OT:RR:CTF:EMAIN H331484 PF / JRG
Parag Agarwal
Ernst & Young LLP
1 Manhattan West
New York, NY 10001
RE: Tariff Classification of a “smart” shopping cart
Dear Mr. Agarwal:
This is in reply to your request, on behalf of your client MAPLEBEAR INC. d/b/a Instacart (Instacart), for a prospective ruling on the tariff classification, under the Harmonized Tariff Schedule of the United States (HTSUS), of a Caper “smart” shopping cart Model 3 (Caper Cart). In addition to your written submission, our decision takes into consideration a teleconference meeting held with your office on August 23, 2023.
FACTS:
You describe the instant merchandise as a mobile point-of-sale (POS) device that will enable shoppers to scan items they select off grocery store shelves and pay for them directly via the Caper Cart, eliminating the need to wait in line at the checkout area. The Caper Cart uses a series of built-in Computer Vision (CV) cameras and a scanner, along with an artificial intelligence (AI) unit with built-in machine learning algorithms, to identify products as customers put them in the cart. A built-in scale measures items sold by weight. A touchscreen LCD display (Touchscreen) mounted on the cart, provides an interactive in-store experience. On the Touchscreen, shoppers can see items in their basket as well as basket-based recommendations, available deals, and use an interactive guide to locate where the items are in the store. The cart also allows retailers to collect data about shopper’s behavior, including identifying high traffic areas in store and out of stock items.
Shoppers will be able to pay for their purchases by using either the cart touchscreen for a cloud-based payment facility or by using the cart’s credit/debit card terminal. Transactional information is saved on a server. Once payment is made, the customer is requested to enter their phone number or email address to receive a receipt for their transaction. Records of all transactions can be retrieved with the proper access and authority. Shoppers can bag their own groceries as they shop, so that they may exit the store as soon a payment is made.
The Caper Cart consists of a scanner, scale, CV cameras, LED module, touchscreen display, and AI unit. The Caper Cart uses an Android operating system (OS) and requires Internet connectivity to function. However, shoppers cannot access the Internet, download apps, or play games on the cart. It is a purpose-built device which only can be used for self-checkout while shopping.
As described in your ruling request, the additional features of the Caper Cart are detailed below:
Scanner: The scanner is used to scan the barcode of items that are placed in the cart by the shopper. The cart interprets the barcode and maps it to an item code that can be looked up in a database to return the price, name, thumbnail image, and other metadata about the item.
Scale: The scale is used to weigh items that are placed in the cart by the shopper. Depending on the item, the weight is used by the cart to calculate the price.
CV Cameras: The CV Cameras are used to detect items that are placed in the cart by the shopper.
LED Module: The LED Modules increase the brightness of the environment for item recognition.
Touchscreen display and AI Unit: The touchscreen is primarily used to present a user interface to the shopper through their shopping trip and enables self-checkout on the cart. The display along with the AI unit presents tutorials on how to use the cart, facilitates self-scanning of items, lists the real-time contents of the cart as items are added, displays the total price of the contents of the cart, helps shoppers weigh produce items (E.g., Fruit, vegetables), pay for their groceries, and provides the shopper feedback on errors or warnings when identification of added items fails.
The Caper Cart may be imported: (1) completely assembled or (2) without a card reading terminal, which will be added after importation. In the second configuration, the Caper Cart will include the casing and wiring for the card reading terminal, which will allow retailers to install their existing card reading terminals onto the carts.
Images of the Caper Cart in its condition as imported, with the name of a grocery chain redacted, are shown below:
ISSUE:
Whether the Caper Cart is classified in heading 8470, HTSUS, as a cash register, or in heading 8716, HTSUS, as a vehicle.
LAW AND ANALYSIS:
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) and, in the absence of special language or context which requires otherwise, by the Additional U.S. Rules of Interpretation (AUSRIs). The GRIs and the AUSR are part of the HTSUS and are considered statutory provisions of law for all purposes.
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 order. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the heading 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 HTSUS and are generally indicative of the proper interpretation of the headings. It is CBP’s practice to follow, whenever possible, the terms of the ENs when interpreting the HTSUS. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The HTSUS headings under consideration are as follows:
8470 Calculating machines and pocket-size data recording, reproducing and displaying machines with calculating functions; accounting machines, postage-franking machines, ticket-issuing machines and similar machines, incorporating a calculating device; cash registers:
8470.50 Cash registers
8470.50.20 Point-of-sale terminals.
* * *
8716 Trailers and semi-trailers; other vehicles, not mechanically propelled; and parts thereof:
8716.80 Other vehicles:
8716.80.50 Other.
Note 1(l) to section XVI, HTSUS, specifically excludes articles of section XVII, HTSUS.
In your request, you assert that the subject Caper Cart is classified in heading 8470, HTSUS, as a cash register, under GRI 3(b). Specifically, you maintain the Caper Cart is a “composite article that consists of the basket with wheels and the POS electrical components.” You further contend the POS components, cumulatively, impart the whole article with its essential character by highlighting that “[the] Caper Cart is marketed as a POS device, a “smart cart”; arguing the Caper Cart would never be purchased for use as an ordinary shopping cart; and noting that the cost of producing a Caper Cart is significantly more than the normal purchase price of a typical shopping cart. Given the GRIs are applied in order and Note 1(l) to section XVI excludes articles of section XVII, the threshold inquiry is whether the Caper Cart is covered, in its entirety, by heading 8716, HTSUS, under GRI 1, i.e., whether it falls under the scope of the provision for “other vehicles, not mechanically propelled”.
