CLA-2 OT:RR:CTF:EMAIN H315458 PF
Port of Seattle
U.S. Customs and Border Protection
Department of Homeland Security
1000 2nd Avenue, Suite 2100
Seattle, WA 98104
Attn: Japhy O’Doherty, Import Specialist
Re: Protest and Application for Further Review No: 1101-19-100212; Classification of the Cleveron Packrobot & Locker Combo
Dear Port Director:
The following is our decision as to Protest and Application for Further Review No. 1101-19-100212, which was filed on July 29, 2019 on behalf of Bell and Howell, LLC (“protestant”). The protest pertains the classification of the Cleveron Packrobot & Locker Combo (“Packrobot”) under the Harmonized Tariff Schedule of the United States (“HTSUS”). Various entries of the subject items were entered by Protestant and liquidated by U.S. Customs and Border Protection (“CBP”) at the Ports of Philadelphia and Columbus. Protestant asserts that CBP’s classification of the subject items at liquidation is incorrect. In reaching the below decision, we have taken into account the arguments and information included in the protest.
FACTS:
The subject Packrobot, which consists of the Cleveron Packrobot and Locker Combination (Model 401), dispenses products to customers that have previously placed an order online. The Packrobot allows consumers to order products online and then present proof of the transaction to retrieve the product from the machine at a designated pick-up location. After a customer places an order online, the customer chooses to pick up the item in a nearby Walmart store and is provided with a confirmation bar code or QR code via email and/or text message. The confirmation or QR bar code is the customer’s proof of payment, which entitles the customer to pick up the merchandise at the subject device, which has been stocked by store employees. If the product is available in the identified store, then the customer’s credit card is processed when the customer picks up the product at the Packrobot. If the ordered product is not available in-store and is instead shipped from a Walmart Fulfillment Center to the store for the customer’s subsequent pick-up, the customer’s credit card is processed at the time the online order is shipped for pick-up at the Packrobot.
Upon arrival at the store, the customer scans their unique code at the Packrobot to retrieve their purchased merchandise. Once the Packrobot processes the code to confirm the purchase, the machine will dispense the product and the customer receives the purchased item, either directly from the tower or (depending on the package size) from a designated locker that will automatically open. Without a bar code or QR code, the Packrobot will not dispense the purchased product and the customer cannot access the item.
The protestant provided a link to its marketing literature for the Packrobot, which describes the product as follows:
As technology drives consumer preference, retail customers demand
convenience and ease while shopping online. The Cleveron 401 pickup
tower, an automated self-service terminal, offers retail customers a
streamlined, personalized in-store pickup experience in under 10 seconds.
Retailers can consolidate shipping costs to deliver a package to customers
efficiently.
While average smart lockers have set locker sizes, the Cleveron 401 uses a
robotic 3D lifting system to dynamically store packages. Each package is
measured to determine its exact dimensions. It then automatically selects
the best slot to store each package.
The Cleveron 401 pickup tower hosts a smaller footprint than traditional
smart locker systems. At 72 square feet, it's perfect for retail where square
footage is valuable, while providing three times more capacity than regular
smart locker systems.
In addition, on its company website, the Packrobot is described as follows:
The Cleveron 401 Indoor is a robotic last-mile parcel pickup solution with an adjustable storage system for maximum use of space. The 401, also known as the Pickup Tower, is a robotic tower where you pick up your online-ordered items. This means customers can order online and pick up goods quickly, skipping queues or home delivery that could take a week or longer.
According to the protestant, the Packrobot helps facilitate online ordering, solves logistical impediments for delivery, reduces shipping costs, and drives-in store consumer traffic. The Packrobot also prevents package theft issues and provides the consumer with a safe place to retrieve their items.
The Packrobot was entered as two separate entries on September 13, 2018 and September 28, 2018. On February 1, 2019, CBP liquidated the entries in heading 8479, and specifically subheading 8479.89.65, which provides for “Machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof: Other machines and mechanical appliances: Other: Electromechanical appliances with self-contained electric motor: Other.” Protestant alleges that the subject items are properly classified in heading 8476, HTSUS, specifically subheading 8476.89.00, HTSUS, which provides for “Automatic goods-vending machines (for example, postage stamp, cigarette, food or beverage machines), including money-changing machines; parts thereof: Other machines: Other.” Protestant claims, in the alternative, that the subject merchandise is classified in heading 8428, and specifically subheading 8428.90.02, HTSUS, which provides for “Other lifting, handling, loading or unloading machinery (for example, elevators, escalators, conveyors, teleferics): Other machinery.”
