OT:RR:CTF:CPMMA H320726 AJK
Center Director
Center of Excellence and Expertise for Electronics
U.S. Customs and Border Protection
Port of Los Angeles/Long Beach Seaport
301 E. Ocean Blvd.
Long Beach, CA 90802
RE: Application for Further Review of Protest No. 2704-21-157165; Classification of
Vanity Mirror Speakers; Untimely Voluntary Reliquidation; 19 U.S.C. § 1501
Dear Center Director,
This is in reply to the Application for Further Review (AFR) of Protest No.
2704-21-157165, dated August 4, 2021, on behalf of SDI Technologies, Inc. (Protestant), contesting U.S. Customs and Border Protection’s (CBP) voluntary reliquidations and classification of vanity mirror speakers in heading 7009, Harmonized Tariff Schedule of the United States (HTSUS), as glass mirrors. The subject merchandise covers three entries: (1) Entry No. xxx-xxxx864-2, entered on April 1, 2020, and initially liquidated on February 26, 2021; (2) Entry No. xxx-xxxx704-8, entered on April 7, 2020, and initially liquidated on February 26, 2021; and (3) Entry No. xxx-xxxx944-6, entered on April 14, 2020, and initially liquidated on March 5, 2021. All three entries were entered and initially liquidated in heading 8518, HTSUS, as loudspeakers. On May 17, 2021, however, CBP issued a Notice of Action, which notified Protestant of CBP’s intent to voluntarily reliquidate the protested entries. Thereafter, on May 28, 2021, CBP voluntarily re-liquidated all three entries and reclassified the merchandise in heading 7009, HTSUS, as glass mirrors. Protestant now claims that the voluntary reliquidations of two entries—Entry No. xxx-xxxx864-2 and Entry No. xxx-xxxx704-8—were untimely and thus void pursuant to 19 U.S.C. § 1501. In addition, Protestant asserts that the merchandise was properly classified in heading 8518, HTSUS, upon entry and initial liquidation.
FACTS:
The products at issue are three different models of iHome® vanity mirror speakers: Model Nos. iCVBT8, iCVBT15, and iCVBTW11. All three models consist of: (1) a Bluetooth wireless speaker, which may be used to play streamed audio or to conduct hands-free telephone conversations with the built-in microphone when paired to Bluetooth-compatible devices; (2) one or two lighted glass mirrors; and (3) a charging capability via a USB port and/or a wireless charging pad. All three products are made in China.
Protestant’s website—iHome®—describes iCVBT8, as follows:
Look your best while enjoying your favorite music anywhere you like. Featuring a USB port[,] you can charge your mobile phone while you prepare for your day. The distortion-free mirror has a 1x and 7x magnification for the best beauty routine and detailed grooming. Bright LEDs with high and low settings provide natural looking light for a look that's right in any situation. Stream audio wirelessly via Bluetooth from your mobile device. Built-in mic, digital voice echo cancellation and answer and end controls make speakerphone use a pleasure. The bright LEDs and audio work independently while operating on internal rechargeable battery or AC adaptor.
LUX II (iCVBT8), IHOME, https://www.ihomeaudio.com/iCVBT8SN/ (last visited Mar. 30, 2022).
Protestant’s website—iHome®—describes iCVBT15, as follows:
Introducing the iHome Beauty Hollywood Pro Bluetooth Vanity Mirror. Featuring 1,000 Lux full-spectrum lighting with 4 levels of brightness and 3 color light modes[,] this mirror will have you looking great in any light. Connect through Bluetooth and enjoy room-filling sound through the built-in speaker, or enjoy voice control with Siri or Google Assistant. Take calls hands-free through speakerphone and charge your phone through the rapid charging USB port. This mirror also comes with a removable 10X detail mirror[.]
HOLLYWOOD PRO (iCVBT15), IHOME, https://www.ihomeaudio.com/iCVBT15SN/ (last visited Mar. 30, 2022).
Protestant’s website—iHome®—describes iCVBTW11, as follows:
Look your best, enjoy your favorite songs and stay fully charged wirelessly with the LUX POWER from iHome. This 9" distortion-free mirror features full-color spectrum lighting with hi/med/low brightness modes that will have you looking great in any light. Touch lighting controls allow you to adjust lighting modes by tapping the stem of the mirror. Charge your phone wirelessly through the wireless charging pad on the base of the mirror, and charge a secondary device through the 5W USB port. Stream music wirelessly through the mirror and enjoy your favorite songs as you get ready. The speakerphone feature allows you to take calls hands-free through the device. Featuring a removable 10X magnification detail mirror for detailed grooming.
