CLA-2 OT:RR:CTF:TCM H271909 LWF
John Wells
Director, Customs Compliance and Planning
Timex Group USA, Inc.
555 Christian Road
Middlebury, CT 06762
RE: Tariff classification of a quartz analog wristwatch equipped with an accelerometer and Bluetooth® 4.0 connectivity
Dear Mr. Wells
This is in reply to your request, on behalf of Time Croup USA, Inc. (“Timex”), seeking a prospective ruling from U.S. Customs and Border Protection (CBP) on the tariff classification under the Harmonized Tariff Schedule of the United States (HTSUS) of the Timex “M372 Activity Tracker ‘Metropolitan +’ (Style No. TW2P81700)” wristwatch (the “Metropolitan+ Watch”).
FACTS:
The Timex “Metropolitan+ Watch” is a battery-operated, quartz analog wristwatch equipped with an accelerometer sensor and Bluetooth® 4.0 low-energy (Bluetooth LE) wireless connectivity. On its website, Timex describes the Metropolitan+ Watch, in relevant part, as an “…activity tracker [that] blends the functionality of an activity tracking band with the look and feel of a traditional analog watch.” Timex Metropolitan+, http://www.timex.com/watches/metropolitan-tw2p81700 (last visited June 20, 2016); see Figs. 1 and 2 (below).
Fig. 1
Fig. 2
The Metropolitan+ Watch is designed to function as a time-keeping device, while simultaneously collecting and transmitting data derived from a wearer’s physical movements. Specifically, the watch uses Bluetooth LE wireless technology to connect (“pair”) with a companion Timex App on an Android or iOS-powered mobile device (“smartphone”).
Movement data collected by the Metropolitan+ Watch’s accelerometer is wirelessly transmitted from the watch to the smartphone, where the Timex App analyzes the data to calculate the wearer’s activity levels—including steps taken, distance travelled, and calories burned. The smartphone Timex App displays a wearer’s actual step count and percentage of activity goal achieved; however, the Metropolitan+ Watch is also capable of displaying step and distance information on the watch dial itself.
If desired, the wearer may turn off the activity tracking function of the Metropolitan+ Watch. Operating the watch without its activity tracking function extends the battery life of the device, due to less energy demand.
The Metropolitan+ Watch features internal memory capable of storing a wearer’s activity tracking data for the last 7 calendar days. To prevent the loss of data, Timex suggests that a wearer plan to synchronize the watch to the companion smartphone application at a minimum of every 7th day of use.
ISSUE:
Whether the Timex Metropolitan+ Watch is classified in heading 9102, HTSUS, as a wrist watch, pocket watch, including stop watches, other than those of heading 9101, or in heading 8517, HTSUS, as 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.
LAW AND ANALYSIS:
Classification under the Harmonized Tariff Schedule of the United States (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, the remaining GRIs may then be applied in their appropriate order.
GRI 3 provides, in pertinent part, as follows:
When, by application of rule 2(b) or for any other reason, good are, prima facie, classifiable under two or more headings, classification shall be effected as follows:
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.
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The HTSUS headings under consideration are the following:
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:
9031 Measuring or checking instruments, appliances and machines, not specified or included elsewhere in this chapter; profile projectors; parts and accessories thereof:
9102 Wrist watches, pocket watches and other watches, including stop watches, other than those of heading 9101:
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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, 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. It is CBP’s practice to follow, whenever possible, the terms of the ENs when interpreting the HTSUS. See T.D. 89-90, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The ENs to GRI 3(b) provide, in pertinent part, that:
(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.
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As an initial matter, CBP observes that the physical characteristics and functionality of the Timex Metropolitan+ Watch substantially differ from those of certain “smart watches” that CBP has previously classified. See, e.g., Headquarters Ruling Letters (“HQ”) H260060 and H257947, dated July 14, 2015 (classifying the “Apple Watch” and “Samsung Gear Live Android Smartwatch” under heading 8517, HTSUS, respectively).
A comparison between the instant Metropolitan+ Watch and those “smart watches” previously classified by CBP under heading 8517, HTSUS, reveals that the Metropolitan+ Watch lacks several of the electronic components featured in the Apple Watch and Samsung Gear Live. Specifically, unlike the Apple Watch and Samsung Gear Live at issue in ruling letters HQ H260060 and H257947, respectively, the Metropolitan+ Watch does not feature a touch-sensitive liquid-crystal display (LCD) or other interactive controls on the watch dial or case that would allow a wearer to view or manipulate electronic data on the wristwatch itself.
Similarly, the wireless communication functions of the Metropolitan+ Watch are limited. Unlike the Apple Watch or Samsung Gear Live, the Metropolitan+ Watch does not receive, display, or transmit emails, texts, images, social media updates, or phone calls. By contrast, the wireless communication functions of the Metropolitan+ Watch are limited to the collection and transmission of activity data from the wristwatch to the companion Timex App on a paired smartphone. Moreover, although the watch dial of the Metropolitan+ Watch is capable of displaying steps and distance information, the watch does not possess a central processing unit (CPU) or internal memory that would enable the device to run a mobile operating system or execute processing programs stored on a paired smartphone. Accordingly, CBP observes that the wireless communication functions of the device are significantly limited to only provide for the transmission of basic movement data.
