CLA-2 OT:RR:CTF:EMAIN H300873 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 TRACE®, STINGR, STX3-S, and SmartOne™ tracking devices 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 STX3-S, SPOT TRACE® (“SPOT TRACE”), STINGR, and SmartOne™ C (“SmartOne”) global asset data and tracking devices 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 STX3-S is a small, low power satellite transmitter. It is sold to original equipment manufacturers (“OEMs”) for integration into items such as liquid petroleum gas tanks, water tanks, pipelines, meters, cars, trucks, boats, and containers. The STX3-S does not have a power source or receiver; its sole function is to transmit binary data supplied by a separate device. The type of data transmitted varies according to the end user. The STX3-S transmits data to Globalstar’s satellite network which forwards the information to the end user.
The STINGR is similar to the STX3-S, but has additional features. In addition to a small, low power satellite transmitter, the STINGR also contains an integrated global positioning system (“GPS”) receiver. It is sold to OEMs for integration into items such as liquid petroleum gas tanks, water tanks, pipelines, meters, cars, trucks, boats, and containers and is used to track the location of the item that it is attached to. The STINGR is designed to receive binary data supplied by separate sensors, i.e. when a cargo door opens, which it combines with GPS data from its GPS receiver. The combined data are transmitted to Globalstar’s satellite network which forwards the information to the end user.
The SPOT TRACE is a theft alert and tracking device that contains a GPS receiver, a transmitter, a motion sensor, a battery compartment, and an internal antenna. It is a ready-to-use product which is sold directly to end users. The SPOT TRACE can be mounted on an automobile, boat, or other item that the user wishes to track. It can be programmed to alert the user when the item it is attached to moves. The SPOT TRACE can also be programmed for automatic tracking, wherein it determines and transmits its location at regular intervals of 2.5, 5, 10, 30, or 60 minutes and sends its location to the end user.
The SmartOne is a theft alert and tracking device that contains a motion sensor, GPS receiver, satellite transmitter, internal antenna, and inputs which allows it to accept signals from separate sensors. The SmartOne is a ready-to-use product which is sold directly to end users. It can be mounted on an automobile, boat, or other item. In addition to receiving GPS signals at regular intervals, the SmartOne can be programmed to send an alarm and GPS location information if the item it is attached to moves out of a pre-determined range or outside motion sensor/vibration parameters.
In your ruling request, you assert that the STX3-S, STINGR, SPOT TRACE, and SmartOne 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 SPOT TRACE, STINGR, STX3-S, and SmartOne 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 STX3-S is distinct from the SPOT TRACE, STINGR, and SmartOne in that it only performs one function, that of a transmitter. Because it lacks a GPS receiver, the STX3-S does not have any GPS location or tracking capabilities. Rather, it transmits a binary signal provided by a separate, external device.
By contrast, the SPOT TRACE, STINGR, and SmartOne are theft alert and tracking devices that have a GPS receiver and are capable of transmitting pertinent GPS location data to Globalstar’s network and the end user. Therefore, unlike the STX3-S, the SPOT TRACE, STINGR, and SmartOne are each a composite good 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 SPOT TRACE, STINGR, and SmartOne are tracking devices intended to assist a user with monitoring and tracking property such as cargo containers, automobiles, boats, etc. In order for the devices to perform their intended function, they must be able to discern their location via a GPS receiver in order to transmit the GPS location data to Globalstar’s satellite network, which forwards the information to end users. Without the ability to determine their location via GPS receiver, the devices do not have any location data to transmit. 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 light of the foregoing, we find that the essential character of the SPOT TRACE, STINGR, and SmartOne is imparted by the GPS receiver. Thus, pursuant to GRI 3(b), the SPOT TRACE, STINGR, and SmartOne are classified under heading 8526, HTSUS, which provides for “radar apparatus, radio navigational aid apparatus and radio remote control apparatus.”
In support of your argument that the STX3-S, STINGR, SPOT TRACE, and SmartOne 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 instant theft alert and asset tracking devices because they do not function in the same manner. They 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 STINGR, SPOT TRACE, and SmartOne as imported cannot be paired with a smartphone via Bluetooth and indeed, do not need to do so in order to perform their full range of theft alert or asset tracking functions. They are designed to independently access GPS location data if certain parameters are reached and automatically transmit such data and alert the user or the user’s contacts. Additionally, the instant devices do not function as controllers in the same manner as the personal fitness trackers. Therefore, the STINGR, SPOT TRACE, and SmartOne are not analogous to personal fitness trackers.
HOLDING:
By operation of GRIs 1 and 6, the STX3-S is classified under subheading 8517.62.0090, HTSUS, which provides for “Telephone sets . . . ; other apparatus for the transmission or reception of voice, images or other data . . . .” The column one, general rate of duty for merchandise of subheading 8517.62.00, HTSUS is free.
By operation of GRI 3(b), the STINGR, SPOT TRACE, and SmartOne 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.