LUXPOWER (iCVBTW11), iHome, https://www.ihomeaudio.com/iCVBTW11SN/ (last visited Mar. 30, 2022).
ISSUES:
Whether CBP’s voluntary reliquidations of Entry Nos. xxx-xxxx864-2 and
xxx-xxxx704-8 were untimely and thus void pursuant to 19 U.S.C. § 1501; and
Whether the vanity mirror speakers are classified in heading 7009, HTSUS, as
glass mirrors; heading 8518, HTSUS, as loudspeakers; or heading 8504, HTSUS, as static converters.
LAW AND ANALYSIS:
Initially, we note that the matter is protestable under 19 U.S.C. § 1514(a)(2) and (5) as a decision on classification and reliquidation of entries. The protest was timely filed, within 180 days of liquidation for entries made on or after December 18, 2004. 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. 2704-21-157165 is properly accorded pursuant to 19 C.F.R. § 174.24(b) because the decision against which the protest was filed is alleged to involve a question of law or fact that has not previously been ruled upon by CBP or the courts.
(1) The Voidability of CBP’s Voluntary Reliquidations
Section 501 of the Tariff Act of 1930, as amended (19 U.S.C. § 1501), which refers to “Voluntary reliquidations by U.S. Customs and Border Protection,” states the following:
A liquidation made in accordance with section 1500 or 1504 of this title or any reliquidation thereof made in accordance with this section may be reliquidated in any respect by U.S. Customs and Border Protection, notwithstanding the filing of a protest, within ninety days from the date of the original liquidation. Notice of such reliquidation shall be given or transmitted in the manner prescribed with respect to original liquidations under section 1500(e) of this title.
An untimely reliquidation by CBP under 19 U.S.C. § 1501 is not void, but rather voidable. See Philip Morris U.S.A., Div. of Phillip Morris, Inc. v. United States, 716 F. Supp. 1479, 1481 (Ct. Int’l Trade 1989). To contest the legality or the correctness of CBP’s reliquidation, an importer must timely file a protest against CBP’s untimely reliquidation. See id. (“Neither the legality nor the correctness of a reliquidation by Customs may be disturbed unless a timely protest is filed according to the procedures in 19 U.S.C. § 1514 ... and failure to do so within the stated period leaves the reliquidation final.”).
On May 28, 2021, CBP reliquidated the protested entries pursuant to 19 U.S.C. § 1501. The reliquidations of two of the three entries (i.e., Entry Nos. xxx-864-2 and xxx-xxxx704-8), however, were untimely because they occurred ninety-one days after the original liquidation, which occurred on February 26, 2021. Accordingly, Protestant timely filed its protest against CBP’s reliquidations on August 18, 2021, which was within 180 days of reliquidation pursuant to 19 U.S.C. § 1514(c)(3). Thus, the untimely reliquidations of Entry Nos. xxx-xxxx864-2 and xxx-xxxx704-8 are voided and the protest is granted in this regard. Therefore, Entry Nos. xxx-xxxx864-2 and xxx-xxxx704-8 remain classified in subheading 8518.21.00, HTSUS, as originally liquidated. The remaining entry—Entry No. xxx-xxxx944-6—was timely reliquidated. Consequently, the analysis of the classification of vanity mirror speakers applies to Entry No. xxx-xxxx944-6 only.
(2) The Classification of Vanity Mirror Speakers
The classification of goods under the HTSUS is governed by the General Rules of Interpretation (GRI). GRI 1 provides that classification 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.
GRI 3(b) states, in pertinent part:
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.
* * * *
The 2020 HTSUS headings under consideration are as follows:
7009 Glass mirrors, whether or not framed, including rear-view mirrors
8518 Microphones and stands therefor; loudspeakers, whether or not mounted in their enclosures; headphones and earphones, whether or not combined with a microphone, and sets consisting of a microphone and one or more loudspeakers; audio-frequency electric amplifiers; electric sound amplifier sets; parts thereof
8504 Electrical transformers, static converters (for example, rectifiers) and inductors; parts thereof
* * * *
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System (HS) 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. See T.D. 89-90, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).
EN to GRI 3(b) provides, in pertinent part:
(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.
