CLA-2 OT: CTM: TCM H167108 ERB
CATETORY: Classification
Port Director, Port of Seattle
U.S. Customs and Border Protection
1000 Second Avenue, Suite 2100
Seattle, WA 98104-1020
Attn: Anhtu Hoang, Import Specialist
RE: Application for Further Review of Protest No. 3011-11-100150; Tariff classification of AM/FM Armband Radio
Dear Port Director:
This letter is in reply to the Application for Further Review (AFR) of Protest number 3001-11-100150, filed April 11, 2011, on behalf of Target Stores by counsel (Target). The Protest is against U.S. Customs and Border Protection’s (CBP) classification of the Jensen® Digital AM/FM Stereo Armband Radio packaged with ear buds, armband, and detachable belt clip, under subheading 8527.19.50 of the Harmonized Tariff Schedule of the United States (HTSUS). A sample was provided for this office’s analysis and is being returned with this letter. Our response follows.
FACTS:
The subject merchandise is the Jensen® Digital AM/FM Stereo Armband Radio, model SAB-55 (DPCA 057-04-0096). The product consists of a portable battery-operated radio receiver with an AM/FM tuner and a built-in clock, which is imported as retail-packed with ear buds, an elastic textile armband, and a detachable plastic belt clip that also serves to hold the adjustable armband. It is not designed to be installed in a motor vehicle. The radio can be placed around a user’s upper arm or alternatively at their waist while engaged in physical exercise or other activity.
The AFR involves two entries: the first entered on March 8, 2010 and the second entered on April 19, 2010, both classifying the product under subheading 8527.19.10, HTSUS, as “Reception apparatus for radiobroadcasting, whether or not combined in the same housing, with sound recording or reproducing apparatus or a clock: Radiobroadcast receivers capable of operating without an external source of power: Other: Valued not over $40 each, incorporating a clock or clock-timer, not in combination with any other article, and not designed for motor vehicle installation.” CBP liquidated the entries on January 21, 2011, and March 9, 2011, respectively, under subheading 8527.19.50, HTSUS, as ““Reception apparatus…: Radiobroadcast receivers capable of operating without an external source of power: Other: Other.”
ISSUE:
Whether a radio receiver and AM/FM tuner packaged with ear buds, armband, and belt clip is classified under subheading 8527.19.10, HTSUS, or under subheading 8527.19.50, HTSUS.
LAW & ANALYSIS:
Initially, we note that the 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 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. 3011-11-100150 is properly accorded to Target pursuant to 19 C.F.R. § 174.24(a) because the decision against which the protest was filed is alleged to be inconsistent with a ruling of the Commissioner of CBP or his designee, or with a decision made at any port with respect to the same or substantially similar merchandise. Specifically, Target asserts that CBP’s classification of the article is inconsistent with New York Ruling (NY) D84069, dated October 27, 1998, NY N027878, dated May 27, 2008, and NY N103226, dated May 24, 2010.
Merchandise imported into the United States is classified under the HTSUS. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (GRIs). GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule and any relative section or chapter notes and, unless otherwise required, according to the remaining GRIs taken in their appropriate order. GRI 3(b) provides the following
When, by application of Rule 2(b) or for any other reason, goods are prima facie, classifiable under two or more headings, classification shall be effected as follows:
(b) 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. [Emphasis added]
The HTSUS heading and subheadings under consideration are as follows:
8527 Reception apparatus for radiobroadcasting, whether or not combined, in the same housing, with sound recording or reproducing apparatus or a clock:
Radiobroadcast receivers capable of operating without an external source of power:
8527.19 Other:
8527.19.1000 Valued not over $40 each, incorporating a clock or clock-timer, not in combination with any other article, and not designed for motor vehicle installation
8527.19.5000 Other
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized system. While not 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 these headings. See IT.D. 89-80, 54 Fed. Reg. 35127 (Aug. 23, 1989).
