OT:RR:CTF:EMAIN H319100 LCB/PF

TARIFF NOs.: 8517.62.00; 8518.21.00; 8518.22.00; 9903.88.15

Center Director
Electronics Center of Excellence & Expertise
U.S. Customs and Border Protection
301 East Ocean Blvd., Ste. 900
Long Beach, CA 90802

Attn: Michael Stevens, Supervisory Import Specialist

Re: Application for Further Review of Protest No. 3802-20-104253; Tariff classification and applicability of Section 301 trade remedies to smart speakers and smart displays from China

Dear Center Director:

The following is our decision regarding the Application for Further Review (AFR) of Protest No. 3802-20-104253 timely filed on behalf of Google, LLC (Protestant). The Protest pertains to the tariff classification of the “Google Home Mini,” “Nest Mini (2nd Gen),” “Google Home,” “Google Home Max (collectively, smart speakers),” “Nest Hub,” and “Nest Hub Max (collectively, smart displays),” under the Harmonized Tariff Schedule of the United States (HTSUS), and U.S. Customs and Border Protection’s (CBP) decision regarding the applicability of the exclusion annotated under Chapter 99 U.S. Note 20(zz)(8) under the HTSUS. Our decision is set forth below.

The subject merchandise was entered between September 1, 2019 and January 9, 2020 and was liquidated between July 31, 2020 and December 4, 2020, under heading 8517, HTSUS, and specifically subheading 8517.62.00, HTSUS, which provides for “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: 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.”

As products of China, the subject merchandise was also subject to additional ad valorem duties pursuant to U.S. Note 20 to Subchapter III, Chapter 99 under subheading 9903.88.15, HTSUS. The Protestant alleges that CBP erred in finding that the exclusion annotated under Chapter 99 U.S. Note 20(zz)(8) of the HTSUS, did not apply to its merchandise.

FACTS:

The “Smart Speakers”:

The “Google Home Mini,” “Nest Mini (2nd Gen),” “Google Home,” and “Google Home Max” are smart speakers that consist of audio speaker(s), microphone(s), wireless transceiver modules (Bluetooth and/or Wi-Fi), a control panel, a capacitive touch sensor, and voice assistant components. The wireless transceiver connects the devices to a home router to gain access to the internet. The “Google Home Mini,” “Nest Mini (2nd Gen),” and “Google Home Max” also have a Bluetooth transceiver, which is used to connect to a user’s cellular phone and other devices to perform functions such as playing music. The “Google Home Max” has four speakers (two 114 mm high-excursion woofers and two 18mm tweeters) and the Nest Mini (2nd Gen) contains a machine learning chip that performs certain on-device processing.

The smart speakers all have a built-in Google Assistant, 1 which allows for voice control of specialized Wi-Fi enabled devices through a joint inter-connectivity with Wi-Fi network users. The Google Assistant is also capable of accessing and playing audio from multiple internet streaming services and accessing certain internet-based databases. The voice assistant components convert spoken voice commands and transmits these search and/or control requests to the internet or home network. Within the remote server, a voice to text or voice to data program converts the spoken word to a format that the computer system can use to carry out various tasks. The function of the speaker assembly through a user request is to direct the spoken word to the proper application on the cloud. In contrast, the voice assistant function is more of a user interface function and instead of typing in a command or using a mouse or touch screen, audio (voice) is used. These spoken commands/requests are used to control network enabled devices such as lighting, or to request a search of internet-based sites (i.e., weather forecast, local traffic, how to say a word in another language, etc.).

The “Smart Displays”:

The “Nest Hub” and “Nest Hub Max” are smart displays consisting of LCD or HD touch screen displays, audio speakers, microphones, CPU and CDRAM, and wireless transceiver modules (Bluetooth and/or Wi-Fi). The “Nest Hub Max” also contains a megapixel camera.

The “Nest Hub” and the “Nest Hub Max” use audio (voice) or touch screen inputs to gain access to Google’s remote servers. The servers use software algorithms to determine the most appropriate action. The Google server might retrieve requested information from the internet or 1 Google Assistant is an artificial intelligence-powered virtual assistant.

2 use internal programs to facilitate the control (send a control command via the home Wi-Fi) of a home appliance or device (e.g., turning a light on and off). The servers transmit requested information back to the device, while control signals are transmitted from the home router/Wi-Fi connection (e.g., to control lights and cameras, etc.). The smart display receives the data and converts it into the appropriate format (i.e., audio, video, data text) and presents it to the user as either music, video, or text on the screen. The smart displays also have built-in Google Chromecast, which allows a user to stream content from one external device (e.g., a phone, computer, etc.) to the smart display. The smart displays can also stream video and sounds associated with streaming services like Netflix and YouTube TV. The touchscreen functions on the smart displays include swiping and tapping to navigate menus, control settings and media.