Upon consideration of the distinguishing physical and functional characteristics of the Timex Metropolitan+ Watch and other “smart watches” previously classified by CBP under heading 8517, HTSUS, CBP finds that the Metropolitan+ Watch substantially differs from the Apple Watch and Samsung Gear Live. Consequently, the analysis set forth in ruling letters HQ H260060 and H257947 is not dispositive of the classification of the instant Metropolitan+ Watch.
In determining the correct classification of the Metropolitan+ Watch, CBP observes that the device is constructed of component articles that are, prima facie, classifiable under two or more headings. Specifically, there is no dispute that the Bluetooth 4.0 LE module is described by heading 8517, HTSUS, or that heading 9031, HTSUS, describes the accelerometer sensor. Similarly, when the electronic component articles are excluded from consideration, it is not contested that the wristwatch is classifiable under the terms of heading 9102, HTSUS. Accordingly, because the Metropolitan+ Watch is, prima facie, classifiable under two or more headings, classification shall be effected by application of GRI 3—specifically GRI 3(b), which directs that composite goods made up of different components shall be classified as if they consisted of the material or component that gives them their essential character.
GRI 3(b) covers mixtures, composite goods, and goods put up in sets for retail sale. For purposes of this rule, Explanatory Note IX to GRI 3(b) provides that, “composite goods made up of different components shall be taken to mean not only those in which the component 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.” (Emphasis original). As such, the Metropolitan+ Watch is properly described as a composite good because it consists of several components articles of independent, individual function that are attached to each other to form an inseparable whole.
Under GRI 3(b), composite goods must be classified according to the material or component that imparts the article with its essential character. The “essential character” of an article is “that which is indispensable to the structure, core or condition of the article, i.e., what it is.” Structural Industries v. United States, 360 F. Supp. 2d 1330, 1336 (Ct. Int’l Trade 2005). EN VIII to GRI 3(b) explains that “[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 the constituent material in relation to the use of the goods.” Recent court decisions on the essential character for GRI 3(b) purposes have looked primarily to the role of the constituent material in relation to the use of the goods. See Estee Lauder, Inc. v. United States, 815 F. Supp. 2d 1287, 1296 (Ct. Int’l Trade 2012); Structural Industries, 360 F. Supp. 2d 1330; Conair Corp. v. United States, 29 C.I.T. 888 (2005); Home Depot USA, Inc. v. United States, 427 F. Supp. 2d 1278 (Ct. Int’l Trade 2006), aff’d 491 F.3d 1334 (Fed. Cir. 2007).
In accord with the meaning of “essential character” under GRI 3(b), CBP finds that the Metropolitan+ Watch is primarily a timepiece. The watchcase and dial of the Metropolitan+ Watch are substantially similar to those of a quartz analog wristwatch, and as noted above, the watch does not feature a touch-sensitive LCD display typical of smart watches of heading 8517, HTSUS. Moreover, although a small, analog dial on the face of the Metropolitan+ Watch is capable of displaying information concerning steps taken and distance traveled, the large, analog watch dial predominates the face of the watch.
As noted above, the Metropolitan+ Watch does not possess a touch-sensitive LCD display, and it lacks a CPU or internal memory that would enable the device to run a mobile operating system or execute processing programs stored on a paired smartphone. Consequently, apart from limited activity information displayed on a small, analog dial, the wearer cannot use the watch to access or review electronic data stored on a paired smartphone.
Based on a review of the physical characteristics and functions of the Metropolitan+ Watch, CBP finds that the design and use of the device is dominated by the analog watch face and time-keeping function of the wristwatch. In particular, the absence of a touch-sensitive LCD display supports a determination that the device’s limited data functionality is ancillary to its use as an analog wristwatch. Therefore, upon consideration of the role of the accelerometer sensor, Bluetooth LE module, and the watch’s timekeeping function, CBP finds that the essential character of the Metropolitan+ Watch is imparted by the analog timekeeping function.
Wristwatches with cases of non-precious metal are classified under heading 9102, HTSUS, which provides for “Wrist watches, pocket watches and other watches, including stop watches, other than those of heading 9101.” Accordingly, by application of GRI 3(b), the Metropolitan+ Watch is classified under heading 9102, HTSUS, specifically in subheading 9102.11.45.
HOLDING:
By application of GRI 3(b), the Timex Metropolitan+ Watch is classified under heading 9102, HTSUS. Specifically, the watch is classified in subheading 9102.11.45, HTSUS, which provides for, “Wrist watches, pocket watches and other watches, including stop watches, other than those of heading 9101: Wrist watches, electrically operated, whether or not incorporating a stop watch facility: With mechanical display only: Having no jewels or only one jewel in the movement: Other: Other.” The 2016 column one, general rate of duty for merchandise of subheading 9102.11.45, HTSUS, is 40¢ each + 8.5% on the case + 2.8% on the strap, band or bracelet + 5.3% on the battery.
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 http://www.usitc.gov/.
A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Ieva K. O’Rourke, Chief
Tariff Classification and Marking Branch