CLA-2 OT:RR:CTF:TCM H257947 LWF
Steven B. Zisser
Zisser Customs Law Group, PC
9355 Airway Road, Suite 1
San Diego, CA 92154
RE: Tariff classification of the Samsung “Gear™ Live Android™ Smartwatch” wearable electronic device
Dear Mr. Zisser:
This is in reply to your letter of August 26, 2014, to the U.S. Customs and Border Protection (CBP) National Commodity Specialist Division (NCSD) in New York, on behalf of Samsung Electronics of America, Inc. (“Samsung”), seeking a prospective ruling under the Harmonized Tariff Schedule of the United States (HTSUS) on the tariff classification of Samsung’s “Gear™ Live Android™ Smartwatch” wearable electronic device. Your request was forwarded to this office for response.
FACTS:
The Samsung “Gear™ Live Android™ Smartwatch” (the “Gear Live”) is a battery-operated, wearable electronic device in the form of a wrist-watch, incorporating a 1.63 inch (41.4 mm) touch-sensitive, active-matrix organic light-emitting diode (AMOLED) display, a Qualcomm® Snapdragon™ 400 1.2GHz central processing unit (CPU), random access memory (512MB RAM), a 4GB internal flash memory hard drive, a motion sensor (accelerometer), a gyro sensor, a heart rate monitor, a speaker, a microphone, and a radio transceiver. See Fig. 1: Samsung Gear Live hardware (below).
The Gear Live’s radio transceiver utilizes an open wireless technology standard (Bluetooth®), which enables the Gear Live to communicate wirelessly (“pair”) with certain Internet-connected mobile devices, such as Android™ mobile telephones for cellular networks or tablet computers. A user interacts with the Gear Live by touching and swiping “finger gestures” on the surface of the display, and when the Gear Live is “paired” with a compatible Android OS device, the user can also speak voice commands to the Gear Live.
Fig. 1: Samsung Gear Live hardware
Samsung Gear Live hardware: 1. Screen; 2. Upper strap; 3. Microphone; 4. Lower strap; 5. Power button; 6. Charging terminals; 7. USB port; 8. Strap release; 9. Heart Rate sensor; 10. Clasp. Google.com, Samsung Gear Live Hardware, https://support.google.com/andro idwear/answer/6056442?hl=en (last visited January 15, 2015).
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The Gear Live runs a pre-installed version of Android Wear OS, a Linux kernel-based mobile operating system that enables the Gear Live to execute processing programs known as “wearable apps.” Wearable apps run directly on the Gear Live and give the user access to low-level hardware such as sensors, activities, and services on the Gear Live. A “companion handheld app” to the wearable app resides on the “paired” mobile device and communicates with the wearable app to performing heavy processing, network actions, and data storage functions external from the Gear Live. See android.developer.com, “Creating Wearable Apps,” https://developer.android.com/ training/wearables/apps/index.html (last visited January 16, 2015); see also Android.com, “See what you can do with Android Wear,” http://www.android.com/wear/ (last visited January 16, 2015).
Users can select which wearable apps to install on the Gear Live by downloading wearable apps from Google’s digital distribution platform, Google Play. At the time of this writing, approximately 197 wearable apps were available for free or paid download from Google Play. See play.google.com, “Android Wear Apps,” https://play.google.com/store/apps/collection/promotion_3000cf4_android_wear_all?hl=en (last visited January 16, 2015).
When the Gear Live is “paired” with a mobile device, the wearer is able to use wearable apps on the Gear Live to display, manipulate, and store data on the Gear Live itself, or on the connected mobile device or Internet. The wearable apps communicate wirelessly with their companion handheld apps on the paired mobile device and are capable of performing a variety of functions, including: making and receiving calls over the paired device; using voice commands to control the paired device (e.g., to send messages, take photos, set an alarm, check for calendar appointment, or check the weather forecast); displaying notifications from the paired device, including information such as missed calls, received text messages, and emails; playing music stored on the host device via Bluetooth® wireless headphones or speakers; performing functions of timekeeping instruments, such as a watch, stopwatch, alarm, and timer, using either the built-in electronic watch module or data from the paired device; measuring and displaying health and exercise data (e.g., step counts, heart rates, and calorie consumption), by using its accelerometer and gyro-sensor; and downloading (via the paired device) and running wearable apps suitable to be used on the device.
