CLA-2 OT:RR:CTF:TCM H287462 DSR
Port Director
Los Angeles International Airport
11099 South La Cienega Blvd.
Los Angeles, CA 90045
Re: Protest and Application for Further Review No. 2704-16-100241; Classification of inductive charging sleeves for iPads
Dear Port Director:
The following is our decision regarding the Application for Further Review of Protest No. 2704-16-100241 filed on behalf of Dana Innovations a/k/a Sonance (“Protestant”). Protestant contests the classification by U.S. Customs and Border Protection (“CBP”) of certain inductive charging sleeves for iPads under the Harmonized Tariff Schedule of the United States (“HTSUS”). Our decision as to the proper tariff classification of the charging sleeves and to the disposition of the instant protest is set forth below. In reaching this decision, we have taken into account materials included with the protest, samples of the merchandise and a supplemental submission received February 12, 2018.
FACTS:
The subject charging sleeves are plastic iPad cases with internal electrical components that enable the sleeves to work as charging devices. The sleeves are designated as models “AM.2,” “AP.4,” “AP.3,” and “AM.5.” Each sleeve has a built-in connector that fits into the power ports of iPads, an inductor and various other electrical conditioning elements within the rear portion of the sleeves. Once an iPad is inserted into a sleeve, a separately imported and separately sold “charging base” that contains an inductor and electrical conditioning and altering components can inductively charge the iPad. High frequency alternating current flowing within the transmitter induction coil in the charging base creates a magnetic field that wirelessly extends to the receiver induction coils in the sleeves. The receivers’ electronic circuitry converts that alternating current into direct current that is then used to charge the internal batteries of iPads inserted into the sleeves.
CBP has liquidated the sleeves in subheading 4202.99.90, HTSUS, which provides for other, other, other “Trunks, suitcases, vanity cases … and similar containers; traveling bags, knapsacks and backpacks, handbags … and similar containers: Other: Other: Other.” Protestant asserts the following three possible classification subheadings for the articles:
3926.90.99, HTSUS, which provides for “Other articles of plastic …: Other: Other.”
8504.40.70, HTSUS, which provides for “…: Static converters: Power supplies for automatic data processing machines or units thereof of heading 8471; …: Other.”
8504.40.95, which provides for “…: Static converters: Other.”
8504.50.40, which provides for “…: Other inductors: For power supplies for automatic data processing machines or units thereof of heading 8471; …”
ISSUE:
What is the proper classification under the HTSUS of the subject charging sleeves?
LAW AND ANALYSIS:
Initially, we note that the matter is protestable under 19 U.S.C. §1514(a)(2) as a decision on classification. The protest was timely filed within 180 days of liquidation of the first entry. See Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, §2103(2)(B) (ii), (iii), codified as amended at 19 U.S.C. §1514(c)(3)(2006). Further Review of Protest No. 2704-16-100241is properly accorded to Protestant pursuant to 19 C.F.R. 174.24(a), to the extent that this Protest is alleged to be inconsistent with a protest decision involving nearly identical merchandise. Protestant also raises the effect of the Court of International Trade's decision in Otter Products, LLC v. United States, 70 F. Supp. 3d 1281 (Ct. Int’l Trade 2015), aff’d 834 F.3d 1369 (Fed. Cir. 2016)
Classification under the HTSUS is determined 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 2 through 6 may then be applied in order.
The HTSUS provisions under consideration are as follows:
3926 Other articles of plastics and articles of other materials of headings 3901 to 3914:
* * *
3926.90 Other:
* * *
3926.90.99 Other.
* * * *
4202 Trunks, suitcases, vanity cases, attache cases, briefcases, school satchels, spectacle cases, binocular cases, camera cases, musical instrument cases, gun cases, holsters and similar containers; traveling bags, insulated food or beverage bags, toiletry bags, knapsacks and backpacks, handbags, shopping bags, wallets, purses, map cases, cigarette cases, tobacco pouches, tool bags, sports bags, bottle cases, jewelry boxes, powder cases, cutlery cases and similar containers, of leather or of composition leather, of sheeting of plastics, of textile materials, of vulcanized fiber or of paperboard, or wholly or mainly covered with such materials or with paper:
* * *
Other:
* * *
4202.99 Other.
* * *
4202.99.90 Other.
* * *
8504 Electrical transformers, static converters (for example, rectifier) and inductors; parts thereof:
* * *
8504.40 Static converters:
* * *
Power supplies for automatic data processing machines or units thereof of heading 8471; power supplies for goods of subheading 8443.31 or 8443.32; power supplies for monitors of subheading 8528.42 or 8528.52 or projectors of subheading 8528.62:
* * *
8504.40.70 Other.
* * *
8504.40.95 Other.
* * *
8504.50 Other inductors:
* * *
8504.50.40 For power supplies for automatic data processing machines or units thereof of heading 8471; power supplies for goods of subheading 8443.31 or 8443.32; power supplies for monitors of subheading 8528.42 or 8528.52 or projectors of subheading 8528.62; for telecommunication apparatus.
