CLA-2 OT:RR:CTF:TCM H246726 LWF
DeeDee DeSmet
Customs Classification Manager
Adidas America, Inc.
5055 N. Greeley Ave.
Portland, OR 97217
RE: Tariff classification of the “miCoach Smart Run” multi-function watch
Dear Ms. DeSmet:
This is in reply to your letter of June 11, 2013, to the U.S. Customs and Border Protection (CBP) National Commodity Specialist Division (NCSD) in New York, on behalf of Adidas America, Inc. (“Adidas”), seeking a prospective binding tariff classification ruling under the Harmonized Tariff Schedule of the United States (HTSUS), concerning the “miCoach Smart Run” multi-function watch (the “miCoach”). Your request was forwarded to this office for response. In reaching this decision, we have considered Adidas’ supplemental submissions, dated July 31, 2013 and January 22, 2014, which contain additional factual descriptions of the miCoach watch.
FACTS:
The miCoach watch (Fig. 1) is a multi-function device that consists of a 1.45-inch full-color, transflective thin-film-transistor liquid-crystal display (TFT LCD), stainless steel bezel, magnesium backplate, and silicone wrist strap with buckle and detailing. The miCoach weighs approximately 2.8 ounces and is powered by a 410mAh lithium-ion rechargeable battery.
The miCoach watch features 4GB of internal flash memory, and the device incorporates several components and sensors that collect and store data produced during physical exercise. A Global Positioning System (GPS) sensor tracks all movement and position related information, including distance travelled, pace, and route. Additionally, an optical heart-rate (OHR) monitor mounted on the backplate of the miCoach watch provides continuous heart-rate data via information produced by two light emitting diodes (LEDs) and an electro-optical cell, which uses light to detect the blood flow in the capillaries of the skin. An integrated accelerometer sensor measures the wearer’s stride rate and ensures that the heart-rate data collected by the OHR monitor are corrected for arm movements and body motion. The miCoach displays the time of day for two seconds and then dims. The time is displayed in the upper-left corner of the LCD screen.
Fig. 1: Adidas miCoach Smart Run
Data collected via the GPS sensor, OHR monitor, and accelerometer are stored on the miCoach watch’s internal flash memory and can be displayed on the device’s TFT LCD. Bluetooth connectivity permits the data and other audio feedback to be wirelessly transmitted to the wearer’s wireless headphones (not included with the miCoach watch) to provide audio cues to increase or decrease physical effort, based on a pre-determined workout plan. Similarly, the Bluetooth connectivity provides for the wireless transmission of MP3 music files stored on the miCoach watch to wireless headphones. Data collected during exercise sessions can also be transferred to a computer or uploaded to Adidas’ micoach.com website via the miCoach watch’s WiFi connection.
ISSUE:
Whether the miCoach multi-function watch is classified in heading 8519, HTSUS, as a sound recording or reproducing apparatus; heading 8526, HTSUS, as a radio navigational aid apparatus; heading 9029, HTSUS, as revolution counters, production counters, taximeters, mileometers, pedometers and the like; speed indicators and tachometers, other than those of heading 90.14 or 90.15; heading 9031, HTSUS, as measuring or checking instruments, appliances and machines; or heading 9102, HTSUS, as wrist-watches, pocket-watches and other watches, including stop-watches, other than those of heading 9101, HTSUS.
LAW AND ANALYSIS:
Merchandise imported into the United States is classified under the HTSUS. Tariff classification is governed by the principals set forth in the General Rules of Interpretation (GRIs) and, in the absence of special language or context which requires otherwise, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law for all purposes.
GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule and any relative section or chapter notes and, unless other required, according to the remaining GRIs 2 through 6 may then be applied in their appropriate order.
GRI 3 provides, in pertinent part, as follows:
When, by application of rule 2(b) or for any other reason, good are, prima facie, classifiable under two or more headings, classification shall be effected as follows:
Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.
When goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.
* * * * *
The HTSUS headings under consideration are the following:
8519 Sound recording or reproducing apparatus
8526 Radar apparatus, radio navigational aid apparatus and radio remote control apparatus
9029 Revolution counters, production counters, taximeters, mileometers, pedometers and the like; speed indicators and tachometers, other than those of heading 90.14 or 90.15; stroboscopes
9031 Measuring or checking instruments, appliances and machines, not specified or included elsewhere in this Chapter; profile projectors; parts and accessories thereof
9102 Wrist-watches, pocket-watches and other watches, including stop-watches, other than those of heading 91.01
* * * * *
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System at the international level. While not legally binding, the ENs provide a commentary on the scope of each heading of the HS and are thus useful in ascertaining the proper classification of merchandise. It is CBP’s practice to follow, whenever possible, the terms of the ENS when interpreting the HTSUS. See T.D. 89-90, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The ENs to GRI 3(b) provide, in pertinent part, that:
(VII) In all these cases the goods are to be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.
