OT:RR:CTF:VS H316278 RMC
Michael Dahm
Cole International USA Inc.
1775 Baseline Rd.
Grand Island, NY 14072
RE: Tariff Classification and USMCA Eligibility of Social Distancing Wristband
Dear Mr. Dahm:
This is in response to your correspondence dated December 10, 2020, in which you request a ruling on the tariff classification of a Proxxi Technology social distancing wristband and on the eligibility of that product for preferential tariff treatment under the United States-Mexico-Canada Agreement (“USMCA”). Your request, submitted as an electronic ruling request, was forwarded to this office from the National Commodity Specialist Division for response.
FACTS:
According to the information provided, the “Proxxi Contact” is a wrist-worn band that is designed to facilitate Covid-19 safety in offices, manufacturing facilities, and other job sites. The device incorporates a Bluetooth transceiver and a unique identifying number that is used to detect, alert, and report interactions between individuals wearing the wristband.
The device has two primary functions. The first is to vibrate any time that the wearer comes within six feet of another person wearing the device, which serves to remind staff of the need to maintain social distance. The second is to record and report each time that users come into close contact. When this occurs, each band will transmit its unique identifying number, which the other device will then record. The device will then transmit the data to a back-end computer system via a Bluetooth connection to a smartphone. The resulting proximity logs allow organizations to create contact tracing lists to ascertain which workers might need testing and quarantine in the event of a Covid-19 exposure.
You state that the final product will be based on a fully functional Chinese-origin fitness wristband that Proxxi Technology will import into Canada. The fitness wristband consists of a wrist strap, top enclosure incorporating an LCD screen, a bottom enclosure, a large and small printed circuit board, and a battery. The printed circuit boards contain elements such as flash memory, an accelerometer, a touch sensor, a heartrate sensor, LEDs, a voltage regulator, and a Bluetooth antenna. You opine that the classification of the wristband when imported into Canada will be subheading 8517.62.0090 of the Tariff Schedule of Canada.
At its facilities in Vancouver, British Columbia, Canada, Proxxi Technology will remove the existing software from the device and install its own software, which will allow the device to function as a social distancing wristband. Workers will then test the device, assign a serial number, record the number in the Proxxi database, set the device in sleep mode, polish the device, and pack it for export to the United States. You argue that the device should be classified in 8517.62.0090, Harmonized Tariff Schedule of the United States Annotated (“HTSUSA”) and that the device will be eligible for USMCA preferential tariff treatment.
ISSUES:
Whether the social distancing wristband will be properly classified under subheading 8517.62.0090, HTSUSA, when imported into the United States.
Whether social distancing wristband will be eligible for USMCA preferential tariff treatment when it is exported from Canada to the United States.
LAW AND ANALYSIS:
Classification
Classification of goods under the HTSUS is governed by 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 2 through 6 may then be applied in order.
CBP has classified merchandise similar to the Proxxi Contact social distancing wristband in 8517.62.0090, HTSUSA. For example, in New York Ruling (“NY”) N306036, dated September 17, 2019, CBP classified the “Disney MagicBand” in subheading 8517.62.0090, HTSUSA. The device consisted of a wristband incorporating both active and passive radio frequency (“RF”) modules and a digital identification number. The RF modules communicated with RF readers at Disney World, allowing users access to certain areas such as hotel rooms and attractions.
Here, in its condition as imported into the United States, the Proxxi device is similarly relying on its Bluetooth transceiver to detect the presence of other Bluetooth transceivers incorporated into other wristbands at the specified proximity. Therefore, we agree that the merchandise will be properly classified by operation of GRI 1 in 8517.62.0090, HTSUSA, as “Telephone sets, including telephones for cellular networks or 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: Other apparatus for 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): machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus: Other.”
Eligibility for USMCA Preferential Tariff Treatment
The United States-Mexico-Canada Agreement (“USMCA”) was signed by the Governments of the United States, Mexico, and Canada on November 30, 2018. The USMCA was approved by the U.S. Congress with the enactment on January 29, 2020, of the USMCA Implementation Act, Pub. L. 116-113, 134 Stat. 11, 14 (19 U.S.C. § 4511(a)). General Note (GN) 11 of the HTSUS implements the USMCA. GN 11(b) sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA. GN 11(b) states:
For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country, as defined in subdivision (l) of this note, is eligible for the preferential tariff treatment provided for in the applicable subheading and quantitative limitations set forth in the tariff schedule as a “good originating in the territory of a USMCA country” only if—
the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries;
the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials;
the good is a good produced entirely in the territory of one or more USMCA countries using nonoriginating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o)); or
…
Here, the non-originating, Chinese-origin fitness tracker will be loaded with software in Canada to produce the final product for export to the United States. Therefore, the merchandise will not qualify as originating pursuant to GN 11(b)(i) or (ii). We must therefore consider whether the merchandise qualifies as originating pursuant to GN 11(b)(iii).
As noted above, the social distancing wristband will be classified in 8517.62.0090, HTSUSA, when entered into the United States. The applicable rule of origin in GN 11(o)/85.49 requires “[a] change to a good of any of subheadings 8517.62 through 8517.70 from any other good within that subheading or any other subheading, including another subheading within that group.” In other words, if the good and the non-originating material are classified in the same subheading, the rule requires a change from any other good. Here, a fitness tracker with all the requisite hardware is imported into Canada, and the completed product consists of the same item with other software. Accordingly, we do not find that another good was produced. Additionally, we note that the non-originating material (i.e., the fitness tracker) and the final product are both classified in the same eight and ten-digit tariff provision. Therefore, we find that the tariff shift rule will not be satisfied, and that the merchandise will be ineligible for preferential tariff treatment under the USMCA when imported from Canada to the United States.
HOLDING:
Based on the information provided, the social distancing wristband will be classified in subheading 8517.62.0090, HTSUSA, and will be ineligible for preferential tariff treatment under the USMCA when imported from Canada into the United States.
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a Customs Service field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.”
A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is 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,
Monika R. Brenner, Chief
Valuation and Special Programs Branch