EN 70.09 provides, in pertinent part, as follows:
This heading covers mirrors in sheets, whether or not further worked. It also includes shaped mirrors of any size, for example, mirrors for furniture, for interior decoration, for railway carriages, etc.; toilet mirrors (including hand or hanging mirrors); pocket mirrors (whether or not in a protective case). The heading further includes magnifying or reducing mirrors and rear-view mirrors (e.g., for vehicles). All these mirrors may be backed (with paperboard, fabric, etc.), or framed (with metal, wood, plastics, etc.), and the frame itself may be trimmed with other materials (fabric, shells, mother of pearl, tortoise-shell, etc.). Mirrors designed for placing on the floor or ground (for example, cheval-glasses or swing-mirrors of the type used in tailors’ fitting rooms or in footwear shops) also remain in this heading in accordance with Note 1 (b) to Chapter 94.
EN 85.18 provides, in pertinent part, as follows:
(B) LOUDSPEAKERS, WHETHER OR NOT MOUNTED IN THEIR ENCLOSURES
…
Loudspeakers may be mounted on frames, chassis or in cabinets of different types (often acoustically designed), or even in articles of furniture. They remain classified in this heading provided the main function of the whole is to act as a loudspeaker. Separately presented frames, chassis, cabinets, etc., also fall in this heading provided they are identifiable as being mainly designed for mounting loudspeakers ….
* * * *
The vanity mirror speaker is a composite good that is composed of a Bluetooth wireless speaker, one or two lighted glass mirrors, and a charging component that is powered via a USB port and/or a wireless charging pad. All components are attached to a single housing and will be imported as a complete unit. Accordingly, the subject composite good is classifiable under three different headings: (1) 7009, HTSUS, which provides for glass mirrors; (2) 8518, HTSUS, which provides for loudspeakers; and (3) 8504, HTSUS, which provides for static converters. Because the merchandise is classifiable under two or more headings, the classification of the vanity mirror speakers is determined by application of GRI 3(b). To classify the protested merchandise under GRI 3(b), CBP must identify the component that imparts the essential character of the merchandise. As noted by the Court of International Trade in Structural Industries v. United States, “[t]he ‘essential character’ of an article is ‘that which is indispensable to the structure, core or condition of the article, i.e., what it is.’” 360 F. Supp. 2d 1330, 1336 (Ct. Int’l Trade 2005) (quoting United China & Glass Co. v. United States, 61 Cust. Ct. 386, 389 (1968)). A composite good is classified as if consisting only of the component that imparts the essential character of the merchandise. See, e.g., Headquarters Ruling Letter (HQ) 967291, dated Nov. 9, 2004 (“Under GRI 3(b), the good shall be classified as if consisting only of that component that imparts the essential character to the whole.”). While the physical measures of bulk, quantity, weight, or value can be considered in an essential character analysis, the merchandise herein calls for an analysis of the role of the components in relation to the good. See EN to GRI 3(b)(VIII). In the instant protest, the mirror component does not have the highest value in all three models of vanity mirror speakers. Rather, the speaker component predominates in value for Model No. iCVBT8, while the charging components predominate in value for Model Nos. iCVBTW11 and iCVBT15. Due to the significant functionality of each component, however, the fact that the mirror component has a lower value than the other parts does not capture the essence of “what it is.”
Based on our review of the totality of each component’s functionality and the physical characteristics of the subject merchandise, CBP finds that the mirror component imparts the essential character of the vanity mirror speakers under GRI 3(b). First, we note that the vanity mirror speakers are comprised of components that provide entertainment and convenience to users during personal grooming—an activity which is generally performed in front of mirrors. During personal grooming—when users sit or stand in front of the vanity mirror to view reflections of themselves, users can utilize the speakers to listen to music or conduct phone calls and/or charge their mobile phones with the USB port and/or the wireless charging pad. Protestant’s description of the merchandise on its website implies that all three components are designed to be used simultaneously. While the use of each component can be simultaneous, we note that the functions of the speaker and charger are subordinate to the utility of the mirror. Accordingly, we find that the speaker component provides entertainment to users while engaged in personal grooming (i.e., utilizing the mirror) by playing or streaming music. Protestant’s description of the merchandise further suggests that the speakers serve a subordinate function by allowing users to “enjoy [their] favorite songs” during personal grooming. Moreover, the charging component is also an ancillary part of the vanity mirror speakers as it is designed to “charge [user’s] mobile phone while [the user] prepare[s] for [his or her] day.” Accordingly, the charging component merely offers convenience to users by providing the means to charge electronics nearby while getting ready.
