OT:RR:CTF:TCM H276954 PTM
TARIFF NO: 9113.20; 9113.90
Stephen T. Heller
Import Compliance Sr. Specialist
Best Buy
7601 Penn Ave. S.
Richfield, MN 55423
RE: Tariff Classification of Apple Watch Bands
Dear Mr. Heller,
We are writing in response to your request for a binding ruling, dated January 5, 2016, that you sent to the U.S. Customs & Border Protection’s (“CBP”) National Commodity Specialist Division (“NCSD”), which NCSD subsequently forwarded to our office. The request concerns the tariff classification on the Harmonized Tariff Schedule of the United States (“HTSUS”) of bands for the Apple Watch. Our response follows.
FACTS:
The merchandise at issue are various watch bands for the Apple Watch. The Apple Watch is a “smart watch” that pairs with a user’s iPhone via a Bluetooth® connection to perform various functions. In Headquarters Ruling (“HQ”) H260060 we described the Apple Watch as follows:
The Apple Watch is a battery-operated, wearable electronic device in the form of a wrist-watch, incorporating a touch-sensitive, active-matrix organic light-emitting diode (AMOLED) display, a central processing unit (CPU), random access memory (512MB RAM), a 8GB internal flash memory hard drive, microphone, speaker, vibration motor, accelerometer, gyroscope, heart rate sensor, and a radio transceiver (NFC, Bluetooth® 4.0, and Wi-Fi).
* * *
When the Apple Watch is “paired” with an iPhone, the wearer is able to use apps on the Apple Watch to display, manipulate, and store data on the Apple Watch itself, or on the connected iPhone. The Apple Watch apps communicate wirelessly with the WatchKit extension on the iPhone and are capable of performing a variety of functions, including: receiving and responding to electronic communications, tracking fitness, displaying location-based information and directions, accessing Internet data, sending and receiving audio messages, paying for purchases using Apple Pay™ via NFC wireless connections, displaying airplane boarding passes, and controlling an Apple TV®. See “Apple Unveils Apple Watch—Apple’s Most Personal Device Ever,” www.apple.com/pr/library/2014/09/09Apple-Unveils-Apple-Watch-Apples-Most-Personal-Device-Ever.html (last visited June 17, 2015).
Although the Apple Watch must be paired with an iPhone to perform most functions, the Apple Watch is capable of performing several functions without being connected to an iPhone. “Unpaired” functions of the Apple Watch include: playing music stored locally on the Apple Watch; using watch, alarm, timers, and time functions; keeping track of physical activities and exercise; displaying photos stored locally on the Apple Watch; and using Apple Pay™ to make purchases via NFC wireless connections. See “Use Apple Watch without its paired iPhone,”
You state that Best Buy Purchasing LLC (“Best Buy”) imports bands for the Apple Watch under Best Buy’s Brand names: Modal, Modal Sports and Modal Platinum. The bands will be sold in various colors and materials. The “Modal Band” is a pebbled leather band made of top grain leather with a metal buckle. The “Modal Sports Band” is a plastic watch band with a thermoplastic polyurethane bumper to enclose the watch face. The “Platinum Band” is a band made of stainless steel metal mesh and contains an adjustable lock closure. The bands are available in several lengths and widths. Further, you state that the bands cannot be used for other types of traditional watches or smart watches.
The Apple Watch is similar in size to conventional wrist-watches. Further, it is worn by the user in the same manner as a conventional wrist-watch. The Apple Watch bands perform the same function as the watch band or strap of a conventional wrist watch: it attaches the watch to the user’s wrist. You state that unlike traditional wrist watches, much of the Apple Watch’s functionality comes from being attached to the wrist and reading the wearer’s biometrics and giving the wearer tactile notifications via the wrist. Indeed, the Apple Watch has various functions that require that the watch be affixed to the user’s wrist. The watch has activity tracking functionality that measures the user’s activity levels. It can measure how many calories a user burns and the user’s heartrate. The “taptic” functionality provides the user with notifications by “tapping” the user’s wrist. The watch will not go into standby mode so long as it is affixed to the user’s wrist. Otherwise, the user must input a security code in order to unlock it. Functions such as “Apple Pay” will not work while the watch is in standby mode. The watch has a power-saving function that powers the watch off when it is not oriented towards the user’s view. Other functions do not require the Apple Watch to be on the user’s wrist. These include displaying the time and date, playing music, connecting to the internet and displaying photos.
ISSUE:
What is the tariff classification of the Apple Watch bands?
LAW AND ANALYSIS:
Classification under the 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, GRIs 2 through 6 may then be applied in order.
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, and therefore not dispositive, the ENs provide a commentary on the scope of each heading of the Harmonized System and are thus useful in ascertaining the classification of merchandise under the System. See T.D. 89-80, 54 Fed. Reg. 35127 (Aug. 23, 1989).
The HTSUS provisions under consideration are as follows:
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:
8517.70 Parts
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9113 Watch straps, watch bands and watch bracelets, and parts thereof:
Note 1(n) to Section XVI, HTSUS, which includes heading 8517 states:
1. This section does not cover:
(n) Clocks, watches or other articles of chapter 91;
Thus, if the Apple Watch Bands are classifiable in Chapter 91, then they are excluded from classification in heading 8517 by virtue of Note 1(n) to Section XVI.
