Wednesday, March 07, 2012

Everyone Talks About the Weather

The Court of International Trade has issued a decision in La Crosse Technology v. United States, which concerns the tariff classification of devices combining, to varying degrees, clocks, weather sensors, and weather forecasting devices. Thus, this is mostly a case about composite goods. But, not entirely.

The main instructive point in this case is that the Court of International Trade did a careful review of how to apply the General Rules of Interpretation and, in particular, GRI 3 in slightly differing circumstances. Initially, the Court dismissed the notion that this case could be resolved under GRI 1. Because the tariff headings in question describe only part of the products, the Court moved on the GRI 3, which states:

3. When, by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:
 (a) 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.
 (b) 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.
 (c) 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 parties seem to have come into this case thinking they were dealing with composite goods of 3(b).  The  Court, however, noted that the definition of composite goods in the Explanatory Notes requires that the components be attached (whether inseparable or separable), provided that the components are adapted to one another, are mutually complementary, and form a whole that would not normally be offered for sale in separate parts.

Looking at the specific combinations involved in the case, the Court noted that the simpler "Clock" models and "Professional" models come with external sensors that connect wirelessly to the base unit. Because these wireless parts for not attach to the base unit, they do not constitute part of a composite good. Rather, according to the Court, this is a retail set under 3(b). The analysis was different for the "Weather Stations," because the relevant heading (i.e., 9205) includes combinations of instruments and "parts and accessories." The Court found that the the weather stations are combinations of instruments for purposes of Heading 9025 and the base units are composite goods.

Whether classified as composite goods or retail sets, the question still turns on essential character. For the Weather Stations and professional models, the Court found that the weather-related features predominate over the clock features. For Clock products, the clock features predominated. Thus, they were classified in 9105 as clocks.

The remaining interesting question was the difference between 9015 meteorological instruments and 9025 which covers, among other things thermometers, barometers, hygrometers, and any combination thereof. It would seem that 9015 should cover only single meteorological instruments other than those listed in 9025 while 9025 would cover certain meteorological instruments and combinations thereof. But, as is often the case, it is a little more complicated.

The Explanatory Notes attempt to clarify the distinction between 9015 and 9025 by stating that 9015 does not cover thermometers, barometers, hygrometers or combinations of them. But, the Note to 9025 states that it covers combinations of instruments "except when the addition of one or more other devices gives the combination the character of equipment or appliances covered by more specific headings (e.g., heading 9015 as meteorological equipment)." Crikey.

Plaintiff argued that the weather stations are combinations that take on the character of meteorological instruments by virtue of their ability to perform analysis and predict the weather. And, by the way, in some models that prediction is conveyed via an icon of "Oscar Outlook," who would more likely be working for E! than for the Weather Channel. The Court disagreed that the Weather Station was anything other than a combination of instruments of Heading 9025. On the other hand, the Professional models also include wind and rain sensors and the ability to upload (n.b., not download) weather data to a computer for further analysis. According to the Court, this created a meteorological instrument of Heading 9015.

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