In response to a request for additional information, the protestant described the subject merchandise as follows:
The PackRobot is used for parcel storage allowing pickup of online paid orders, etc. that the consumer does not wish to have shipped to their home. The PackRobot is a unique parcel terminal model with an automated smart storage system that optimizes the use of available space. Parcels are automatically weighed, measured and photographed. This is performed by a 3D lift that picks and delivers the right parcel to a secure delivery slot. The unit is built for outdoor and indoor use and has internal climate control.
Locker Combo is a parcel module system for the PackRobot with larger drawer slots for extra large parcels. The command for opening of Locker Combo door is given by the user through the PackRobot’s UI by entering the correct code.
Below is an image of the Packrobot and Locker Combo that are installed side-by-side:
ISSUE:
Whether the subject Packrobot is properly classified in heading 8428, HTSUS, as other lifting, handling, loading or unloading machinery, in heading 8476, HTSUS, as an automatic goods-vending machine, or in heading 8479, HTSUS, as a machine having an individual function.
LAW AND ANALYSIS:
Initially, we note that the matters protested are protestable under 19 U.S.C. §1514(a) (2) as decisions on classification. The protest was timely filed, within 180 days of liquidation of the first entry. (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. 1101-19-100212 is properly accorded to Protestant 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 by CBP with respect to the same or substantially similar merchandise.
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (“GRI”). 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 may then be applied.
The 2018 HTSUS provisions under consideration are as follows:
8428 Other lifting, handling, loading or unloading machinery (for example, elevators, escalators, conveyors, teleferics):
8476 Automatic goods-vending machines (for example, postage stamp, cigarette, food or beverage machines), including money-changing machines; parts thereof:
8479 Machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof:
In understanding the language of the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and Coding System, which constitute the official interpretation of the HTSUS at the international level, may be utilized. The ENs, although not dispositive or legally binding, provide a commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUS. See T.D. 89-80, 54 Fed. Reg. 35127 (August 23, 1989).
EN 84.76 provides, in part, as follows with respect to the scope of heading 8476, HTSUS:
This heading covers the various kinds of machines which supply some kind of merchandise when one or more coins, tokens or a magnetic card are put in a slot (other than those machines covered more specifically by other headings of the Nomenclature or excluded from the Chapter by a Chapter or Section Note). The term “vending” in the context of this heading refers to a “monetary” exchange between the purchaser and the machine in order to acquire a product. This heading does not cover machines which dispense a product but do not have a device to accept payment.
* * *
The heading covers not only machines in which the distribution is automatic, but also those consisting of a number of compartments from which the merchandise can be withdrawn after the coin has been inserted, the machine incorporating a device for releasing the lock of the appropriate compartment (e.g., by pressing on a corresponding button).
* * *
The heading includes machines equipped with heating or refrigerating devices, or with devices for preparing the product sold (e.g., fruit juice pressers, coffee and milk mixers, ice cream mixers), provided the principal function and purposes of the machines is the automatic sale of the product.
* * *
Protestant claims that the subject Packrobot is classified in heading 8476, HTSUS, as “automatic goods-vending machines.” Protestant states that the Packrobot dispenses merchandise to customers that have made online purchases and that the Packrobot only vends the merchandise after the customer scans their unique codes (which indicates proof of purchase and triggers payment or confirms that payment has been made).
The term “vending machine” is not defined in the HTSUS. In the absence of a statutory definition, a tariff term is construed according to its common and commercial meaning, which are presumably identical. Tyco Fire Products v. United States, 841 F.3d 1353, 1357 (Fed. Cir. 2016). A term’s meaning may be ascertained by reference to dictionaries, which specifically impart its common meaning, as well as “other reliable information sources” and, in particular, the ENs. Carl Zeiss, Inc. v. United States, 195 F.3d 1375, 1379 (Fed. Cir. 1999); see also GRK Can., Ltd. v. United States, 761 F.3d 1354, 1357 (Fed. Cir. 2014) (emphasizing the importance of the ENs). Among the sources that are regularly consulted pursuant to this maxim is industry literature, which may inform a term’s commercial meaning. See Rocknell Fastener, Inc. v. United States, 267 F.3d 1354, 1361 (Fed. Cir. 2001) (citing ANSI specifications as industry standards indicative of commercial designation); see also Well Luck Co., Inc. v. United States, 208 F. Supp. 3d 1364 (Ct. Int'l Trade 2017); and Specialty Commodities, Inc. v. United States, 190 F. Supp. 3d 1277, 1285-1286 (Ct. Int'l Trade 2016) (both citing industry references in defining tariff terms at issue).
