Tariff Classification of the Dash Smart Earphone

HQ H270923 August 28, 2017 CLA-2 OT:RR:CTF:TCM H270923 DSR CATEGORY: CLASSIFICATION TARIFF NO: 9031.80.80 Shawn Glover UPS Trade Management Services, Inc. 2031 South Centennial Ave. Aiken, SC 29803 RE: Tariff Classification of the Dash Smart Earphone Dear Mr. Glover, This is in response to your correspondence, dated September 2, 2015, in which you request a binding ruling from U.S. Customs & Border Protection (“CBP”) on behalf of your client, Bragi. The ruling request concerns the classification on the Harmonized Tariff Schedule of the United States (“HTSUS”) of the Dash Smart Earphone. Our response follows. FACTS: As imported, the Dash consists of wireless earphones, a charging case, silicone sleeves for ear comfort and a USB cable. The Dash is described as multifunctional wireless smart earphones. The user can listen to music while engaging in sports or exercise activities. The Dash contains sensors in the earphones that measure the user’s heart rate, movement, body temperature and blood oxygen level. A stereo accelerometer measures movement and gravitational force. This data is used to calculate the pace and distance while running, cadence while biking, or the number of laps swam by the user. The Dash pairs with a user’s smartphone via a Bluetooth connection. The user can observe the biometric and performance data on the smartphone application. Additionally, the Dash can provide an audio readout of the biometric and performance data to the user. The Dash contains a four gigabyte music player which houses up to 1000 songs. Alternatively, it can stream music from the user’s smartphone via the Bluetooth transceiver connection. The user can maneuver through four playlists or use a shuffle function. Music is uploaded to the Dash through a USB connection. The earphones have a touch sensitive surface that permits the user to control the various Dash functions, such as scrolling through a playlist. The earphones can also sense gestures, such that a user can control various functions by nodding or shaking his head. The Dash doubles as a Bluetooth headset which permits the user to talk and make phone calls through the headphones. The Dash has an ambient microphone in the left and right earphone. ISSUE: What is the tariff classification of the Dash Smart Earphone? LAW AND ANALYSIS: Merchandise imported into the United States is classified under the HTSUS. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (GRIs). GRI 1 requires that classification be determined first according to the terms of the heading of tariff schedule and any relative section or chapter notes, and unless otherwise required, according to the remaining GRIs taken in their appropriate order. GRI 3 provides as follows: When, by application of rule 2(b) or for any other reason, good are, prima facie, classifiable under two or more headings, classification shall be effected as follows: The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. 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. When goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. 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 and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989). The ENs to GRI 3(b) provide, in pertinent part, that: (VII) 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. (VIII) 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. The HTSUS provisions under consideration in this case 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: * * * 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: * * * 8519 Sound recording or reproducing apparatus: * * * 9031 Measuring or checking instruments, appliances and machines, not specified or included elsewhere in this chapter; profile projectors; parts and accessories thereof: As an initial matter, CBP notes that the Dash earphones and its charging case, silicone sleeves and USB cable are imported and packaged together for retail sale. As such, they are classified as a “set” pursuant to GRI 3(b). Consistent with the description of retail “sets’ provided in the EN to GRI 3(b), there is no dispute that the Dash earphones, charging case, silicone sleeves and USB cable are classifiable in different headings, are “put up together” to enable a user to charge, wear and use the earphones, and are offered for sale directly to purchasers without repacking. See EN (X) to GRI 3(b). We find that the Dash earphones imparts the set with its essential character inasmuch as it is the dominant component article by use and cost in relation to the other components. All of the functionality of the device works through the earphones, while the remaining components (charger, silicone ear sleeves and USB cable) supplement the operation of the earphones themselves. Consequently, in accord with GRI 3(b), the Dash set will be classified as if it consisted only of the