The EN (X), to GRI 3(b) provides that the term “goods put up in sets for retail sale” refers to goods that:
Consist of a least two different articles which are prima facie classifiable in different headings;
Consist of products or articles put together to meet a particular need or carry out a specific activity; and
Are put up in a manner suitable for sale directly to users without repacking (e.g. in boxes or cases or on boards).
The subject merchandise is imported in its condition ready for retail sale. In each package is included: one AM/FM radio receiver with digital tuner, one set of ear bud headphones, one textile elastic armband, and one detachable plastic belt clip capable of attaching to the radio receiver and holding the adjustable armband. Considered separately, the subject merchandise consists of four components which are prima facie classifiable in different headings. They are packaged, marketed, and meant to be used together, to meet a specific need; that is, a portable means of listening to the radio. Lastly, the merchandise does not require repacking or additional components upon importation. As such, the subject merchandise satisfies the above requirements in the EN (X) to GRI 3(b) for “goods put up in sets for retail sale.”
GRI 3(b) continues, in relevant part, “…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.” [Emphasis added]
Although the GRI’s do not provide a definition of “essential character,” the EN (VIII) of GRI 3(b) provides guidance. Essential character may “…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.” This is known as the “essential character test,” see Home Depot USA, Inc. v. United States, 491 F.3d 1334, 1337 (Fed. Cir. 2007) quoting Better Homes Plastics Corps. v. United States, 119 F.3d 969, 971 (Fed. Cir. 1997), and the application of this test requires a fact-intensive analysis see Rollerblade, Inc. v. United States, 112 F.3d 481, 483 (Fed. Cir. 1997).
Upon examination, the radio (which houses the receiver, AM/FM tuner, and clock) clearly provides the bulk and weight. The ear buds, textile arm band and plastic belt clip are lightweight, even flimsy, and are incidental to the products overall weight. No breakdown of the individual component’s costs was provided, but the technology used to design and manufacture a radio receiver and tuner, with a built-in clock, a head-phone jack, all in a small portable housing unit is clearly more valuable than a small plastic belt clip, an elastic arm band and ear buds. Lastly, the product is marked and advertised as a “Jensen® Digital AM/FM Stereo Armband Radio,” and except the mention of the armband feature, the entirety of that product description applies to the radio receiver and tuner. It is the expectation of the consumer that s/he is purchasing a portable radio and thus this is the nature and the character of the product. Accordingly, for tariff classification purposes, the essential character of the set is imparted by the radio receiver and tuner.
The subject set is not imported “in combination” with any other article, because all the components present are part of a single “set,” and thus are classified pursuant to the article that imparts the essential character. Finally, the radio receiver and tuner component of the set is battery operated, has a unit value of less than $40.00, includes a built-in clock, and it is not designed for motor vehicle installation.
Therefore, the Jensen® Digital AM/FM Stereo Armband Radio is fully described in subheading 8527.19.10, HTSUS. This is consistent with previous CBP rulings. See Headquarters Ruling (HQ) 960114, dated September 15, 1997 (affirming NY A89251, dated November 8, 1996, AM/FM radio/clock/book stand with sound effects under heading 8527.19.10, HTSUS).
HOLDING:
Pursuant to GRI 3(b), the Jensen® Digital AM/FM Stereo Armband Radio is classified under subheading 8527.19.10, HTSUS as “Reception apparatus for radiobroadcasting, whether or not combined, in the same housing, with sound recording or reproducing apparatus or a clock: Radiobroadcast receivers capable of operating without an external source of power: Valued not over $40 each, incorporating a clock or clock-timer, not in combination with any other article, and not designed for motor vehicle installation.” The column one, rate of duty, is free.
The Protest should be GRANTED.
In accordance with Sections IV and VI of the Customs Protest/Petition Processing Handbook you are to mail this decision, together with the CBP Form 19, to the Protestant no later than 60 days from the date of this letter. Any re-liquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision.
Sixty days from the date of the decision, the Office of International Trade, Regulations and Rulings, will make the decision available to CBP Personnel, and to the public on the CBP home page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division