CLA-2 OT:RR:CTF:TCM H026521 JRB

Ms. Cecilia Castellanos
Vice President Import Administration
Western Overseas Corporation
10731-B Walker Street
Cypress, California 90630

RE: Revocation of NY N019513; Classification of a Melody MP-3 Case with Portable Speaker, Cable (Input Jack) and Battery Compartment

Dear Ms. Castellanos:

This letter is in reference to New York Ruling Letter (“NY”) N019513, issued to Western Overseas Corporation on behalf of Picnic Time on December 5, 2007, concerning the tariff classification of an MP-3 case with a portable speaker. In that ruling, U.S. Customs and Border Protection (“CBP”) classified the merchandise under subheading 8518.21.0000, Harmonized Tariff Schedule of the United States (“HTSUS”), as a single loudspeaker mounted in its enclosure. We have reviewed NY N019513 and found it to be in error. For the reasons set forth below, we hereby revoke NY N019513.

Pursuant to section 625(c), Tariff Act of 1930 (19 U.S.C. §1625(c)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act, Pub. L. 103-182, 107 Stat. 2057, 2186 (1993), notice of the proposed modification was published on August 13, 2009, in the Customs Bulletin, Volume 43, No. 33. One comment was received in response to the notice to revoke NY N019513.

FACTS:

In NY N019513 we described the merchandise as follows:

The merchandise subject to this ruling is a Melody MP-3 Case with portable speaker, cable (input jack) and battery compartment. It is a media carrying case with a built-in amplified speaker and an input jack. The item measures approximately 6 inches in length by 4 inches in width. The item is comprised of plastic and contains a plastic zipper around the case. On the front of the carrying case, is a built-in speaker. A plastic belt clip is attached to the top of the case. On the back of the case, is a Velcro® plastic flap, which opens to enable the MP-3 player to be inserted into and removed from. Inside the case is a compartment for batteries, the input jack, and an on/off switch. The item operates on 2 "AAA" batteries, which are not included.

ISSUE:

Whether the Melody MP-3 case with speaker is classified in heading 8518, HTSUS, as a speaker or in heading 4202, HTSUS, as a case for an MP-3 player?

LAW AND ANALYSIS:

Merchandise is classifiable under the HTSUS in accordance with the General Rules of Interpretation (GRIs). The systematic detail of the HTSUS is such that most goods are classified by application of GRI 1, that is, 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:

4202 Trunks, suitcases, vanity cases, attaché 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:

8518 Microphones and stands therefore; 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:

The Melody MP-3 case with a portable speaker is described by both headings 4202 and 8518, HTSUS, as it is a case, as well as, as a loudspeaker. Because it is prima facie classifiable under two or more headings, it cannot be classified according to GRI 1. In pertinent part, GRI 2(b) provides that any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. However, GRI 2(b) adds that the classification of goods consisting of more than one material or substance shall be according to the principles of rule 3. Accordingly, GRI 3 is utilized when, by application of GRI 2(b), a good consists of materials or components which are prima facie classifiable under two or more headings.

GRI 3(a) states that when goods are prima facie classifiable under two or more headings, classification shall be effected as follows:

The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.

In this case, headings 4202 and 8518, HTSUS, are equally specific in relation to one another. We cannot classify these goods by application of GRI 3(a) and therefore turn to GRI 3(b) which states:

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 Harmonized Commodity Description and Coding System Explanatory Notes (EN’s) constitute the official interpretation of the Harmonized System. While not legally binding on the contracting parties, and therefore not dispositive, the EN’s 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. CBP believes the EN’s should always be consulted. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).

Explanatory Note IX to GRI 3(b) states in pertinent part:

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.

We find that the portable speaker/plastic travel case is a composite good because no heading in the HTSUS completely describes the product; it is prima facie classifiable in two or more headings, heading 8518, HTSUS, which provides for speakers and heading 4202, HTSUS, which provides for various types of cases and similar containers; and the speaker and the case are attached together to form a practically inseparable whole. Thus, we are required to undergo an essential character analysis. EN VIII to GRI 3(b) provides guidance on determining the essential character of an item. It provides:

[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 a constituent material in relation to the use of the goods.

There have been several court decisions on "essential character" for purposes of GRI 3(b). These cases have looked to the role of the constituent materials or components in relation to the use of the goods to determine essential character. See, Conair Corp. v. United States, 29 C.I.T. 888 (2005); Structural Industries v. United States, 360 F. Supp. 2d 1330, 1337-1338 (CIT 2005); and Home Depot USA, Inc. v. United States, 427 F. Supp. 2d 1278, 1295-1356 (CIT 2006), aff’d 491 F.3d 1334 (Fed. Cir. 2007).

In cases where containers of heading 4202, HTSUS, incorporate electrical devices in their design, CBP has consistently held that the 4202 component imparts the essential character to the article as a whole. See Headquarters Ruling Letters (HQ) HQ 087057, dated December 21, 1990; HQ 089901, dated April 2, 1992; and HQ 955261, dated April 14, 1994. More specifically, in both HQ 968051, dated June 9, 2006 and HQ 967704, dated August 25, 2005, CBP held that by application of GRI 3(b), the essential character of a speaker/CD case was imparted by the 4202 component and the composite goods was classified under subheading 4202.92.9050, HTSUS. In particular, in HQ 968051, CBP dealt with the same issue as this case. In HQ 968051, CBP determined that when a composite good consists of a speaker (heading 8518) and a container (heading 4202), the container imparts the essential character because of its role in relation to the use of the goods.

Similarly, we believe that the essential character of your product is imparted by the case of heading 4202, HTSUS, because we find that the consumer is most likely purchasing the product for use as a case. This case has the ability to store the purchaser’s MP-3 player so that it can be transported from place to place. While the speaker may make the case more distinctive and more attractive to some, it is unlikely that the purchaser would buy the case primarily for use as a speaker. Also, the case is always in use as a means to store and protect the MP-3 player while the speaker is not always being used by the consumer. Thus, we believe the case imparts the essential character for this product.

HOLDING:

By application of GRI 3(b), the Melody MP-3 case with portable speaker is classified in heading 4202, HTSUS, which provides for “[t]runks, suitcases, vanity cases, attaché 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:”.

At this time we are unable to provide a specific subheading classification because additional information is needed concerning the material used to construct the exterior of the case. We invite you to request a new ruling with this required information on the speaker case to obtain a more precise classification of the product.

EFFECT ON OTHER RULINGS:

NY N019513, dated December 5, 2007 is hereby revoked. In accordance with 19 U.S.C. §1625(c), this ruling will become effective 60 days after publication in the Customs Bulletin.

Sincerely,

Myles B. Harmon
Director, Commercial and Trade Facilitation Division