When the Gear Live is not “paired” with a mobile device, the Gear Live cannot connect to the Internet and the wearable apps installed on the Gear Live cannot communicate with their respective companion handheld apps. As result, an “unpaired” Gear Live is unable to perform heavy processing related to the display, manipulation, and storage of data.
Although an “unpaired” Gear Live cannot connect to the Internet, an “unpaired” Gear Live remains capable of executing and storing on its hard drive the data immediately necessary for certain basic wearable apps, including those for: playing music and other digital media stored on the device; viewing calendar events; time-keeping functions; measuring and displaying step-count and heart rate information; and powering the Bluetooth antenna on and off. See “Samsung Gear™ Live Android Smartwatch User Manual,” http://downloadcenter.samsung.com/content/UM/201407/ 20140709020409963/GEN_SM-R382_Gear_Live_English_User_Manual_78T_F1.pdf (last visited January 15, 2015); see also Google.com, “Android Wear Help: What still works when the watch isn’t paired,” https://support.google.com/androidwear/ answer/6056862 (last visited January 15, 2015); Android.com, “See what you can do with Android Wear,” http://www.android.com/wear (last visited January 15, 2015).
ISSUE:
Whether the Samsung Gear Live is classified, by application of General Rule of Interpretation (GRI) 1, in heading 9102, HTSUS, as a wrist watch, pocket watch, including stop watches, other than those of heading 9101, HTSUS, or by application of GRI 3(b), as a composite good made up of different components, classified as if it consisted of the material or component which gives the Gear Live its essential character.
LAW AND ANALYSIS:
Classification under the Harmonized Tariff Schedule of the United States (HTSUS) is made in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative Section or Chapter Notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 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.
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The HTSUS headings under consideration are the following:
8517 Telephone sets, including telephones for cellular networks or for other wireless networks; other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network), other than transmission or reception apparatus of heading 8443, 8525, 8527 or 8528; parts thereof:
8519 Sound recording or reproducing apparatus:
8521 Video recording or reproducing apparatus, whether or not incorporating a video tuner:
9029 Revolution counters, production counters, taximeters, odometers, pedometers and the like; speedometers and tachometers, other than those of heading 9014 or 9015;
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 9101:
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Note 1(n) to Section XVI, HTSUS, provides, in relevant part:
This section does not cover:
…
(n) Clocks, watches or other articles of chapter 91;
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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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Upon initial consideration of the physical characteristics and functions of the Gear Live, CBP finds that the commercial identity of the Gear Live prima facie differs from wrist watches and other watches described by heading 9102, HTSUS. Specifically, the Gear Live features several electronic components—including an AMOLED display, 1.2GHz CPU with installed OS, 512MB RAM, 4GB internal flash memory hard drive, radio transceiver, motion sensor (accelerometer), gyro sensor, heart rate monitor, speaker, and microphone—that are uncommon to articles of heading 9102, HTSUS. Moreover, although the Gear Live is capable of displaying basic timekeeping information while both “paired” and “unpaired” with a mobile device, the Gear Live is primarily designed to display, manipulate, and store data via the use of executable Android Wear OS wearable apps that communicate wirelessly with an Internet-connected mobile device. The fact that the Gear Live is worn like conventional wrist watches of Chapter 91 merely indicates a different physical configuration of an article that is, prima facie, designed to extend the functionality of a “paired” mobile device for the convenience of the user. Accordingly, CBP finds that the Gear Live substantially differs from the articles described by heading 9102, HTSUS, and cannot be classified under the heading by application of GRI 1.
