CLA-2 OT:RR:CTF:EMAIN H300872 NVF
Michael K. Tomenga
Neville Peterson LLP
One Exchange Plaza
55 Broadway, Suite 2602
New York, New York 10006
RE: Tariff classification of Globalstar SPOT X® and GEN3® personal locator beacons from China.
Dear Mr. Tomenga:
This is in response to your letter of September 17, 2018, submitted on behalf of Globalstar Inc. (“Globalstar), requesting a prospective ruling (“ruling request”) as to the classification of the SPOT GEN3® (“GEN3”) and SPOT X® (“SPOT X”) personal locator beacons under the Harmonized Tariff Schedule of the United States (“HTSUS”). In reaching the below determination, we have considered information presented in your September 17, 2018 letter (hereinafter “ruling request”), public information from the Globalstar website, and information presented during the conference between your firm and CBP.
FACTS:
The GEN3 is a small, square device that has a GPS receiver and transmitter and a few buttons. It is intended for use by people when they travel to remote, rugged locations without cellular phone service. The primary feature of the GEN3 is automatic, motion-activated tracking which can be monitored by contacts. The GEN3 has various other location-related functions: it can send a pre-written check in message with GPS location to contacts; if the SOS button is pushed, it will send an emergency distress signal and GPS information to local response teams; and the user can push the help button to send a non-emergency assistance signal to contacts along with GPS information if the user needs assistance.
The SPOT X is rectangular handheld device that has the same functions as the GEN 3, with the addition of a screen and QWERTY keyboard and additional features. Like the GEN 3, the SPOT X is intended for use by people travelling in rugged, remote locations. The SPOT X tracks the user’s GPS location and sends the GPS location data to contacts or local authorities accompanied by different preset messages, depending on the option selected by the user. In addition to motion-activated automatic tracking and SOS and non-emergency alert buttons, the SPOT X can send and receive SMS messages, update social media pages, and contains an electronic compass and altimeter.
In your ruling request, you assert that the GEN3 and SPOT X are classified under subheading 8517.62.0050, HTSUS, as other apparatus for the transmission of voice, images, or other data. As justification for your position, you state that they are composite devices which transmit and receive telemetric signals and therefore are communication devices. You also state that “the wireless transceiver in the asset tracking devices enables the user to fully access all of [their] functionality” and therefore provides their essential character. Finally, you contend that the Globalstar devices are analogous to personal fitness devices classified in HQ H279898 (Apr. 5, 2017) (Fitbit workout device), HQ H260060 (July 14, 2015) (Apple watch), H257947 (July 14, 2015) (Samsung Gear LiveAndroid wearable smart device), HQ H273382 (Jan. 3, 2017) (Garmin VivoActive and VivoSmart), and HQ H265035 (Jan. 19. 2016) (Microsoft Band fitness tracker).
ISSUE:
Whether the GEN3 and SPOT X are composite goods classified as other apparatus for the transmission or reception of voice, images or other data in subheading 8517.62.0090, HTSUS, or as other radio navigational aid apparatus in subheading 8526.91.1140, HTSUS.
LAW AND ANALYSIS:
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. Goods that are prima facie classifiable under two or more headings are classifiable in accordance with GRI 3.
GRI 3(a) states that the heading that provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings refer to only part of the items in a composite good or set, those headings are to be regarded as equally specific in relation to the goods, even if one of the gives a more complete or precise description of the good. As such, they are regarded as equally specific and classification of the composite good or set is to be determined by GRI 3(b) or GRI 3(c).
GRI 3(b) states that composite goods or sets which cannot be classified by reference to GRI 3(a) are to be classified as if they consisted of the component that gives them their essential character.
GPS receivers are not specifically provided for in the HTSUS. However, CBP has consistently classified GPS receivers in subheading 8526.91, HTSUS, which provides for radio navigational aid apparatus. See, e.g., HQ H014564 (Dec. 6, 2017) (Holux GPS Receiver Set), N26635 (July 16, 2015) (LugTrack GPS tracking device for luggage), N267981 (Sep. 21, 2015) (Crane bluetooth GPS watch), and HQ 955510 (Sep. 15, 1994) (GPS cards for PC).
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 these headings. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
EN 85.26(1) states, in pertinent part, that heading 8526, HTSUS “also includes global positioning system (GPS) receivers.”
Therefore, the HTSUS headings under consideration are as follows:
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
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8526 Radar apparatus, radio navigational aid apparatus and radio remote control apparatus:
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The GEN3 and SPOT X are devices that determine their GPS location using the internal GPS receiver and then transmit GPS location data to contacts who are tracking the user’s location. GPS location data can be accompanied by a preset message, and in the case of the SPOT X, satellite network text messages can be sent to and received from contacts using the screen and keyboard. The devices are therefore composite goods pursuant to GRI 3 consisting of, among others, a GPS receiver and a transmitter which are fitted together, and must be classified as if they consisted of the component which imparts their essential character. It is well-established that a determination as to “essential character” is driven by the particular facts of the case at hand. See, e.g., Alcan Food Packaging (Shelbyville) v. United States, 771 F.3d 1364, 1366 (Fed. Cir. 2014) (“The ‘essential character’ of merchandise is a fact-intensive issue.”); see also EN VIII to GRI 3(b) (“The factor which determines essential character will vary as between different kinds of goods.”). That said, essential character has traditionally been understood as “that which is indispensable to the structure, core or condition of the article, i.e., what it is” and as “the most outstanding and distinctive characteristic of the article.” Structural Indus. v. United States, 360 F. Supp. 2d 1330, 1336 (Ct. Int’l Trade 2005).