In its imported condition, whether or not equipped with electronics, the Caper Cart is a vehicle. The subject cart will be used to push items from aisle to aisle until the items are bagged and paid for and the shopper is ready to leave the store. Despite the costly enhancements of the cart, the shopper may choose not to use the added features and can use the Caper Cart as an ordinary cart. The Caper Cart is supplied by a supermarket, for use by customers inside the shop for transport of merchandise. The additional features, including the installation of electronics, only add to the convenience in use of the shopping cart.
This is consistent with the guidance provided by EN 87.16, which provides, in relevant part, as follows:
This heading covers a group of non mechanically propelled vehicles (other than those of the preceding headings) equipped with one or more wheels and constructed for the transport of goods or persons. It also includes non mechanical vehicles not fitted with wheels (e.g., sledges, special sleds running on timber trackways).
The vehicles of this heading are designed to be towed by other vehicles (tractors, lorries, trucks, motorcycles, bicycles, etc.), to be pushed or pulled by hand, to be pushed by foot or to be drawn by animals.
The heading includes:
* * *
(B) Hand- or foot-propelled vehicles.
This group includes:
Trucks and trolleys of various kinds including those specialised for use in particular industries (in the textile or ceramic industries, in dairies, etc.).
Wheelbarrows, luggage trucks, hopper trucks and tipping trucks.
Food carts, buffet trolleys (other than the type falling in heading 94.03), of a kind used in railway stations.
Hand carts, e.g., for waste disposal.
Rickshaws.
Small insulated barrows for use by ice cream vendors.
Tradesmen’s barrows of all kinds. These lightweight vehicles are sometimes fitted with pneumatic tyres.
Sledges (hand drawn) for the transport of wood in mountainous country.
“Kicksleds”, propelled by the direct pressure of the rider's foot on the snow covered ground, designed particularly for the transport of persons in subarctic regions.
This heading does not cover:
Mobile garbage bins (including those for outside use) (e.g., heading 39.24 or 73.23).
Walking aids known as “walker-rollators”, which generally consist of a tubular metal frame on three or four wheels (some or all of which may swivel), handles and hand-brakes (heading 90.21).
Small wheeled containers (e.g., wheeled baskets) of basketwork, metal, etc., not incorporating a chassis, of a kind used in shops (classification according to their constituent material).
* * *
VEHICLES FITTED WITH MACHINERY, ETC.
The classification of units consisting of vehicles with permanently built on machines or appliances is determined according to the essential character of the whole. The heading therefore covers such units which derive their essential character from the vehicle itself. On the other hand, units deriving their essential character from the machine or appliance they incorporate are excluded.
It follows from the above that:
Trucks, carts or trailers with built on tanks, whether or not they are fitted with subsidiary pumps for filling or emptying purposes, are classified here.
The following, for example, are excluded and fall in the heading relating to the machine or appliance:
Hand truck, animal cart or trailer type spraying appliances of heading 84.24.
Machines and appliances mounted on a simple wheeled chassis, designed to be towed, such as mobile pumps and compressors (heading 84.13 or 84.14) and mobile cranes and ladders (heading 84.26 or 84.28).
Trailed concrete mixers (heading 84.74)….
(Emphasis in original).
We note that several of the examples of goods covered by heading 8716, HTSUS, described in EN 87.16(B), supra, fall under the scope of the legal text regardless of whether they are equipped with electronic features for payment (e.g., rickshaws or small insulated barrows for ice cream venders), or other specialized components (e.g., food carts, specialized trucks, or trolleys). Similarly, to the extent that the electronics that facilitate the payment functions constitute “machinery”, we conclude that the Caper Cart still is essentially a manually propelled vehicle that transports goods, particularly noting that it functions as a cart regardless of whether the POS function is enabled. It is, therefore, classified in heading 8716, HTSUS, specifically in subheading 8716.80.50, HTSUS, pursuant to GRI 1. Pursuant to GRI 2(a), the Caper Cart is still classified in subheading 8716.80.50, HTSUS, even if it is imported without the card reading terminal.( Finally, as the Caper Cart is classified in heading 8716, HTSUS, it is excluded from classification in heading 8470, HTSUS, as a cash register, pursuant to Note 1(l) to section XVI.
HOLDING:
By application of GRIs 1 and 6, the subject Caper Cart is classified in heading 8716, HTSUS, and specifically in subheading 8716.80.50, HTSUS, which provides for “Trailers and semi-trailers; other vehicles, not mechanically propelled; and parts thereof: Other vehicles: Other.” The column one, general rate of duty for merchandise of this subheading is 3.2% ad valorem.
Duty rates are subject to change. The text of the most recent HTSUS and the accompany duty rates are provided at 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,
Gregory Connor, Branch Chief
Electronics, Machinery, Automotive, and International Nomenclature Branch