“Vending machine” is consistently defined in dictionaries as an apparatus that dispenses merchandise in exchange for coins or another form of payment. See, e.g., Headquarters Ruling (“HQ”) H269223, dated June 8, 2017, Oxford English Dictionary (2021), available at http://www.oed.com/view/Entry/222068 (defining vending machine as a “slot machine from which comestibles or other small goods may be obtained”); Merriam-Webster.com, definition of VENDING MACHINE, https://www.merriam-webster.com/dictionary/?vending%?20machine (defining term as “a coin-operated machine for selling merchandise”); Collins English Dictionary, vending machine, https://www.collinsdictionary.com/?us/?dictionary/?english/vending-machine (defining term as “a machine that automatically dispenses consumer goods such as cigarettes, food, or petrol, when money is inserted.”) (last visited February 19, 2021). The Common Language Marketing Dictionary defines a vending machine as “[a] vending machine (or automatic merchandising machine) is a coin-, currency-, or credit card-operated machine activated by the ultimate consumer-buyer for the retail sale of goods or services. See https://marketing-dictionary.org/v/vending-machine/ (last visited February 19, 2021). This definition of vending machine is consistent with characterizations of such in industry literature and EN 84.76. See National Automatic Merchandising Association, Vending 101 (stating that vending involves provision of service at an “unattended point of sale”); and EN 84.76 (“’Vending’ in the context of this heading refers to a ‘monetary’ exchange between the purchaser and the machine in order to acquire a product.”); see also HQ 962415, dated February 22, 2000 (determining that medication dispenser did not qualify as a vending machine because dispensation did not involve a monetary transaction).
Moreover, industry literature explains that automatic merchandising is:
[T]he process of selling various types of goods using vending machines strategically placed in locations that are convenient for customers. Also known as automatic selling, this approach allows consumers to purchase the goods whenever they like without the need to interact with a salesperson or store clerk.
The article also describes how the process of “automatic merchandising” has changed as technology has evolved. Vending machines first accepted coins, then paper money, and now vending machines are equipped to process credit and debit cards in lieu of cash. Notably, the article goes on to explain how one of the main expenses of a vending machine owner is arranging for the restocking of vending machines in a timely manner, making sure the selections are always fresh and varied enough to attract the attention of consumers. See https://www.wise-geek.com/what-is-automatic-merchandising.htm (last visited May 18, 2021).
Protestant maintains that the primary function of the Packrobot is to automatically vend/dispense merchandise that has been purchased by a customer. While the Packrobot does store and release the products loaded for pickup, is not an automatic goods vending machine of heading 8476, HTSUS. A customer has already ordered and paid for the merchandise via Walmart’s online retail site. After the item is ordered, Walmart personnel place the item in the Packrobot as a convenient way for a customer to pick up the merchandise. In short, the point of sale does not occur at the Packrobot. The Packrobot is a device that stores online purchases until the customer picks up the merchandise with their unique code. The function that the Packrobot is performing is not a vending function as described by heading 8476, HTSUS.
The Protestant maintains that the “service” performed by the Packrobot is dispensing a product based on a customer payment. The service that the Packrobot provides is akin to the service that a customer service representative provides at a retail store. For example, once a customer places an online order, the customer will wait for a notification that their online order is ready for pickup, goes to the customer service section of the store, and an employee/customer service representative will confirm the customer’s order number, and provide the customer with their online ordered merchandise. The Packrobot provides the same service, albeit an automated one. The service provided at the retail store of providing a customer with their online ordered merchandise is not vending, nor is the service provided by the Packrobot.
The term “vending” in the context of heading 8476, HTSUS, and EN 84.76 refers to a “monetary” exchange between the purchaser and the machine in order to acquire a product. As stated in EN 84.76, this heading “does not cover machines which dispense a product but do not have a device to accept payment.” EN 84.76 specifies that the merchandise must have a device to accept payment and the principal function and purpose of the machine is the automatic sale of the product. On the contrary, the Packrobot does not have a payment mechanism incorporated in its design or operation system for the immediate sale of merchandise.