In the present case, the GEN3 is a satellite device which allows users to send their GPS location and preset messages to contacts. It can send location automatically, or if the check-in button is selected, it will send location data accompanied by a preset message, such as, “I am fine,” to contacts. It also has an emergency response button which, when pushed, sends an alert to local authorities and the user’s GPS location. The primary function of the device is to track the user’s GPS location when in remote locations that do not have cellular data service. In order to perform its intended function, the GEN3 must be able to discern its location via a GPS receiver and transmit the GPS location data to contacts. Without the ability to determine its location via GPS receiver, the GEN3 does not have any GPS coordinates to transmit. This renders the motion-activated tracking, emergency signal, and non-emergency signal function useless as contacts and local authorities will be unable to track or locate the user, or provide assistance or rescue if requested.
The above analysis also applies to the SPOT X, which similarly functions as a GPS location tracking device. The SPOT X must be able to discern its location via GPS receiver in order to transmit that location via transmitter. Without the GPS receiver, the motion-activated tracking, emergency signal, and non-emergency signal cannot function as intended. While the SPOT X is capable of receiving and sending text messages from contacts or local authorities, the presence of a custom messaging feature does not outweigh the primary GPS tracking function of the SPOT X. Indeed, the service plans offered by Globalstar support this position. All service plans currently offered for the SPOT X include unlimited SOS requests, check in messages, predefined messages, and unlimited tracking, all of which are forms of GPS location tracking. By contrast, custom messages are limited in the majority of the plans offered and the user is charged for every message sent or received beyond the preset limit.
In light of the foregoing, we find that the essential character of the GEN3 and SPOT X is imparted by the GPS receiver. Thus, pursuant to GRI 3(b), the GEN3 and SPOT X are classified under heading 8526, HTSUS, which provides for “radar apparatus, radio navigational aid apparatus and radio remote control apparatus.” This is consistent with our classification decision in N26635, which classified a similar GPS tracking device for luggage under heading 8526, HTSUS. See NY N26635 (Jul. 16, 2015).
In support of your argument that the GEN3 and SPOT X are classified under heading 8517, HTSUS, you assert that the “wireless transceiver in the asset tracking devices enables the user to fully access all of the asset tracker devices functionality and thus provides the ‘essential character’ of the devices.” You assert that the subject devices are analogous to the devices in HQ H279898 (Fitbit workout device), HQ 260060 (Apple watch), H257947 (Samsung Gear LiveAndroid wearable smart device), HQ H273382 (Garmin VivoActive and VivoSmart), and HQ H265035 (Microsoft Band fitness tracker).
The fitness trackers in the abovementioned CBP rulings are not analogous to the GEN3 and SPOT X because they do not function in the same manner. The fitness trackers are wearable personal fitness trackers/monitors designed to connect via Bluetooth to the user’s smartphone or other device and which are used to convey and/or control information collected either by the fitness tracker or the portable device to which they are connected. This information includes, but is not limited to: tracking heart rate (Fitbit, Apple watch, Samsung Gear, Microsoft Band), tracking time slept (Fitbit, Microsoft Band), displaying the phone number of incoming calls or text messages (Fitbit, Apple watch, Samsung Gear, Microsoft Band), accessing contacts on a smartphone (Samsung Gear, Fitbit), and controlling a television (Apple watch). Notably, the fitness trackers cannot perform the full range of functions for which they are marketed until they are paired via Bluetooth to a smartphone or other portable device. HQ H279898 at 7, HQ H260060 at 2, H257947 at 6, HQ H273382 at 5, HQ H265035 at 5.
By contrast, the GEN3 and SPOT X cannot be paired with a smartphone via Bluetooth and indeed, do not need to do so in order to perform their full range of tracking and communication functions. They are capable of independently accessing GPS location data and transmitting such data, along with messages, without being connected to another device. Additionally, the instant devices do not function as controllers in the same manner as the personal fitness trackers. Therefore, the GEN3 and SPOT X are not analogous to personal fitness trackers.
HOLDING:
By operation of GRI 3(b), the GEN3 and SPOT X are classified in heading 8526.91.00, HTSUS. The column one, general rate of duty for merchandise of subheading 8526.91.00, HTSUS is free.
Effective July 6, 2018, the Office of the United States Trade Representative (USTR) imposed an additional tariff on certain products of China classified in the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(b), HTSUS. The USTR imposed additional tariffs, effective August 23, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(d), HTSUS. Subsequently, the USTR imposed further tariffs, effective September 24, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(f) and U.S. Note 20(g), HTSUS. For additional information, please see the relevant Federal Register notices dated June 20, 2018 (83 Fed. Reg. 28710), August 16, 2018 (83 Fed. Reg. 40823), and September 21, 2018 (83 Fed. Reg. 47974). Products of China that are provided for in subheading 9903.88.01, 9903.88.02, 9903.88.03, or 9903.88.04 and classified in one of the subheadings enumerated in U.S. Note 20(b), U.S. Note 20(d), U.S. Note 20(f) or U.S. Note 20(g) to subchapter III shall continue to be subject to antidumping, countervailing, or other duties, fees and charges that apply to such products, as well as to those imposed by the aforementioned Chapter 99 subheadings.
Products of China classified under subheading 8526.91.00, HTSUS, unless specifically excluded, are subject to the additional 25 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.01, in addition to subheading 8526.91.00, HTSUS, listed above.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the internet at www.usitc.gov/tata/hts/.
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,
Gregory Connor, Chief
Electronics, Machinery, Automotive, and
International Nomenclature Branch.