CLA-2 OT:RR:CTF:TCM H216396 EGJ
TARIFF NO: 3926.90.99; 4205.00.80
U.S Customs and Border Protection
Center of Excellence and Expertise-Electronics
1 World Trade Center, Suite 601
Long Beach, CA 90831
Attn: Jorge Garcia, Assistant Director
RE: Internal Advice Request: Tariff classification of Two Styles of iPad Smart Covers
Dear CEE Director:
This letter is in reply to your request for Internal Advice, initiated by a letter dated May 3, 2012, by counsel for Apple, Inc. (Apple). At issue is the classification of two styles of iPad Smart Covers by U.S. Customs and Border Protection (CBP) under the Harmonized Tariff Schedule of the United States (HTSUS). Two samples of the iPad covers were forwarded to this office. We also had a meeting with Apple and Apple’s counsel at our office on August 7, 2012.
FACTS:
The iPad covers consist of two layers. The bottom layer always consists of a microfiber lining. The microfiber lining buffs off smudges or fingerprints on the iPad screen when closed. The top layer always consists of one of two different materials: polyurethane (plastic) or leather. One of the submitted sample covers has the plastic layer (model no. MD309/LLA) and one has the leather layer (model no. MD301/LLA).
Apple designed iPad Smart Covers for exclusive use with iPad tablet computers. The iPad covers are sized to fit directly over the screens of the iPads, covering the front, but not the back, of the devices. The iPad cover is secured to the iPad by magnets that run along the back edge of the iPad covers and align with magnets embedded inside the frame of the iPad. The force of the magnets secures the iPad cover to the iPad.
The iPad cover protects the iPad in different ways. First, the cover protects the front of the iPad from nicks and scratches. Also, the iPad has a sleep/wake button on its face. When closed, the iPad cover prevents any accidental pushing of the sleep/wake button.
In addition to serving as a cover, the iPad cover can fold into a stand for the iPad. The fold creates either a high upright stand or a lower, more horizontal stand for the iPad. The user can adapt the height of the stand to accommodate different activities, such as viewing video or typing.
Below are pictures of the iPad cover in use:
In addition to serving as a protective cover and a stand, the iPad covers help to preserve the iPad’s battery life. A magnet built into the covers aligns with a sensor built into the iPad. When the user closes the cover, the magnet activates the sensor and sends the iPad into sleep mode. Sleep mode uses less power and so preserves battery life. When the user opens the cover, the sensor sends a signal which wakes up the iPad from sleep mode.
On May 6, 2011, the Port of Chicago sent Apple an Informed Compliance Notice which stated that the plastic iPad covers were classified in heading 3926, HTSUS, which provides for other articles of plastics. In its request for Internal Advice, Apple disagrees with CBP’s classification of the iPad covers. Apple asserts that the iPad covers should be classified in heading 8473, which provides for accessories suitable for use solely or principally with ADP machines.
ISSUE:
What is the tariff classification of the plastic and leather iPad Smart Covers?
LAW AND ANALYSIS:
Classification under the 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 2 through 6 may then be applied in order.
The HTSUS provisions at issue are:
3926 Other articles of plastics and articles of other materials of headings 3901 to 3914 …
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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 …
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4205 Other articles of leather or of composition leather …
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6307 Other made up articles, including dress patterns …
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8471 Automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data, not elsewhere specified or included …
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8473 Parts and accessories (other than covers, carrying cases and the like) suitable for use solely or principally with machines of headings 8469 to 8472:
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8505 Electromagnets; permanent magnets and articles intended to become permanent magnets after magnetization; electromagnetic or permanent magnet chucks, clamps and similar holding devices; electromagnetic couplings, clutches and brakes; electromagnetic lifting heads; parts thereof:
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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 at the international level 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 84.73 provides, in pertinent part, as follows:
But the heading excludes covers, carrying cases and felt pads; these are classified in their appropriate headings. It also excludes articles of furniture (e.g. cupboards and tables) whether or not specially designed for office use (heading 94.03). However, stands for machines of headings 84.69 to 84.72 not normally usable except with the machines in question, remain in this heading.
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Applying GRI 1, two headings may describe the iPad Smart Covers in their entirety. First, heading 4202, HTSUS, provides for different types of containers. It is divided into two parts: articles listed before the semicolon are not restricted as to material composition, and articles listed after the semicolon must be composed of leather or composition leather, of sheeting of plastics, of textile material, of vulcanized fiber, or of paperboard, or wholly or mainly covered with such materials or with paper. Both parts provide for the classification of certain named articles and “similar containers.” As the iPad covers are not specifically named in heading 4202, HTSUS, we must turn our discussion to the meaning of the term “similar containers.”
The term “container” is not defined in the HTSUS. In Webster’s New World Dictionary of American English, 300 (3d. College Ed. 1988), a container is “a thing that contains or can contain something.” To contain means “to hold; 1. to have in it; hold, enclose, or include.” Id. In Merriam-Webster’s Collegiate Dictionary, 249 (10th ed. 2001), to contain means “to hold together, hold in, contain; 1. to keep within limits.” Each of the subject iPad covers only protects one side of the iPad. The subject merchandise cannot hold, contain or enclose the iPad. Therefore, the iPad covers fail to meet the definition of containers. They cannot be classified under heading 4202, HTSUS. This conclusion is consistent with prior CBP rulings on merchandise which only protects one side of an electronic device. See N185835, dated October 21, 2011 (tablet computer cover (Style K39352) which only covered one side of the tablet classified in 3926, HTSUS); NY N068497, dated July 20, 2009 (mobile phone protector which only attached to one side of the phone classified in 3926, HTSUS).