ISSUE:

1. Whether the subject devices are classified under heading 8517, HTSUS, which provides for, in pertinent part, apparatus for the reception, conversion and transmission or regeneration of voice, images or other data, or under heading 8518, HTSUS, which provides for, in pertinent part, loudspeakers, whether or not mounted in their enclosures.

2. Whether the subject devices are eligible for the Section 301 trade remedy provided for in US. Note 20(zz)(8) to Chapter 99, HTSUS, under subheading 9903.88.47, HTSUS?

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 entries at issue. (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. 3802-20-104253 is properly accorded to Protestant pursuant to 19 C.F.R. § 174.24(b) because the decision against which the protest was filed involves questions of law and fact that have not been ruled upon by the Commissioner of CBP or his designee or by the Customs courts.

Classification under the HTSUS is determined 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. If the goods cannot be classified solely based on 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 2019 HTSUS provisions under consideration are:

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

3 than transmission or reception apparatus of heading 8443, 8525, 8527 or 8528; parts thereof: * * * 8518 Microphones and stands therefor; loudspeakers, whether or not mounted in their enclosures; headphones and earphones, whether or not combined with a microphone, and sets consisting of a microphone and one or more loudspeakers; audio-frequency electric amplifiers; electric sound amplifier sets; parts thereof:

U.S. Note 20(zz)(8) to Chapter 99, HTSUS, provides as follows, in relevant part:

The U.S. Trade Representative determined to establish a process by which particular products classified in heading 9903.88.15 and provided for in U.S. notes 20(r) and (s) to this subchapter could be excluded from the additional duties imposed by heading 9903.88.15. See 84 Fed. Reg. 43304 (August 20, 2019), 84 Fed. Reg. 45821 (August 30, 2019), 84 Fed. Reg. 57144 (October 24, 2019) and 85 Fed. Reg. 3741 (January 22, 2020). Pursuant to the product exclusion process, the U.S. Trade Representative has determined that the additional duties provided for in heading 9903.88.15 shall not apply to the following particular products, which are provided for in the following enumerated statistical reporting numbers: […]

(8) Wireless communication apparatus capable of receiving audio data to be distributed to wireless speakers (described in statistical reporting number 8517.62.0090)[.]

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 Harmonized System and are generally indicative of the proper interpretation of the heading. 2

The EN to heading 85.17 provides, in pertinent part, the following:

This heading covers apparatus for the transmission or reception of speech or other sounds, images or other data between two points by variation of an electric current or optical wave flowing in a wired network or by electromagnetic waves in a wireless network. The signal may be analogue or digital. The networks, which may be interconnected, include telephony, telegraphy, radio-telephony, radio-telegraphy, local and wide area networks. … (II) 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) …

(F) Transmitting and receiving apparatus for radio-telephony and radio-telegraphy.

2 See Treasury Decision (T.D.) 89-80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).

4 This group includes:

(1) Fixed apparatus for radio-telephony and radio-telegraphy (transmitters, receivers and transmitter-receivers)….

EN 85.18 provides, in pertinent part, the following:

This heading covers microphones, loudspeakers, headphones, earphones and audio- frequency electric amplifiers of all kinds presented separately, regardless of the particular purpose for which such apparatus may be designed (e.g., telephone microphones, headphones and earphones, and radio receiver loudspeakers).

The heading also covers electric sound amplifier sets. ***

(B) LOUDSPEAKERS, WHETHER OR NOT MOUNTED IN THEIR ENCLOSURES

The function of loudspeakers is the converse of that of microphones: they reproduce sound by converting electrical variations or oscillations from an amplifier into mechanical vibrations which are communicated to the air. . .

Matching transformers and amplifiers are sometimes mounted together with loudspeakers. Generally the electrical input signal received by loudspeakers is in analogue form, however in some cases the input signal is in digital format. Such loudspeakers incorporate digital to analogue converters and amplifiers from which the mechanical vibrations are communicated to the air.

Loudspeakers may be mounted on frames, chassis or in cabinets of different types (often acoustically designed), or even in articles of furniture. They remain classified in this heading provided the main function of the whole is to act as a loudspeaker. Separately presented frames, chassis, cabinets, etc., also fall in this heading provided they are identifiable as being mainly designed for mounting loudspeakers; articles of furniture of Chapter 94 designed to receive loudspeakers in addition to their normal function remain classified in Chapter 94.

The heading includes loudspeakers designed for connection to an automatic data processing machine, when presented separately.