(VIII) The factor which determines essential character will vary as between different kinds of goods. It may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods.
(IX) For the purposes of this Rule, composite goods made up of different components shall be taken to mean not only those in which the components are attached to each other to form a practically inseparable whole but also those with separable components, provided these components are adapted one to the other and are mutually complementary and that together they form a whole which would not normally be offered for sale in separate parts.
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The miCoach multi-function watch consists of several electronic components that are prima facie classifiable in different headings. There is no dispute that heading 8519, HTSUS, describes the MP3 music player; heading 8526, HTSUS, describes the GPS sensor; heading 9029, HTSUS, describes the heart-rate monitor; heading 9031, HTSUS, describes the accelerometer sensor; and heading 9102, HTSUS, describes the electronic time-keeping component. Consequently, because the miCoach watch is prima facie classifiable in different headings, classification shall be effected pursuant to GRI 3.
GRI 3(b) covers mixtures, composite goods, and goods put up in sets for retail sale. For purposes of this rule, Explanatory Note IX to GRI 3(b) provides that, “composite goods made up of different components shall be taken to mean not only those in which the component are attached to each other to form a practically inseparable whole but also those with separable components, provided these components are adapted one to the other and are mutually complementary and that together they form a whole which would not normally be offered for sale in separate parts.” (Emphasis original). As such, the miCoach watch is properly described as a composite good because it consists of electrical components of independent, individual function that are attached to each other to form an inseparable whole.
Under GRI 3(b), composite goods must be classified according to the material or component that imparts the article with its essential character. The “essential character” of an article is “that which is indispensable to the structure, core or condition of the article, i.e., what it is.” Structural Industries v. United States, 360 F. Supp. 2d 1330, 1336 (Ct. Int’l Trade 2005). EN VIII to GRI 3(b) explains that “[t]he factor which determines essential character will vary as between different kinds of goods. It may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of the constituent material in relation to the use of the goods.” Recent court decisions on the essential character for GRI 3(b) purposes have looked primarily to the role of the constituent material in relation to the use of the goods. See Estee Lauder, Inc. v. United States, No. 07-00217, 2012 Ct. Int’l Trade LEXIS 23, *17-18; Structural Industries, 360 F. Supp. 2d 1330; Conair Corp. v. United States, 29 C.I.T. 888 (2005); Home Depot USA, Inc. v. United States, 427 F. Supp. 2d 1278 (Ct. Int’l Trade 2006), aff’d 491 F.3d 1334 (Fed. Cir. 2007).
Pertinent to our discussion of the instant merchandise, the U.S. Court of Appeals for the Federal Circuit (CAFC), in La Crosse Tech., Ltd. V. United States, 723 F.3d 1353 (Fed. Cir. 2013), recently examined the essential character of composite devices that combine time-related functions with other electronic sensors. In La Crosse Tech., the CAFC noted its agreement that time-related functions are an important aspect of devices combining electronic clocks with sensors that measure atmospheric conditions (e.g., outdoor temperature, indoor temperature, and/or humidity) and display the measured information alongside temporal information. 723 F.3d 1353 at 1360. However, the CAFC concluded that the trial court committed error in determining that the essential character of the devices was related to timekeeping. Specifically, the CAFC held that:
[T]he devices the trade court classified as clocks monitor weather conditions and provide weather forecasts that consumers often use to plan their activities. In addition, these weather-related features add significant cost to the products at issue, making them considerably more expensive than a standard clock. See CamelBak Prods., LLC v. United States, 649 F.3d 1361, 1369 (Fed. Cir. 2011) (observing the “higher prices CamelBak charges and consumers pay for the subject articles as compared to conventional backpacks” and determining that products were not properly considered conventional backpacks pursuant to GRI 1). La Crosse Tech., 723 F.3d 1353 at 1360.
Consequently, in La Crosse Tech., the CAFC ruled that the meteorological capabilities, as opposed to the time-related functions, provided the devices with their essential character, because the weather-related features added significant cost to the devices, and consumers used the merchandise to monitor weather conditions and plan their activities accordingly. Id.
In prior decisions on the classification of devices incorporating time-keeping components combined with other electronic functions, CBP has consistently followed the essential character analysis set forth in the CAFC’s 2012 decision in La Crosse Tech. In Headquarters Ruling Letter (“HQ”) 964372, dated July 17, 2002, CBP classified a digital wristwatch featuring a LCD display screen and built-in MP3 music player in heading 8520, HTSUS, as a sound recording device, in part because the MP3 player was central “in achieving the good’s main purpose.” There, CBP determined that the MP3 player was the wristwatch’s predominant component in both value and bulk, in contrast to the “comparatively small value” of the time-keeping component.