In addition, while the speaker and charging components can be easily operated while utilizing the mirror during personal grooming, we find that consumers are unlikely to purchase this article primarily for use as a speaker or a charger. Because the vanity mirrors are typically placed in a space where users get ready and groom themselves, such as a bathroom or a dressing room, it is unlikely that the vanity mirror speakers would be transported to different settings solely for the use of the speaker or charger. While we note that the additional function of the speaker or charger may make the merchandise more distinctive or attractive to some consumers, the speaker and charging components are ancillary appliances that merely enhance the user’s entertainment and/or convenience during personal grooming. Furthermore, we note the large disparities between the available product variety of the loudspeakers and chargers compared to that of mirrors. While there are varying qualities of mirrors, such range of quality does not compare to the wide range of products and options that are available for loudspeakers and chargers. Accordingly, consumers in search of loudspeakers or chargers would most likely opt for more specialized and advanced loudspeakers and chargers in the industry. For the subject vanity mirror speakers, we find that a consumer’s motivating impetus to purchase the subject merchandise is primarily for the use of a vanity mirror, not the speaker or charger. Because the mirror component imparts the essential character of the merchandise under GRI 3(b), the vanity mirror speakers are classified as if consisting only of the mirror. The vanity mirror speakers, therefore, are classified in heading 7009, HTSUS, which provides for glass mirrors.
Moreover, the classification of the vanity speaker mirrors in heading 7009, HTSUS, as glass mirrors, is consistent with the industry standard. In Inabata Specialty Chems. v. United States, the U.S. Court of International Trade held that “tariff classification law relies heavily on commercial practice and understandings.” 29 CIT 419, 424 (2005). While we recognize that Protestant, SDI Technologies, Inc., and its iHome® brand are known for their household electronic products, including Bluetooth speakers, our research indicates that various online retailers—including Protestant’s website for its iHome® products—sell or market the subject vanity mirror speakers and other similar merchandise under “beauty”, “bath”, or “bed and bath” sections, not under “electronics” or “loudspeakers.” In accordance with the above analysis and with the general commercial practice, the vanity mirror speakers constitute glass mirrors for classification purposes.
Protestant asserts that the subject vanity mirror speakers are properly classified in heading 8518, HTSUS. In support, Protestant cites to New York Ruling Letter (NY) N019972, dated December 7, 2007, and NY M84806, dated July 18, 2006, which classified other composite goods with speakers in chapter 85, HTSUS, under GRI 3(b). In NY N019972, CBP classified a rearview mirror with a hands-free Bluetooth car kit, which consisted of a rearview mirror, a Bluetooth speaker, a built-in microphone, control buttons and a display, in heading 8517, HTSUS, which provides for other apparatus for transmission of voice. While the reasoning for the classification was not provided therein, the classification in heading 8517, HTSUS, is supported by the fact that this merchandise was primarily designed for motor vehicle drivers to make and receive phone calls without physically holding their phones. As most motor vehicles are already equipped with rearview mirrors, a consumer most likely purchases the combination rearview mirror with hands-free Bluetooth car kit primarily for the Bluetooth component. Thus, CBP found that the Bluetooth speaker imparted the essential character of this merchandise. Similarly, in NY M84806, CBP classified a decorative plush pillow with an embedded loudspeaker in heading 8518, HTSUS, as loudspeakers. In NY M84806, CBP found that the loudspeaker component imparted the essential character of the merchandise because the pillow component was of secondary importance to the merchandise. Although the loudspeaker was embedded in the pillow and was visually unrecognizable as a loudspeaker, the pillow was for decorative purposes only; it was not designed to be utilized in an ordinary manner—such as, supporting the user’s head or neck, or being held by the user. The pillow was merely a decorative holder for the loudspeaker and thus, served an auxiliary function to enhance the user’s entertainment while utilizing the loudspeaker. Protestant also cites to NY N272147, dated January 29, 2016, in support of the subject merchandise’s classification based on the Bluetooth speaker component. In that ruling, CBP classified a combination LCD color video monitor and motor vehicle rearview glass mirror in heading 8528, HTSUS, which provides for monitors. Analogous to the combination rearview mirror with hands-free Bluetooth car kit in NY N019972, we found in NY N272147 that a consumer is more likely to purchase the subject rearview mirrors for use of the video monitor component, which is distinct and has a higher value than general rearview mirrors, and because most motor vehicles are already equipped with standard rearview mirrors. Unlike the merchandise in NY N019972, NY M84806, and NY N272147, however, the speaker component of the subject vanity mirror speakers is auxiliary and thus, consumers of the protested merchandise are more likely to purchase them for the use of the vanity mirror component. Therefore, the rulings cited by Protestant are not dispositive of the classification of the subject merchandise under GRI 3(b).
