hand, are just as clearly of a very similar designed to be inserted into the housing of nature. the ADP machine itself. Indeed, counsel for the applicant produced a network card at the hearing to demonstrate that it was not separately housed, and argued that it could therefore not be regarded as a unit.

cards may take the form of stand-alone feature of the vast majority of PCs. The devices. Moreover, the wording of heading function of such a unit is to transpose data 8471 refers merely to 'units', not 'sepa- from the PC on to a disk, and vice versa, by rately-housed units', and it would be converting it between two different for- absurd if an item were to be classified mats. The disk may be used merely as a under that heading when separately housed backup for the PC (ADP machine) in but not when placed in the same housing as question, or it may be used (and in the the ADP machine itself. It is clear, in any absence of a LAN is frequently used) to event, from the wording of subheading transfer data or software between ADP 8471 20, which refers to ADP machines machines. It seems to me that network 'containing in the same housing' at least a cards should have the same classification CPU and an input and output unit, and for customs purposes as such disk drives. It from subheadings 8471 91, 8471 92 and is clear from the Court's judgment in 8471 93, which refer to units 'whether or Vobis 44 that such disk drives are to be not presented with the rest of a system', classified under heading 8471, and I thus that units need not be separately housed. take the view that network cards should be The Court has, furthermore, regarded Vista classified under the same heading. boards, intended to be incorporated into ADP machines, as 'units' for the purposes of Note 5(B) to Chapter 84, 4 3 and the Commission, in reply to a question put by the Court in the present case, has indicated that graphics cards and serial interface cards, which are installed in a similar manner, may be classified under heading 8471.

Between July 1990 and M a y 1995, network cards designed to be installed in automatic data-processing machines of heading 8471 of the Combined Nomen- clature, in order to enable them to exchange information or data with other such machines over a local area network, were to be classified under heading 8471 as units of such machines.

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