earphones. The Dash earphone provides a variety of functions. Note 3 of Section XVI, HTSUS, provides that, “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.” It is your position that the sound recording device imparts the essential character to the device. In support of your position, you reference New York Ruling (“NY) N019621, dated November 9, 2007. In that ruling, CBP classified an MP3 music player with a heart rate monitor under heading 8519 HTSUS a composite device where the sound recording device imparted the essential character. However, the Dash earphone has functionality that goes beyond that of the product in N019621. Furthermore, there are more recent CBP rulings addressing products that are more similar in form in function to the Dash earphone which we discuss, infra. Therefore, we disagree that this ruling controls the classification of the instant product. Although marketed as “wireless smart earphones with many capabilities,” it is not clear which component imparts the essential character of the product. In addition to playing music streamed via Bluetooth transceiver or in internal storage, the accelerometer tracks activity such as distance run, pace while biking or laps swam. It is marketed towards active people and people who engage in sports. Thus, the accelerometer function is equally important as the listening capability. Furthermore, the earphone permits the user to talk and make phone calls. Thus, the Dash Earphone performs a wireless transceiver function of heading 8517, HTSUS, an earphone function of heading 8518, HTSUS, a sound recording function of heading 8519, HTSUS, and an accelerometer function of heading 9031, HTSUS. As it is impossible to determine whether the wireless transceiver, earphone, sound recording or accelerometer impart the Dash earphone with its essential character, GRI 3(c) must be applied. GRI 3(c) provides that when goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. Among those headings which merit equal consideration pursuant to GRI 3(c), heading 9031, HTSUS – which covers the accelerometer sensor – occurs last in numerical order. Consequently, we find that the Dash earphones are classifiable in heading 9031, HTSUS, pursuant to GRI 3(c). This finding is consistent with prior CBP rulings for similar goods. In N264890 (June 16, 2015) CBP classified the Sony Smart-B Trainer under heading 9031, HTSUS, as an accelerometer. That product consists of waterproof earphones, internal memory to record music files, a sound reproducing apparatus to play stored music files, and USB connector. It also is Bluetooth equipped and is capable of measuring biometric and performance data. CBP found that the Sony Smart-B trainer consisted of various components and that no one component imparted the product with its essential character. Consequently, it was classified under heading 9031, HTSUS, by application of GRI 3(c). The Dash earphone is similar to the Sony Smart-B Trainer inasmuch as it also incorporates functionality geared towards fitness in a headphone the user wears. In Headquarters Ruling (“HQ”) H246726, CBP classified the Adidas miCoach Smart Run fitness watch in heading 9031, HTSUS, by application of GRI 3(c). That product is marketed as a fitness product and consists of a wristwatch of heading 9102, HTSUS, an MP3 player of heading 8519, a GPS device of heading 8526, a heart-rate monitor of heading 9029 and an accelerometer of heading 9031. Because the MP3 player, GPS, accelerometer and heart-rate monitor are integrated and function together to provide athletic training feedback to the user, CBP was unable to determine which individual component or sensor imparted the miCoach watch with its essential character. Therefore, it was classified in heading 9031, HTSUS, by application of GRI 3(c). Similarly, the Dash earphone incorporates various components that provide multiple functionalities geared towards fitness. Like the miCoach, the Dash earphone components function together to provide training feedback and the product must be classified by application of GRI 3(c). See also HQ H250531 (Apr. 20, 2015) (classifying the LG Fitness Band with multiple functions in heading 9031, HTSUS, by application of GRI 3(c)). HOLDING: By application of GRI 3(c), the Dash Earphones are classified in heading 9031, HTSUS. Specifically, they are classified in subheading 9031.80.80, which provides for “Measuring or checking instruments, appliances and machines, not specified or included elsewhere in this chapter; profile projectors; parts and accessories thereof: Other instruments, appliances and machines: Other.” The 2017 column one, general rate of duty is 0.8% ad valorem. Duty rates are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided at http://www.usitc.gov. Sincerely, Gregory Connor, Acting Chief Electronics, Manufacturing, Automotive, and International Nomenclature Branch