In HQ 965417, dated July 29, 2002, CBP classified a digital wristwatch, with built-in infrared control and lens for remote control of televisions, VCRs, and cable boxes, in heading 8537, HTSUS, as a base equipped with two or more apparatus of heading 8535 or 8536, for electrical control or the distribution of electricity. There, CBP ruled that the essential character of the wristwatch was imparted by the infrared control component because:
[The] remote control device is the good’s predominant feature. It is central in achieving the good’s main purpose, to have a highly portable and readily accessible remote control for a combination of television, VCR, and cable box entertainment.
Additionally, “the marketing of the remote control/watch focuses on its remote control features,” advertised “as a ‘remote control watch,’… [with] programmable compatibility with over 250 national and international brands of televisions and VCRs.” Similar to CBP’s analysis in HQ 964372 of the wristwatch/MP3 player, CBP again noted that the watch mechanism of the wristwatch/infrared remote was not “expensively made” and that “[t]he remote control appears to constitute the bulk of the good in both value and weight.”
Consistent with the CAFC’s guidance in La Crosse Tech. and prior CBP rulings, we find that the time-keeping component and function of the miCoach watch is subordinate to the device’s other electrical components and sensors. By measuring the wearer’s heart rate, GPS location, and athletic performance, the miCoach’s OHR monitor, GPS sensor, accelerometer, and wireless audio playback capability add significant functionality to the merchandise. Furthermore, the ability of the device to store the wearer’s movement and position related information, including speed, distance, stride rate, and route, is achieved by the incorporation of a 4GB flash memory storage drive. These functions, which are beyond the basic time-keeping function of a traditional watch, are central to the miCoach’s main purpose as an athletic training device with audio, distance, physical effort, and performance feedback measurements. This is supported by the fact that Adidas markets the product as “an advance, intuitive blend of coaching and performance data designed to help serious runners maximize training.” See Adidas miCoach SMART RUN Watch,” http://www.adidas.com/miCoach.
Moreover, these features are reflected in the price of the device, which is substantially greater than that of a watch that possesses only simple time-keeping functionality. Consequently, because the MP3, GPS, accelerometer, and OHR monitor components add significant functionality and cost to the miCoach device, the essential character of the miCoach watch is not imparted by the device’s time keeping component, and heading 9102, HTSUS, which provides for “Wrist-watches, pocket-watches and other watches, including stop-watches, other than those of heading 91.01,” is excluded from consideration in this case.
Regarding the remaining headings at issue, the information provided by Adidas indicates that each of these components and sensors that enable the product to function as an athletic training device account for similar bulk and value of the miCoach watch. Moreover, because the MP3 player, GPS, accelerometer, and OHR monitor components and sensors are integrated and function together to provide athletic training feedback to the user, it is impossible to determine which individual component or sensor imparts the miCoach watch with its essential character pursuant to GRI 3(b).
As it is therefore impossible to determine whether the MP3 player, GPS, accelerometer, or OHR monitor impart the miCoach watch with its essential character, GRI 3(c) must be applied. GRI 3(c) states, as follows:
When goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. (Emphasis added).
Discussed supra, the CAFC and prior Customs decisions have established that a device’s time-keeping component is subsidiary to other incorporated components when those electronic elements predominate the merchandise by function and value. As such, heading 9102, HTUS, does not merit equal consideration in this instance, because the MP3, GPS, accelerometer, and OHR monitor components add significant functionality and cost to the miCoach device. Among those headings which merit equal consideration pursuant to GRI 3(c), heading 9031, HTSUS—which covers the accelerometer sensor—occurs last in numerical order. Consequently, we find that the miCoach multi-function watch is classifiable in heading 9031, HTSUS, pursuant to GRI 3(c).
HOLDING:
By application of GRI 3(c), the Adidas miCoach Smart Run watch is classified in heading 9031, HTSUS. Specifically, it is classified in subheading 9031.80.80, HTSUS, which provides for “Measuring or checking instruments, appliances and machines, not specified or included elseqhere in this chapter; profile projectors; parts and accessories thereof: Other instruments, appliances and machines: Other.” The 2014 column one, general rate of duty for merchandise of subheading 9031.80.80, HTSUS, is 1.7% ad valorem.
Duty rates are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at http://www.usitc.gov.
A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Ieva K. O’Rourke, Chief
Tariff Classification and Marking Branch