* * * *
The Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”) constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of the headings. It is CBP’s practice to consult, whenever possible, the terms of the ENs when interpreting the HTSUS. See T.D. 89–80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
EN 42.02 states, in relevant part:
This heading covers only the articles specifically named therein and similar containers.
These containers may be rigid or with a rigid foundation, or soft and without foundation.
Subject to Notes 2 and 3 to this Chapter, the articles covered by the first part of the heading may be of any material. The expression “similar containers” in the first part includes hat boxes, camera accessory cases, cartridge pouches, sheaths for hunting or camping knives, portable tool boxes or cases, specially shaped or internally fitted to contain particular tools with or without their accessories, etc.
The articles covered by the second part of the heading must, however, be only of the materials specified therein or must be wholly or mainly covered with such materials or with paper (the foundation may be of wood, metal, etc.). The term “leather” includes chamois (including combination chamois) leather, patent leather, patent laminated leather and metallised leather (see Note 1 to this Chapter). The expression “similar containers” in this second part includes note cases, writing cases, pen cases, ticket cases, needle cases, key cases, cigar cases, pipe cases, tool and jewellery rolls, shoe cases, brush cases, etc….
The heading does not cover: … (c) Articles which, although they may have the character of containers, are not similar to those enumerated in the heading, for example, book covers and reading jackets, file covers, document jackets, blotting pads, photo frames, sweetmeat boxes, tobacco jars, ashtrays, flasks made of ceramics, glass, etc., and which are wholly or mainly covered with leather, sheeting of plastics, etc. Such articles fall in heading 42.05 if made of (or covered with) leather or composition leather, and in other Chapters if made of (or covered with) other materials … (f) Tool boxes or cases, not specially shaped or internally fitted to contain particular tools with or without their accessories (generally, heading 39.26 or 73.26) ….
Subheading Explanatory Notes … Subheadings 4202.31, 4202.32 and 4202.39
These subheadings cover articles of a kind normally carried in the pocket or in the handbag and include spectacle cases, note cases (bill folds), wallets, purses, key cases, cigarette cases, cigar cases, pipe cases and tobacco pouches.
In Otter Products, LLC v. United States, 70 F. Supp. 3d 1281 (Ct. Int’l Trade 2015), aff’d, 834 F.3d 1369 (Fed. Cir. 2016), the CIT and the Court of Appeals for the Federal Circuit (“CAFC”) had occasion to explore the scope of heading 4202, HTSUS. The courts observed that Chapter 39, HTSUS, does not cover trunks, suitcases or other containers of heading 4202, HTSUS, per Note 2(m) to Chapter 39, HTSUS. Id. At 834 F. 3d 1376. Therefore, if the subject charging sleeves are properly classified under heading 4202, HTSUS, they cannot be classified under heading 3926, HTSUS. The courts also observed that none of the eo nomine articles listed in heading 4202, HTSUS, included cell phone cases. The courts noted that a semicolon divided heading 4202, HTSUS, into two lists of exemplars. In order for the cases similar to the instant sleeves to fall under the “similar containers” following the list of exemplars after the semicolon, the courts held that they had to be made of the listed materials, which was not the case. The courts also determined that in order for the those cases to be “similar containers” to the exemplars listed before the semicolon, they had to possess the essential characteristics (organizing, storing, protecting and carrying) that united these exemplars. The CAFC clarified that there was no requirement that the merchandise meet all four characteristics to qualify as a “similar container” under heading 4202, HTSUS. However, if an item met only one of the four characteristics, it would not qualify. Although the Commuter and Defender series cases in Otter Products protected the device, they did not organize, store, or carry. Those Commuter and Defender Series cases did not serve any organizational purpose because they could only hold one electronic device and not multiple items. The cases did not store because the devices remained fully functional and to store “implies setting something aside” for future use. Otter Products, 834 F.3d at 1379-80. The cases did not carry anything for purposes of being classified in heading 4202, HTSUS. Unlike the listed exemplars in the first half of heading 4202, HTSUS, that hold items and do not permit use of the enclosed item, the protective phone cases were “specifically designed to hold and protect an electronic device while it remains 100% functional.” Id. at 1380.