Next, heading 8473, HTSUS, provides, in pertinent part, for “accessories (other than covers, carrying cases and the like) suitable for use solely or principally with machines of headings 8469 to 8472.” Heading 8471, HTSUS, provides for automatic data processing machines. As such, certain accessories to ADP machines are classifiable in heading 8473, HTSUS.
Although the heading text specifically excludes covers, carrying cases and the like, Apple asserts that the iPad covers are classifiable in heading 8473, HTSUS. Apple cites to EN 84.73 which states that “the heading excludes covers … [h]owever, stands for machines of headings 84.69 to 84.72 not normally usable except with the machines in question, remain in this heading.” Apple argues that the iPad covers serve as stands when they are folded under the iPad. Based upon the EN language, Apple asserts that the iPad covers should still be classified under heading 8473, HTSUS.
Apple further argues that the iPad covers are not merely covers; rather, they are a combination of a stand and a battery life preserver. Apple asserts that this makes them much more than traditional covers. As such, Apple takes the position that the iPad Smart Covers are not excluded by the heading text.
We disagree. The term “cover” is not defined in the HTSUS. In Webster’s New World Dictionary, cover is defined as “anything that covers, as a book-binding, the front binding of a magazine, jar lid, box top, etc.” Id. at 320 (3rd College Ed. 1988). The Oxford English Dictionary defines a cover as “that which covers; anything that is put or laid over, or that naturally overlies or overspreads an object …” Id. (2nd Ed. 1989) available at www.oed.com.
Although the iPad Smart Cover has magnets and a folding function, it nevertheless functions as a cover because it is designed to cover the iPad. It is also advertised and marketed as a “cover.” In fact, the principal purpose of the merchandise is to protect the iPad when it is not in use, either when it is being stored or carried. This is the essence of what a cover does. That it can also serve as a stand does not make it any less of a cover.
CBP has considered this precise issue previously. In NY N174255, CBP classified the MicroShell Folio for iPad (Style 8569) under heading 3926, HTSUS. Like the iPad Smart Cover, the MicroShell Folio contains magnets which control the tablet computer’s sleep/wake functions. The MicroShell Folio also folds to form a stand for the tablet computer. Below are pictures of the MicroShell Folio, Style 8569:
The requester asked that CBP classify the MicroShell Folio under heading 8473, HTSUS. However, CBP determined that the tablet cover was excluded from classification in heading 8473, HTSUS, because it was a cover. As in NY 174255, the heading text excludes the iPad Smart Cover from classification under heading 8473, HTSUS.
Since no heading describes the iPad Smart Cover in its entirety, we must look to the constituent materials of the cover. The plastic iPad Smart Cover consists of a hard plastic layer with a microfiber textile lining. The plastic layer encapsulates small magnets which attach the cover to the iPad. These three components are each prima facie classifiable in a different heading, i.e., the plastic layer (heading 3926, HTSUS), the textile lining (heading 6307, HTSUS) and the magnets (heading 8505, HTSUS). As no single heading describes the merchandise in its entirety, we must apply GRI 3(b) and classify the covers according to the component which gives the covers their essential character.
GRI 3(b) provides, in pertinent part:
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:
…
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 ENs to GRI 3(b) state, in pertinent part:
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.
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 stated by the Court of International Trade in Structural Industries v. United States, 360 F. Supp. 2d 1330, 1336 (2005), “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.” See also Conair Corporation v. United States, 29 Ct. Int’l Trade 888, 895 (2005) (discussing "the concept of ‘essential character’ found in GRI 3(b)”). The factors that determine an article’s essential character “vary between different kinds of goods.” See EN (XII) to GRI 3. Examples of such factors include the bulk, quantity, and weight of a material, as well as the role of the material in relation to the use of the product. See 3G Mermet Fabric Corp. v. United States, 135 F. Supp. 2d 151, 159 (Ct. Int’l Trade 2001).
The hard plastic layer comprises most of the cover’s bulk and weight. The hard plastic layer also protects the screen, prevents the iPad from exiting sleep mode by guarding the sleep/wake button and folds to form a stand. Apple has cited all of these functions as important to the cover’s use. Additionally, the hard plastic layer provides the support for the textile lining and encapsulates the magnets. As such, the plastic layer imparts the essential character to the plastic iPad Smart Cover. The plastic iPad Smart Cover is classified under heading 3926, HTSUS, as other articles of plastics.
Regarding the leather iPad Smart Cover, the composition is identical to the plastic iPad Smart Cover except that a hard leather layer replaces the hard plastic layer. As such, the leather layer imparts the essential character to the leather iPad Smart Cover. It is classified under heading 4205, HTSUS, as other articles of leather.
HOLDING:
By application of GRI 3(b), the plastic iPad Smart Cover is classified in heading 3926, HTSUS. It is specifically classified under subheading 3926.90.99, HTSUS, which provides, in pertinent part, for “other articles of plastics…: other: other…” The 2012 column one, general rate of duty is 5.3 percent ad valorem.
By application of GRI 3(b), the leather iPad Smart Cover is classified in heading 4205, HTSUS. It is specifically classified under subheading 4205.00.80, HTSUS, which provides for “other articles of leather or of composition leather: other: other: other …” The 2012 rate of duty is free.
Duty rates are provided for your convenience and subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the U.S. International Trade Commission’s website at www.usitc.gov.
You are to mail this decision to the Internal Advice requester no later than 60 days from the date of the decision. At that time, the Office of International Trade, Regulations and Rulings, will make the decision available to CBP personnel and the public on the CBP website located 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