The customer purchases the merchandise on Walmart’s online system. Walmart subsequently initiates an authorization hold on the customer’s credit card and begins the payment process. If the product is available in the identified store, then the customer’s credit card is processed when the customer picks up the product at the Packrobot. If the ordered product is not available in-store and is instead shipped from a Walmart Fulfillment Center to the store for the customer’s subsequent pick-up, the customer’s credit card is processed at the time the online order is shipped. Neither billing process makes the Packrobot a vending machine. All payment transactions occur via Walmart’s online system. While we recognize that payment technology for vending machines has evolved over the years, in this case, the scanning of a unique barcode to dispense a product at an unattended location does not constitute a payment mechanism. In this case, the scanning of the barcode at the Packrobot functions to confirm the merchandise is available for retrieval and releases the merchandise from the Packrobot. By the time a product reaches the Packrobot, the payment has already occurred.
It is not plausible that a package delivery company would deliver a package to the Packrobot prior to a customer paying for the merchandise. The online order and payment process has occurred prior to the package delivery company delivering the shipment to the Packrobot. As a result, the Packrobot is providing a safe and efficient storage location to facilitate pickup by the customer. It does not provide a vending service whereby goods are automatically dispensed in exchange for payment.
Moreover, the protestant’s marketing of the Packrobot (also described as the Cleveron 401 Pickup Tower) states “[t]he Cleveron 401 Indoor is a robotic last-minute parcel pickup solution with an adjustable storage system for maximum use of space. The 401, also known as the Pickup Tower, is a robotic tower where you can pick up your online ordered items.” It is clear that the Packrobot is marketed as a product where a customer can retrieve its online orders.
In support of its argument, the Protestant relies on several CBP rulings, including HQ H269223, supra, New York Ruling (“NY”) 830252, dated June 9, 1988 and NY N131698, dated December 7, 2010 in support of the Packrobot’s classification in heading 8476, HTSUS. NY 830252 is no longer available on Customs Ruling Online Search System (“CROSS”), but it is briefly described as an in-room hotel snack and drink machine that was made of compartments that stored up to eight snacks or beverages, in HQ 962415, dated February 22, 2000. The machine in NY 830252 was described as being “connected via the hotel’s television co-axial cable to a central computer. When a hotel guest removed a drink or snack, the computer system created an accounting record and debited the guest’s bill.” CBP classified the hotel snack machine in heading 8476, HTSUS.
In NY N131698, the subject merchandise was described as an in-room minibar tray. The in-room minibar stored snacks and beverages and was connected via communication technology to a central computer. When the guest removed a drink or a snack, the unit would send a signal to bill the guest room for the article consumed. In addition, CBP noted that the smart tray incorporated a sensor and sat on top of the minibar to which it was hooked for billing purposes. As items were removed from the tray, i.e., sodas and snacks, a signal was sent via the communication system to automatically charge the guest for the item. If the tray is not hooked up directly to the minibar, it will not work. CBP classified in the in-room minibar tray in heading 8476, HTSUS.
In HQ H269223, the subject merchandise was described as dispensers of personal protective equipment (“PPE) and maintenance, repair, and operations (“MRO”) equipment. Dispensation of the PPE or MRO equipment was regulated by an external control device, which includes a touchscreen-operated automatic data processor and radiofrequency or magnetic car reader. The majority of the dispensers were sold to industrial suppliers, which installed the dispensers in their customer’s facilities – generally industrial worksites - and continually stocked the dispensers’ internal compartments. Employees at the worksites could access the dispenser’s contents by swiping or scanning an employer-issued, dispenser-calibrated card and navigated a series of prompts displayed on the touchscreen to select specific equipment. Selection of the equipment initiated a turn of an internal drum and a corresponding door that allowed a user to retrieve the equipment. Upon removal of the equipment, a notification indicating the removal was electronically transmitted to the supplier (or in some cases to the dispenser’s manufacturer for batching and transmission to the supplier). The supplier billed the customer for any items removed at regular intervals. In HQ H269223, CBP held that an apparatus incorporating a payment mechanism qualified as a vending machine within the meaning of heading 8476, HTSUS, even if the temporal nexus between delivery and payment was not necessarily direct.