In determining the correct classification of the Gear Live, CBP observes that the device is constructed of several component articles that are, prima facie, classifiable under two or more headings. Specifically, upon review of the Gear Live’s various component articles, there is no dispute that heading 8517, HTSUS, describes the radio transceiver; 8519, HTSUS, describes the sound recording and reproducing capabilities; heading 8521, HTSUS, describes the video display function of the AMOLED display; heading 9029, HTSUS, describes the heart rate monitor; and heading 9031, HTSUS, describes the accelerometer and gyro sensors. Consequently, because the Gear Live is, prima facie, classifiable under two or more headings, classification shall be effected by application of GRI 3—specifically GRI 3(b), which directs that composite goods made up of different components shall be classified as if they consisted of the material or component that gives them their essential character.
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 Gear Live 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, 815 F. Supp. 2d 1287, 1296 (Ct. Int’l Trade 2012); 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).
In accord with the meaning of “essential character” under GRI 3(b), CBP finds that the Gear Live is primarily used to execute Android Wear OS wearable apps that display, manipulate, and store data via wireless communications with a paired, Internet-connected mobile device. Wearable apps of the Gear Live allow the wearer to communicate with the paired mobile device to perform tasks, including: making and receiving calls over the paired device; using voice commands to control the paired device (e.g., to send messages, take photos, set an alarm, check for calendar appointment, or check the weather forecast); displaying notifications from the paired device, including information such as missed calls, received text messages, and emails; playing music stored on the host device via Bluetooth® wireless headphones or speakers; performing functions of timekeeping instruments, such as a watch, stopwatch, alarm, and timer, using either the built-in electronic watch module or data from the paired device; measuring and displaying health and exercise data (e.g., step counts, heart rates, and calorie consumption), by using its accelerometer and gyro-sensor; and downloading (via the paired device) and running wearable apps suitable to be used on the device.
By contrast, when the Gear Live is “unpaired”, i.e. without wireless connection to a “paired” mobile device, the Gear Live operates with substantial functional limitations that render it unable to perform many of the tasks for which the Gear Live is marketed. Compare Android.com, “See what you can do with Android Wear,” http://www.android.com/wear (last visited January 15, 2015), with Google.com, “Android Wear Help: What still works when the watch isn’t paired,” https://support.google.com/ androidwear/answer/6056862 (last visited January 15, 2015). Consequently, although each of the Gear Live’s component articles (e.g., the microphone, speaker, AMOLED display, heart rate monitor, accelerometer, and gyro sensor) enable important functionality in the operation of the Gear Live, it is the radio transceiver that is indispensable to the core, essential condition of the Gear Live, because the radio transceiver facilitates the display, manipulation, and storage of data between the Gear Live and paired external devices.
The radio transceiver enables the Gear Live to communicate wirelessly with a paired, Internet-connected mobile device to display, manipulate, and store data via the use of executable wearable apps, a function that distinguishes the Gear Live from other devices that incorporate similar component electronics. Upon consideration of the role of each of the Gear Live’s component articles in relation to the use of the merchandise, CBP therefore finds that the essential character of the Gear Live is imparted by the radio transceiver. Radio transceivers are classified in heading 8517, HTSUS, which provides, in pertinent part, for “Other apparatus for the transmission or reception of voice, images, or other data[…] including apparatus for communication in a wired or wireless network[…]”. Accordingly, the Gear Live is classified in heading 8517, HTSUS, specifically in subheading 8517.62.
HOLDING:
By application of GRI 3(b), the Samsung Gear Live is classified in heading 8517, HTSUS. Specifically, it is classified in subheading 8517.62.00, HTSUS, which provides for, “Telephone sets, including telephones for cellular networks or for other wireless networks; other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network), other than transmission or reception apparatus of heading 8443, 8525, 8527 or 8528; parts thereof: Other apparatus for transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network): Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus.” The 2015 column one, general rate of duty for merchandise of subheading 8517.62.00, HTSUS, is free.
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