Smart Speakers

Pursuant to GRI 1, 3 the classification of the smart speakers shall be determined according to the headings of the tariff schedule and any relative section or chapter notes. Note 3 to Section XVI, states the following: 3 We note that GRI 3(b), as relied upon by Protestant, is not relevant to the present analysis as the case is properly decided in accordance with GRI 1 and Note 3 to Section XVI. Headquarters Ruling Letter (HQ) H260060 (July 14, 2015), H265035 (January 19, 2016), H265038 (February 23, 2016), H273382 (January

5 Unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines designed for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function (emphasis added).

The smart speakers are composite machines that consist of reception, conversion, and transmission apparatus of heading 8517, as well as an amplifier and loudspeaker of heading 8518. The primary issue in determining their proper classification is whether the smart speakers’ principal function is their reception, conversion, and transmission function or their amplifier and loudspeaker function. Although the Protestant emphasizes that the smart speakers (and smart displays) are capable of receiving audio data and distributing it to wireless speakers that are connected to the user’s ecosystem, we note that the issue is not whether the smart speakers are capable of receiving, converting, and transmitting data, but whether doing so is their principal function.

As we observed in HQ H281100 (June 27, 2018), where the principal function of a device such as a loudspeaker is not to connect to the source of a signal, but rather to convert such signal into sound, such a device functions as a loudspeaker of heading 8518, HTSUS. Here, the smart speakers are wireless digital data receptors, converters, and transmitters. They receive digital data and convert it into sound. The transmission and reception functions of the smart speakers are undertaken to accomplish the task of playing sound. Because the smart speakers are connected to a built-in Google Assistant, a peer-to-peer network that allows for voice control of specialized Wi-Fi enabled devices, the smart speakers also transmit data. Digital audio files from a variety of sources can be accessed and played from the smart speakers. The principal function of the smart speakers is not to connect to the source of the signal, but rather to convert the signal into sound, i.e., to function as a loudspeaker. See HQ H167260 (July 11, 2011) (Bluetooth-compliant wireless speakers that connected to laptops, smart phones, tablets, and mp3 players through a 3.5mm stereo wire or wireless Bluetooth technology classified as a loudspeaker of heading 8518, HTSUS) and HQ H281100, supra (holding that the Bluetooth feature of the subject speaker device was a support feature that enabled the speaker to wirelessly connect to the source of the audio signal).

The wireless speaker with Bluetooth and/or Wi-Fi capability provides the principal function to the “Google Home Mini,” “Nest Mini (2nd Gen),” “Google Home,” and “Google Home Max.” CBP has consistently classified wireless speakers that operate using Radio Frequency (RF), Bluetooth, and Wi-Fi connectivity within heading 8518, HTSUS. See e.g., New York Ruling (NY) N306132 (September 24, 2019) (CBP classified a Wi-Fi enabled speaker/shelf unit under heading 8518, HTSUS); NY N306364 (October 16, 2019) (CBP classified a “Sony Smart Speaker” in heading 8518, HTSUS. The speaker was a wireless Wi-Fi enabled speaker that used voice commands to access a web-based search engine. Musical choices were then routed to and reproduced by the speaker); NY N176163 (August 22, 2011) (CBP addressed a home theater system that consisted of various components and used wireless

3, 2017), H279898 (April 5, 2017), and H282905 (April 30, 2018), as referenced and relied upon by Protestant, were decided pursuant to GRI 3(b) and are not relevant to the analysis at issue.

6 RF technology to transmit audio to its wireless speakers; CBP found that the principal function to be that of a loudspeaker and classified the system in heading 8518, HTSUS). These include speakers that can wirelessly transmit/receive streaming audio and control commands and that act as a wireless smart phone interface in regard to receiving and transmitting voice when used to answer and/or make telephone calls. The addition of the voice recognition component is a secondary function that supports the use of the speaker and is therefore viewed as an enhancement to a modern wireless speaker.

The transmission and reception functions employed by the subject smart speaker devices are undertaken to accomplish the principal function of playing sound through the loudspeaker components of the devices. As such, the subject smart speaker devices are classifiable in heading 8518, HTSUS. Moreover, because the smart speakers are classified in heading 8518, HTSUS, they fall outside the scope of the exclusion under U.S. Note 20(zz)(8) to Chapter 99, HTSUS. Consequently, the smart speakers do not meet the terms of the Section 301 exclusion provided for in U.S. Note 20(zz)(8), and subheading 9903.88.47, HTSUS. Accordingly, the smart speakers are subject to the additional 301 duties imposed by subheading of 9903.88.15, HTSUS.

Smart Displays

Like the smart speakers, the smart displays are composite machines that consist of reception, conversion, and transmission apparatus of heading 8517, as well as an amplifier and loudspeaker of heading 8518. See Note 3 to Section XVI. The primary issue in determining their proper classification is whether the smart displays’ principal function is their reception, conversion, and transmission function or their amplifier and loudspeaker function.

