28 March 2019
Court Rules Certain Electronic Device Covers Not Classified in Duty-Free Provision
The CIT has classified a “smart cover” designed to be used exclusively with the iPad 2 as other articles of plastic under HTSUS 3926.90.99 (5.3 percent duty) rather than as accessories of machines of headings 8469 to 8472 under HTSUS 8473.30.51 (duty-free). U.S. Customs and Border Protection originally classified this item as other made up articles under HTSUS 6307.90.98 (7 percent duty) but one of its Centers of Excellence and Expertise later issued a ruling classifying a similar item under HTSUS 3926.90.99.
The smart cover is constructed of plastic rectangular panels and an aluminium hinge and enables the user to fold the cover into positions to facilitate video watching and typing. It has embedded magnets that keep it aligned with the iPad and allow the two items to remain attached when being transported or moved. It also has a micro-fibre lining that comes into direct contact with the iPad’s screen when in the closed position.
The CIT stated that the smart cover is not classifiable under HTSUS 8473.30.51 because it is a cover, which is explicitly excluded from that subheading. Instead, the smart cover is a composite article whose plastic outer layer gives it its essential character.
The plaintiff also challenged CBP’s classification of a smart cover made of leather under HTSUS 4205.00.80 (duty-free). The plaintiff said that while it incurred no duty from this classification it suffered injury because (i) it had to expend additional administrative costs to process, enter and submit separate entry paperwork for the leather and plastic smart covers and (ii) incorrect classification decisions distort statistical records, which affect its business strategies as to sales and manufacturing. However, the CIT responded that these allegations are “broad and non-specific in nature and invoke unsubstantiated and speculative future economic harm.”