Ruling of the Week 2015.10: Getting an iHandle on iLuggage
[UPDATE: It turns out that there is a reason for the ambiguity in the ruling discussed below. The ruling was not written for publication. It was inadvertently posted to CROSS. The "ruling" has now been removed. Hence, you should treat what follows as an interesting hypothetical discussion and nothing more.]
Heading 4202 of the Harmonized Tariff Schedule of the United States sees lots of legal action for two reasons. First, the duty rates are very high; some as high as 20%. Second, U.S. Customs and Border Protection seems to find that many items go in these high-duty provisions.
For context, Heading 4202 covers:
There are two distinct parts to this heading. The first part, before the semicolon, does not depend on material. The second part only includes items that are of leather, plastic sheeting, textiles, etc. Both sections list many examples of containers and end with the expression "and similar containers." That is where things get interesting and problematic.
I am talking about this because it is endlessly fascinating, because I have litigated this issue, and because of HQ H163995 (May 19, 2014), which involves the classification of iPod covers or possibly neoprene covers for laptop computers. There is, at least to my mind, some ambiguity as to the merchandise. I am going to assume it is iPod covers.
Customs classified them in Heading 4202 and Target, the importer, protested. According to Customs, the proper classification is as articles of plastic in Chapter 39. The problem for Target is that Note 2(m) to Chapter 39 states that "This chapter does not cover . . . trunks, suitcases, handbags or similar containers of heading 4202." If the laptop covers are similar to trunks, suitcases, and handbags of Heading 4202, they cannot be classified in Chapter 39.
Because the laptop covers at issue are not leather, plastic sheeting, textiles, vulcanized fiber, or paperboard, if they belong in 4202, it will be in the first section as containers "similar to" trunks, suitcases, vanity cases, etc.
Ticking off the necessary elements, Customs first made the unsurprising but necessary conclusion that the iPod covers are containers. This was based on dictionary definitions stating that a container is something that can hold together, hold, or contain an article.
The bigger issue was whether the iPod covers are "similar to" the containers listed in the first part of Heading 4202. To do this, Customs properly invoked the cannon of statutory construction "ejusdem generis," which is Latin for "same kind." Under this rule, the general phrase "and similar containers" is interpreted as limited to containers that share the same essential characteristics or purposes with the listed articles. The courts have previously held that the essential characteristics and purposes of the items listed in Heading 4202 are that they "store, organize, protect, and carry" the items contained therein.
The meaning of "store" and "organize" were worked out in a case called Firstrax. That case is worth reviewing if only because it is one of mine. It involved fabric pet crates. The Court of International Trade found that a single item, including a living pet, cannot be organized. Organizing is the act of putting multiple items in some kind of useful order. A pet is also not stored, because storage is the act of putting something away for later use.
In this case, the iPod covers hold one device. Consequently, they do not provide organization. Furthermore, the covers include opening to allow the user to operate the controls on the iPods. Since the iPod is not being put away for later use, the covers do not "store" the iPods. Two down.
Target acknowledged that the covers protect the iPods from scratches and from impact in the event they are dropped. Target also seems to have acknowledged that the grippy material facilitates securely carrying the iPods. That means that the covers serve to protect and facilitate carrying.
That was enough for Customs and Border Protection to find that the iPod covers are properly classifiable in Heading 4202 and, therefore, excluded from Chapter 39.
I have some concerns about this decision. First, how exactly do the exemplars in the first part of Heading 4202 facilitate carrying the items in the container? With the exception of spectacle cases, they all have a handle. I think this is important in that it helps define how we should interpret what it means to facilitate carrying something. All of these cases take something that is unwieldy (clothing and personal effects) or delicate (a musical instrument or binoculars) and make carrying the item or items practical by the addition of a handle to something that does not otherwise have a handle. That is not the case with respect to an iPod case, which makes the iPod no easier to carry. The grippiness of the case is, at best, incidental, since the user still has to carry the iPod in much the same way it would be carried without the case.
The inclusion of spectacle cases does not change that analysis. Glasses are hard to carry safely without a case. They bend and scratch easily. The case makes it easier to carry glasses in a meaningful way (even without a handle).
So, it seems to me that the "carry" part of the "store, organize, protect and carry" test must mean that the item would not be easily carried but for the case. The iPod cases doe not seem to satisfy that requirement.
Is it enough if all the cover does is protect the contents? Personally, I think not. This is the second question. Customs, following some court cases, says that any one of the four criteria is sufficient to classify something in Heading 4202. I don't agree. Trunks, suitcases, vanity cases, etc. do all four of those things. I think what we have here is a semantic argument that has lost sight of the original ejusdem generis analysis. Nothing in the first part of Heading 4202 is exclusively protective without also helping to transport the articles inside. It seems to me that you need at least those two items together to be ejusdem generis with trunks, suitcases, spectacle cases, etc.
Lastly, I wonder whether it is correct to say that an iPod cover contains the iPod when it has opening to allow access to the controls. The cover certainly envelopes the iPod, but the iPod is exposed to the elements in a way that is not true for musical instrument cases, for example. When I was in high school carrying a bass clarinet from home to school, I could not play the instrument while it was in the case. That strikes me as very significant.