The Protestant argues that the smart displays offer the same functionality as the smart speakers but also provide a touch screen display which offers additional functionality not found in a traditional speaker, such as the ability to display photos, search results, and play videos. The smart displays are remote access devices that are used to transmit and receive data from the Google server. Like the smart speakers, the smart displays receive data from the Google server and convert it for presentation to the user. However, unlike the smart speakers, the smart displays convert this data into various formats (i.e., audio, video, data text) and present it to the user as either music, video, or text on screen.

The smart displays’ principal function is to receive and transmit data, not to reproduce sound. The smart displays interact with the user, receive, interpret, transmit, and respond to the user’s commands, allowing the user to use audio (voice) to control the operation of various devices and to use internet-based services. Therefore, the principal function of the smart displays is to allow access or connection to a network for the purpose of transmitting and receiving data, not to play sound through the loudspeaker component of the device. As such, the smart displays are classifiable in heading 8517, HTSUS and specifically subheading 8517.62, HTSUS.

Our decision is consistent with HQ H316742 (June 3, 2022), where CBP classified the Echo Show 5, Echo Show 8 and Echo Show 10 (Echo Show devices) in subheading 8517.62,

7 HTSUS. The Echo Show devices incorporated a main circuit board comprised mainly of an integrated microprocessor, random access memory, and flash drive/memory; a touch screen (to enable visual and touch interactivity); a camera; speakers; and an array of microphones. The Echo Show devices were user driven remote access devices principally designed to wirelessly transmit and receive data to and from external servers. The Echo Show devices allowed users to use Internet based services and to accomplish a myriad of tasks that were initiated and directed by users. CBP held that the principal function of the Echo Show devices was to coordinate (i.e., receive and transmit) the data traveling between the aforementioned servers, other devices connected to the network, and the users.

While the smart displays are classifiable in subheading 8517.62, HTSUS, they do not meet the terms of the Section 301 exclusion provided for in U.S. Note 20(zz)(8), and subheading 9903.88.47, HTSUS. A plain reading of the descriptive text of the subject exclusion requires that any device subject to the exclusion must also distribute audio data to wireless speakers. There is no evidence that the subject devices, in their condition as imported, are capable of distributing audio data to wireless speakers. Accordingly, the smart displays are subject to the additional 301 duties imposed by subheading of 9903.88.15, HTSUS.

HOLDING:

By application of GRIs 1 (Note 3 to Section XVI) and 6, the smart speakers (the Google Home Mini, Nest Mini (2nd Gen), and Google Home) are classified in heading 8518, HTSUS, specifically in subheading 8518.21.00, HTSUS, which provides for: “Microphones and stands therefor; loudspeakers, whether or not mounted in their enclosures; headphones and earphones, whether or not combined with a microphone, and sets consisting of a microphone and one or more loudspeakers; audio-frequency electric amplifiers; electric sound amplifier sets; parts thereof: Loudspeakers, whether or not mounted in their enclosures: Single loudspeakers, mounted in their enclosures.” The 2019 general column one, rate of duty is 1.2% ad valorem

By application of GRIs 1 (Note 3 to Section XVI) and 6, the smart speaker (Google Home Max) is classified in heading 8518, HTSUS, specifically in subheading 8518.22.00, HTSUS, which provides for “Microphones and stands therefor; loudspeakers, whether or not mounted in their enclosures; headphones and earphones, whether or not combined with a microphone, and sets consisting of a microphone and one or more loudspeakers; audio-frequency electric amplifiers; electric sound amplifier sets; parts thereof: Loudspeakers, whether or not mounted in their enclosures: Multiple loudspeakers, mounted in the same enclosure.” The 2019 general column one, rate of duty is 1.2% ad valorem.

By application of GRIs 1 (Note 3 to Section XVI) and 6, the smart displays (Nest Hub and the Nest Hub Max) are classified in heading 8517, HTSUS, specifically in subheading 8517.62.00, HTSUS, which provides for: “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: Other apparatus for transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless

8 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.” The 2019 general column one, rate of duty is Free.

Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8517.62.00, 8518.21.00 or 8518.22.00, HTSUS, unless specifically excluded, are subject to an additional 7.5 percent ad valorem rate of duty. As such, the subject merchandise is properly classified under heading 9903.88.15, in addition to subheadings 8517.62.00, 8518.21.00, or 8518.22.00, 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 at www.usitc.gov.

You are instructed to DENY the Protest.

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,

for Yuliya A. Gulis, Director
Commercial and Trade Facilitation Division

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