OT:RR:CTF:EMAIN H333110 DSR
TARIFF NO(s).: 8518.22.00, 9903.88.15
Center Director
Center of Excellence and Expertise, Electronics
1 World Trade Center, Suite 741
Long Beach, CA 90831
ATTN: Thai Bui, Import Specialist
RE: Application for Further Review of Protest No. 0901-21-103100; Section 301 Exclusion; Subheading 9903.88.15, HTSUS; Classification of certain wireless speakers of Chinese origin
Dear Center Director:
The following is our decision regarding an Application for Further Review ("AFR") of Protest No. 0901-21-103100, filed by counsel on August 10, 2021, on behalf of on behalf of Circus World Displays ("Protestant"). The Protest and AFR concern the applicability of U.S. Note 20(jjj) to Subchapter III to Chapter 99, HTSUS, to certain wireless speakers. U.S. Note 20(jjj) to Subchapter III Chapter 99, HTSUS, is an exclusion to additional duties imposed by Section 301 of the Trade Act of 1974 ("Section 301") issued by the U.S. Trade Representative. In reaching the determination below, U.S. Customs and Border Protection ("CBP") has considered information submitted with the Protest and AFR, as well as information provided during a conference between counsel for Protestant and CBP held on February 28, 2024.
FACTS:
The devices subject to the protest are designated as the "Fluance Ai40" and the "FluanceAi60" Bluetooth-enabled bookshelf-style speakers, and the "RS61 Retro" guitar-amplifier style Bluetooth speakers. The Fluance Ai40 and the Fluance Ai60 incorporate multiple loudspeakers (tweeters and woofers) mounted in the same enclosure, and each incorporates an amplifier. They can receive data from a connected device such as a tablet or smartphone via their integrated Bluetooth transceivers and associated electronics, e.g., codecs, with that received data being converted into sound. They can also be wired to a stereo system to reproduce audio over speaker wire. The RS61 Retro has the same capabilities of the Fluance speakers and can also be used as a guitar amplifier by plugging an electric guitar into it.
The devices were entered on October 25, 2019, and February 28, 2020, and classified in subheading 8518.22.00, HTSUS, which provides for "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: Loudspeakers, whether or not mounted in their enclosures: Multiple loudspeakers, mounted in the same enclosure." CBP liquidated each of the subject entries on November 6, 2020, under the same subheading 8518.22.00, HTSUS, and applied additional 7.5% ad valorem Section 301 duties imposed by subheading 9903.88.15, HTSUS.
Protestant does not dispute CBP's classification of the devices under subheading 8518.22.00, HTSUS. Instead, Protestant claims that the devices are excluded from the additional Section 301 duties by application of the exclusion provided for in U.S. Note 20(jjj)(60) to subchapter III of chapter 99, and subheading 9903.88.57, HTSUS. See Notice of Product Exclusion Extensions: China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 85 Fed. Reg. 54616 (September 2, 2020). Specifically, Protestant alleges that the subject merchandise is not subject to the additional duties because the subject devices are described by the text of U.S. Note 20(jjj)(60) to Chapter 99, HTSUS, as "Wireless communication apparatus that can receive audio data to be distributed to wireless speakers (described in statistical reporting number 8518.22.0000)."
ISSUE:
Whether the subject wireless speakers constitute wireless communication apparatus that can receive audio data to be distributed to wireless speakers (described in statistical reporting number 8518.22.0000)" as specified in the Section 301 Exclusion Order granted by the USTR and provided in U.S. Note 20(jjj)(60) to Chapter 99, HTSUS.
LAW AND ANALYSIS:
We first note that this 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 the protest is properly accorded to Protestant pursuant to 19 C.F.R. 174.24(b) because the question as to whether each of the subject devices is considered to be a "wireless communication apparatus that can receive audio data to be distributed to wireless speakers (described in statistical reporting number 8518.22.0000)" as provided in U.S. Note 20(jjj)(60) to Chapter 99, HTSUS, has not been ruled upon by the Commissioner of CBP or his designee, or by the Customs courts.