Note 1(g) to Chapter 91, HTSUS, provides:
1. This chapter does not cover:
(g) Articles of chapter 85, not yet assembled together or with other components into watch or clock movements or into articles suitable for use solely or principally as parts of such movements (chapter 85).
With respect to Note 1(g) to Chapter 91, the Apple Watch Bands at issue here are simple bands designed to hold the Apple Watch on the user’s wrist and therefore cannot be characterized as electrical machinery and equipment or parts thereof that are assembled together into a watch or clock movements, or into articles suitable for use solely or principally as parts of such movements. Thus, the Apple Watch Bands are not excluded from classification in Chapter 91 HTSUS by virtue of Note 1(g).
In HQ H260060, CBP classified the Apple Watch 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.” In reaching this classification, CBP applied GRI 3(b) because the Apple Watch was found to be a composite good consisting of several components that were prima facie classifiable in different headings. CBP found that the essential character of the Apple Watch is imparted by the radio transceiver because it enables the Apple Watch to be paired with the Apple iPhone and run various applications. Consequently, it is your position that the Bands are appropriately classified as parts of the Apple Watch in heading 8517 HTSUS, rather than in heading 9113 HTSUS, which provides eo nomine for watch bands and straps.
In support of your position, you state that the Bands are specifically designed for use with the Apple Watch, and that the Apple Watch cannot properly function without the Bands. In order for the Apple Watch to measure activity levels, it must be affixed to the wrist of the user to measure heart rate. The taptic functionality of the Apple Watch also requires that the Watch be affixed to the wrist. The Apple Watch will not go into standby mode when it is attached to the user’s wrist.
However, the Apple Watch does function as a watch and comes “in the form of a wrist-watch.” See HQ H260060, supra. Furthermore, the Apple Watch will still perform numerous functions while not affixed to the user’s wrist. The Watch can still display the time, play music, surf the internet, respond to text messages and emails, perform as a clock-alarm on Night Stand Mode and run various other applications. The Bands themselves do not perform any of these functions. Rather, they serve solely to keep the Apple Watch affixed to the user’s wrist in the same manner that watch bands affix traditional watches to users’ wrists. Furthermore, as stated in HQ H260060, CBP determined that the radio transceiver imparted the essential character of the device. The Apple Watch Bands do not assist the transceiver in the Apple Watch in any way from pairing with the user’s iPhone. Therefore, they cannot be said to be an indispensable part of the transceiver and an essential part of the Apple Watch.
By contrast, CBP has previously classified similar bands for the Apple Watch in heading 9113 HTSUS. In HQ H270725 (Nov. 7, 2016), we classified Apple Watch bands in heading 9113 HTSUS. In that case, we also rejected the importer’s position that the bands should be classified in heading 8517 as parts of the Apple Watch. The bands at issue here are nearly identical to the bands that were the subject of H270725, the only difference being that the instant bands are imported and marketed under Best Buy’s brand name. Furthermore, in New York Ruling (“NY”) N263082, dated April 17, 2015, CBP classified watch bands designed for use with smart-watches in heading 9113. Notably, the ruling classified several bands intended for use with the Apple Watch in various subheadings of heading 9113 depending on the component material.
The EN to heading 91.13 adds further support for classifying the Bands in heading 9113. It states:
91.13 Watch straps, watch bands and watch bracelets, and parts thereof.
This heading covers all kinds of watch straps, watch bands and watch bracelets, i.e., all devices for fastening watches to the wrist.
Watch straps, watch bands and watch bracelets may be of any material, for example, base metal, precious metal, leather, plastics or textile material. They may also be clearly decorative in character without this affecting their classification.
The heading also includes parts of watch straps, watch bands and watch bracelets, identifiable as such, of any material.
(Emphasis added).
Thus, the EN to heading 91.13 clarifies that the heading covers watch straps, watch bands and watch bracelets and all devices for fastening watches to the wrist. Furthermore, they may be of any material and may provide decorative character. The heading also includes parts of watch straps, bands and bracelets. The Apple Watch Bands are described by the EN to heading 91.13 because they are bands that fasten the Apple Watch to the user’s wrist, are composed of various materials and can provide decorative character.
Based on the foregoing, we find that the Modal, Modal Sport and Modal Platinum Apple Watch bands are classifiable in heading 9113, HTSUS. Consequently, they are excluded from classification in heading 8517 by virtue of Note 1(n) to Section XVI, HTSUS.
HOLDING:
By application of GRI 1, the Apple Watch Bands are classified in heading 9113 HTSUS. Specifically, the Modal and Modal Sports bands of bovine leather and plastic, respectively, are classified in subheading 9113.90.80, which provides for “Watch straps, watch bands and watch bracelets, and parts thereof: Other: Other.” The column one, general rate of duty is 1.8% ad valorem. The Modal Platinum band of stainless steel is classified in subheading 9113.20, which provides for “Watch straps, watch bands and watch bracelets, and parts thereof: Of base metal, whether or not gold- or silver-plated.” The column one, general rate of duty is 11.2% 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 www.usitc.gov.
Sincerely,
Ieva K. O’Rourke, Chief
Tariff Classification and Marking Branch