Protestant also cites to NY N237489, dated February 6, 2013, and NY N077298, dated October 19, 2009, in support of its claim that the subject merchandise is classifiable in heading 8518, HTSUS, under GRI 3(c). However, we decline to discuss a GRI 3(c) classification analysis of the protested merchandise because we hold that the mirror component imparts the essential character of the subject vanity mirror speakers under GRI 3(b).
Historically, CBP has classified composite goods consisting of speakers and other components in the heading that provides for other components. In HQ 968051, dated June 9, 2006, CBP classified a combination of a compact disc (CD) soft case with a loudspeaker, which had the capacity of storing CDs and amplifying music, under heading 4202, HTSUS, which provides for cases designed to protect and transport CDs. CBP held that the soft case for CDs imparted the essential character of the article, because a consumer’s motivating impetus to purchase the subject article would be the need or desire for a container which can store, protect, and transport a CD player and CDs. While the soft case’s ability to play music through the loudspeaker may make the case distinctive and more attractive to some consumers, CBP held that it is unlikely that a consumer would purchase the CD soft case primarily for the loudspeaker. Similarly, in NY N238311, dated March 4, 2013, CBP classified a plastic shower curtain with a built-in waterproof speaker system in heading 3924, HTSUS, as other household items of plastics. In NY N238311, CBP held that the plastic shower curtain imparted the essential character of the merchandise because: (1) the article would be needed only when a user is taking a shower; (2) the shower curtain component performs the primary role of keeping water inside the shower enclosure; and (3) the shower curtain is fully functioning even without the speaker system. Thus, CBP found that the speaker system performs a subordinate role of providing entertainment while the shower curtain is being utilized (i.e., when the user is taking a shower). In the aforementioned rulings, CBP found that the speaker components in composite goods generally serve a subordinate role by providing entertainment to the user while other components provide the primary utility of the respective merchandise. Analogous to the merchandise in NY N238311 and HQ 968051, the mirror component of the protested merchandise provides the primary utility of the product while the speaker component performs a subordinate role of providing entertainment or making hands-free calls with the mirror is being used. Thus, our finding that the mirror component imparts the essential character of the subject vanity mirror speakers is consistent with the CBP practice.
Lastly, Protestant argues that the imposition of duties under Section 301 is illegal, null, and void as action contrary to the substantive and procedural requirements of the Trade Act of 1974 and the Administrative Procedure Act. CBP, however, is precluded from addressing this issue pursuant to 19 C.F.R. § 177.7(b), which prohibits CBP from issuing a ruling “with respect to any issue which is pending before the United States Court of International Trade, the United States Court of Appeals for the Federal Circuit or any court of appeal therefrom.” Thus, CBP will not rule on the issue concerning the Office of the United States of Trade Representative’s imposition of a third and fourth round of tariffs due to the ongoing litigation in the case of In Re Section 301 Cases, (Court No. 21-00052), which is before the U.S. Court of International Trade.
HOLDING:
By application of GRI 3(b), the vanity mirror speakers are classified under heading 7009, HTSUS, specifically in subheading 7009.92.10, HTSUS, which provides for: “Glass mirrors, whether or not framed, including rear-view mirrors: Other: Framed: Not over 929 cm2 in reflecting area”. The 2020 column one, general rate of duty is 7.8 percent ad valorem.
Pursuant to U.S. note 20 to subchapter III, chapter 99, HTSUS, products of China classified under subheading 7009.92.10, HTSUS, unless specifically excluded, were subject to an additional 25 percent ad valorem rate of duty. At the time of importation, an importer was required to report the chapter 99 subheading, i.e., 9903.88.03, in addition to subheading 7009.92.10, HTSUS, listed above.
You are instructed to DENY the protest, except to the extent reclassification of the merchandise as indicated above results in a net duty reduction and partial allowance. You are instructed to notify the protestant of this decision no later than 60 days from the date of this decision. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to this notification. Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel, and to the public on the Customs Rulings Online Search System (“CROSS”) at https://rulings.cbp.gov/ which can be found on the CBP website at http://www.cbp.gov and other methods of public distribution.
Sincerely,
Yuliya A. Gulis, Director
Commercial and Trade Facilitation Division