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 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 Harmonized System and are generally indicative of the proper interpretation of the heading.[1] The HTSUS provisions under consideration are as follows:
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:
* * *
Loudspeakers, whether or not mounted in their enclosures:
* * *
8518.22.00 Multiple loudspeakers, mounted in the same enclosure...
U.S. Note 20(jjj) to Chapter 99, HTSUS, provides as follows, in pertinent part:
"The U.S. Trade Representative determined to establish a process by which particular products classified in heading 9903.88.15 and provided for in U.S. notes 20(r) and 20(s) to this subchapter could be excluded from the additional duties imposed by heading 9903.88.15. See 84 Fed. Reg. 43304 (August 20, 2019), 84 Fed. Reg. 45821 (August 30, 2019), 84 Fed. Reg. 57144 (October 24, 2019), and 85 Fed. Reg. 3741 (January 22, 2020). Pursuant to the product exclusion process, the U.S. Trade Representative has determined that, as provided in heading 9903.88.57, the additional duties provided for in heading 9903.88.15 shall not apply to the following particular products, which are provided for in the enumerated statistical reporting numbers: [. . .]
(60) Wireless communication apparatus that can receive audio data to be distributed to wireless speakers (described in statistical reporting number 8518.22.0000)[.]"[2]
Protestant cites to 84 Fed.Reg. 38717 (2019) and 87 Fed.Reg. 17380 (2022) which states: "In general, the scope of each product specific exclusion granted by the USTR is governed by the scope of the ten-digit HTSUS subheadings and product descriptions ... Thus, products eligible any exclusion must: a) Satisfy the descriptive text; and b) Be classified in the subheading identified in the parenthetical." See Presentation submitted in support of the Application for Further Review (February 28, 2024).
Therefore, by the plain language of the exclusion's descriptive text, the subject devices must receive audio data to be distributed to wireless speakers and also be classified in subheading 8518.22.00, HTSUS, as loudspeakers.
Protestant asserts that the descriptive text is met and cites to HQ H310177 (July 16, 2020). In that ruling, CBP considered the classification of three Sonos-branded wireless speakers. We held that the devices performed the principal function of speakers (i.e., any reception or transmission functions was subordinate), and were thus classified as speakers of subheading 8518.22.00, HTSUS. Protestant characterizes the speakers under consideration here as "just like Sonos devices which transmit audio files via Wi-Fi to incorporate speakers [and] clearly meet the terms of the exclusion as 'wireless communication apparatus that can receive audio data to be distributed to wireless speakers.'"
While it is true that the subject devices are classified in subheading 8518.22.00, HTSUS, our Section 301 analysis does not end there. It is critical to recognize that a plain reading of the descriptive text of the subject exclusion requires that any device subject to the exclusion must also distribute audio data to wireless speakers. There is no evidence that the subject devices, in their condition as imported, are capable of distributing audio data to wireless speakers. Any such data is simply converted into digital audio waves that are distributed to the speaker components housed within the devices themselves.
We therefore conclude that the subject devices do not meet the terms of the Section 301 exclusion provided for in U.S. Note 20(jjj) to subchapter III of chapter 99, and subheading 9903.88.57, HTSUS. Accordingly, the devices are subject to the additional Section 301 duties imposed by subheading 9903.88.15, HTSUS.
HOLDING:
You are instructed to DENY the Protest. By application of GRI 1, the devices designated as the "Fluance Ai40," the "FluanceAi60" and the "RS61 Retro" are classified under subheading 8518.22.00, HTSUS, which provides for "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: Loudspeakers, whether or not mounted in their enclosures: Multiple loudspeakers, mounted in the same enclosure." The general, column one rate of duty is free.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8518.22.00, HTSUS, unless specifically excluded, are subject to an additional 7.5% percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.15, in addition to subheading 8518.22.00, HTSUS, listed above.
The HTSUS is subject to periodic amendment, so you should exercise reasonable care in monitoring the status of goods covered by the Note cited above and the applicable Chapter 99 subheading. For background information regarding the trade remedy initiated pursuant to Section 301 of the Trade Act of 1974, including information on exclusions and their effective dates, you may refer to the relevant parts of the USTR and CBP websites, which are available at https://ustr.gov/issue-areas/enforcement/section-301-investigations/tariff-actions and https://www.cbp.gov/trade/remedies/301-certain-products-china, respectively.
You are also 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 the public on the Customs Rulings Online Search System (CROSS) at https://rulings.cbp.gov/, or other methods of public distribution.
Sincerely,
Yuliya A. Gulis, Director
Commercial and Trade Facilitation Division
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[1] See Treasury Decision (T.D.) 89-80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).
[2]
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-"FGF??0!"56'fhi--- For the version of the HTSUS in effect as of the date the subject merchandise was liquidated, see the twenty-sixth revision of 2020 to the HTSUS (October 30, 2020).