As in Otter Products, none of the eo nomine articles listed in heading 4202, HTSUS, include the instant sleeves. The sleeves do not fall under the “similar containers” of heading 4202, HTSUS, after the semicolon because they are not of the materials specifically named in the second half of the heading. We will next determine whether the sleeves fall under the “similar containers” before the semicolon in heading 4202, HTSUS. Articles “covered by the first half of the heading may be of any material.” EN 42.02. The term “similar containers ” in the first part of heading 4202, HTSUS, “includes hat boxes, camera accessory cases, cartridge pouches, sheaths for hunting or camping knives, portable tool boxes or cases, specially shaped or internally fitted to contain particular tools with or without their accessories, etc.” This list is not exclusive. See Headquarters Ruling Letter (“HQ”) 951534, dated August 4, 1992 (noting that “by definition, exemplars [enumerated in the ENs] are not meant to create absolute restrictions as to what is or is not classifiable within a particular provision.”).
The sleeves are not similar to the first six articles (“[t]runks, suitcases, vanity cases, attaché cases, briefcases, school satchels”) in the first half of heading 4202, HTSUS, because the sleeves are not large articles and are used to hold small items normally carried in the pocket or handbag. The question before us is whether the sleeves have characteristics in common with the remaining six articles (“spectacle cases, binocular cases, camera cases, musical instrument cases, gun cases, holsters”) enumerated in the first half of heading 4202, HTSUS, meaning whether they have the capacity to organize, store, protect, and carry smaller items normally carried in the pocket or handbag. See Totes, Inc. v. United States, 18 CIT 919, 926, 865 F. Supp. 867, 874 (1994).
The subject sleeves are plastic cases that are designed to contain single iPads and do not cover or enclose the screens of the iPads. While the subject sleeves are able to offer minimal protection for devices, they do not organize, store, or carry within the meaning of heading 4202, HTSUS, because the devices remain fully functional, which is “inconsistent with objects enclosed by the exemplars listed in heading 4202, HTSUS.” Otter Products, 70 F. Supp. 3d at 1291. Accordingly, the subject sleeves are not classifiable in heading 4202, HTSUS, which is consistent with the court decisions in Otter Products.
With regard to the applicability of heading 3926, HTSUS, we note that the subject sleeves are composite goods of heading 3926 (other articles of plastics) and heading 8504 (static converters and inductors). GRI 3(b) provides, in pertinent part, that when goods are prima facie classifiable under two or more headings, composite goods consisting of different materials or made up of different components 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. Rather, pursuant to GRI 3(b), they are composite goods which must be classified as if they consisted of the component which imparts their essential character.
Here, the function of each charging sleeve as a whole is to charge iPads and the electrical components within the sleeves are indispensable to that function. While the plastic components of the sleeves hold iPads as they are charged, they offer only minimal protection and serve no other functions. We therefore find that the electrical components provide the essential character of the charging sleeves, and we are now tasked with determining where those components are classified within heading 8504, HTSUS.
Subheading 8504.40.00, HTSUS, provides for: "[e]lectrical transformers, static converters (for example, rectifiers) and inductors: [s]tatic converters.” The ENs to heading 8504, HTSUSA, provide the following guidance regarding static converters:
(II) Electrical Static Converters
The apparatus of this group are used to convert electrical energy in order to adapt it for further use. They incorporate converting elements (e.g., valves) of different types. They may also incorporate various auxiliary devices (e.g., transformers, induction coils, resistors, command regulators, etc.). Their operation is based on the principle that the converting elements act alternately as conductors and non-conductors.
The fact that these apparatus often incorporate auxiliary circuits to regulate the voltage of the emerging current does not affect their classification in this group, nor does the fact that they are sometimes referred to as voltage or current regulators.
This group includes:
Rectifiers by which alternating current (single or polyphase) is converted to direct current, generally accompanied by a voltage change.
The electrical components within the sleeves alter or change current from AC to DC in order to fulfill the function of the sleeves, and those electrical components are beyond the scope of a simple inductor of subheading 8504.50.40, HTSUS, because the components form a static converter (rectifier) that incorporates an inductor. EN 85.04 allows for articles consisting of an inductor within a static converter. The instant sleeves are clearly used to convert electrical energy in order to adapt it for further use, and fall squarely within the EN's description of static converters. Therefore, the sleeves are properly classifiable in subheading 8504.40.70, HTSUS, which provides, in relevant part, for other power supplies for automatic data processing machines or units thereof of heading 8471.
HOLDING:
By application of GRIs 3(b) and 6, the subject charging sleeves are classified under heading 8504, HTSUS, specifically under subheading 8504.40.70, HTSUS, which provides for “Electrical transformers, static converters (for example, rectifier) and inductors; parts thereof: Static converters: Power supplies for automatic data processing machines or units thereof of heading 8471; power supplies for goods of subheading 8443.31 or 8443.32; power supplies for monitors of subheading 8528.42 or 8528.52 or projectors of subheading 8528.62: Other.” The 2016 column one, general rate of duty is “Free.”
You are instructed to GRANT the protest. In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision.
Sixty days from the date of the decision, the Office International Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public on the CBP website at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division