The vending machines in the cases cited by the protestant are different than the subject Packrobot. For instance, it appears that the in-room machine at issue in NY 830252 immediately billed the customer after the retrieval of snacks or beverages, while the Packrobot is dispensing a good that has already been purchased online. Similarly, in NY N131698, the in-room minibar tray automatically charged a guest when an item was removed from the smart tray.
The Packrobot is also substantially different from the vending machine at issue in HQ H269223. A user in HQ H269223 is in effect purchasing PPE and MRO through the dispenser, whereas in the current case, a user is picking up merchandise that has already been purchased. In HQ H269223, there are only two types of merchandise that a user can obtain, whereas the Packrobot is supplied with various types of merchandise that is based on an online transaction where a customer has already purchased an item. Moreover, the Packrobot does not continually stock similar type of merchandise like the dispensers of PPE and MRO had in HQ H269223. The process of picking up a package that has already been purchased is not vending. Therefore, HQ H269223 is not applicable to the instant case.
In the alternative, Protestant maintains that the Packrobot is classified in heading 8428, HTSUS, as “other lifting, handling, loading or unloading machinery.” In support of this contention, Protest relies on CBP rulings including NY F82199, dated February 14, 2000, NY N242323, dated June 18, 2013, and NY N301313, dated November 19, 2018. In NY F82199, the merchandise at issue was an automobile stacker/storage system. This system was described as a box-like structure that lifted and supported automobiles. Unlike the subject Packrobot, the merchandise at issue in NY F82199 did not dispense any objects. Therefore, NY F82199 is not applicable. In NY N242323, the merchandise was an automated storage and retrieval system that included a Pallet Lift, a Pallet Mover, a Load Stacker and a Control Profile. This system included the ability to lift, transport, and stack pallets throughout a warehouse and not in a self-contained tower like the subject Packrobot. Therefore, NY N242323 is also inapplicable. Finally, in NY N301313, the merchandise at issue was called a Toplift Pro and was described as an automotive aftermarket metal hoist and storage unit for removing and storing Jeep Wrangler hardtops. The storage ability of this item was limited to resting upon a steel frame after being lifted and therefore is not similar to the instant Packrobot.
EN 84.28, states in pertinent part, that heading 8428, HTSUS covers:
. . . [A] wide range of machinery for the mechanical handling of materials, goods, etc. (lifting, conveying, loading, unloading, etc.). They remain here even if specialised for a particular industry, for agriculture, metallurgy, etc.
The Packrobot functions principally to store packages that have been previously purchased by a customer. Once a customer scans a QR code, the customer is permitted to retrieve the order from the shelving unit for pickup. To the extent that the 3D lift system incorporated into the Packrobot would itself fall under the scope of heading 8428, HTSUS, its contribution to the overall product by helping it more effectively use the storage space is secondary. For instance, the Locker Combo makes no mention of any mechanical features that load, handle, or lift packages into each compartment. Moreover, the Packrobot does not handle or position packages, but moves the trays on which the packages are placed. Similarly, the Packrobot does not load or unload packages, rather a worker loads packages into the Packrobot and the customer unloads the package from the tray. The lifting or handling of packages is subsidiary to the principal function of the Packrobot, which is to store packages for retrieval triggered by an automated process. This function is not covered by heading 8428, HTSUS.
As noted, the Packrobot is an electromechanical machine that stores merchandise previously purchased by a customer and provides convenient storage and retrieval of goods and as such, the Packrobot stores previously purchased merchandise until the purchaser retrieves it. It is not a vending machine as described in heading 8476, HTSUS. Moreover, heading 8479 provides for machines and mechanical appliances having individual functions, not specified or included elsewhere in this Chapter. In this case, the Packrobot is not more specifically classified elsewhere. The Explanatory Note to heading 8479 states that goods of that heading are restricted to machinery having individual functions which is not excluded from Chapter 84 by the operation of a Section or Chapter Note. Since no other heading covers the instant Packrobot and because it possesses an individual function as explained above, it is classified under heading 8479, HTSUS.
HOLDING:
By application of GRIs 1 and 6, the Packrobot is classified in subheading 8479.89.94, HTSUS, which provides for “Machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof: Other machines and mechanical appliances: Other: Other.” The 2018 general, column one rate of duty is 2.5 percent ad valorem.
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/.
You are instructed to DENY the Protest.
In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), 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 reliquidation 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 Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public on the CBP website at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Craig T. Clark, Director
Commercial and Trade Facilitation Division