This issue will surely be before the Court of International Trade at some point. It looks to me to create the opportunity to further clarify what "carry" and "protect" mean in the context of Heading 4202. More important, it looks like a good opportunity to reverse course and recognize that protection alone is not enough to be ejusdem generis with the exemplars of Heading 4202.
Heading 4202 of the Harmonized Tariff Schedule of the United States sees lots of legal action for two reasons. First, the duty rates are very high; some as high as 20%. Second, U.S. Customs and Border Protection seems to find that many items go in these high-duty provisions.
For context, Heading 4202 covers:
Trunks, suitcases, vanity cases, attache cases, briefcases, school satchels, spectacle cases, binocular cases, camera cases, musical instrument cases, gun cases, holsters and similar containers; traveling bags, insulated food or beverage bags, toiletry bags, knapsacks and backpacks, handbags, shopping bags, wallets, purses, map cases, cigarette cases, tobacco pouches, tool bags, sports bags, bottle cases, jewelry boxes, powder cases, cutlery cases and similar containers, of leather or of composition leather, of sheeting of plastics, of textile materials, of vulcanized fiber or of paperboard, or wholly or mainly covered with such materials or with paper . . . .
There are two distinct parts to this heading. The first part, before the semicolon, does not depend on material. The second part only includes items that are of leather, plastic sheeting, textiles, etc. Both sections list many examples of containers and end with the expression "and similar containers." That is where things get interesting and problematic.
I am talking about this because it is endlessly fascinating, because I have litigated this issue, and because of HQ H163995 (May 19, 2014), which involves the classification of iPod covers or possibly neoprene covers for laptop computers. There is, at least to my mind, some ambiguity as to the merchandise. I am going to assume it is iPod covers.
Customs classified them in Heading 4202 and Target, the importer, protested. According to Customs, the proper classification is as articles of plastic in Chapter 39. The problem for Target is that Note 2(m) to Chapter 39 states that "This chapter does not cover . . . trunks, suitcases, handbags or similar containers of heading 4202." If the laptop covers are similar to trunks, suitcases, and handbags of Heading 4202, they cannot be classified in Chapter 39.
Because the laptop covers at issue are not leather, plastic sheeting, textiles, vulcanized fiber, or paperboard, if they belong in 4202, it will be in the first section as containers "similar to" trunks, suitcases, vanity cases, etc.
Ticking off the necessary elements, Customs first made the unsurprising but necessary conclusion that the iPod covers are containers. This was based on dictionary definitions stating that a container is something that can hold together, hold, or contain an article.
The bigger issue was whether the iPod covers are "similar to" the containers listed in the first part of Heading 4202. To do this, Customs properly invoked the cannon of statutory construction "ejusdem generis," which is Latin for "same kind." Under this rule, the general phrase "and similar containers" is interpreted as limited to containers that share the same essential characteristics or purposes with the listed articles. The courts have previously held that the essential characteristics and purposes of the items listed in Heading 4202 are that they "store, organize, protect, and carry" the items contained therein.
The meaning of "store" and "organize" were worked out in a case called Firstrax. That case is worth reviewing if only because it is one of mine. It involved fabric pet crates. The Court of International Trade found that a single item, including a living pet, cannot be organized. Organizing is the act of putting multiple items in some kind of useful order. A pet is also not stored, because storage is the act of putting something away for later use.
In this case, the iPod covers hold one device. Consequently, they do not provide organization. Furthermore, the covers include opening to allow the user to operate the controls on the iPods. Since the iPod is not being put away for later use, the covers do not "store" the iPods. Two down.
Target acknowledged that the covers protect the iPods from scratches and from impact in the event they are dropped. Target also seems to have acknowledged that the grippy material facilitates securely carrying the iPods. That means that the covers serve to protect and facilitate carrying.
That was enough for Customs and Border Protection to find that the iPod covers are properly classifiable in Heading 4202 and, therefore, excluded from Chapter 39.
I have some concerns about this decision. First, how exactly do the exemplars in the first part of Heading 4202 facilitate carrying the items in the container? With the exception of spectacle cases, they all have a handle. I think this is important in that it helps define how we should interpret what it means to facilitate carrying something. All of these cases take something that is unwieldy (clothing and personal effects) or delicate (a musical instrument or binoculars) and make carrying the item or items practical by the addition of a handle to something that does not otherwise have a handle. That is not the case with respect to an iPod case, which makes the iPod no easier to carry. The grippiness of the case is, at best, incidental, since the user still has to carry the iPod in much the same way it would be carried without the case.
The inclusion of spectacle cases does not change that analysis. Glasses are hard to carry safely without a case. They bend and scratch easily. The case makes it easier to carry glasses in a meaningful way (even without a handle).
So, it seems to me that the "carry" part of the "store, organize, protect and carry" test must mean that the item would not be easily carried but for the case. The iPod cases doe not seem to satisfy that requirement.
Is it enough if all the cover does is protect the contents? Personally, I think not. This is the second question. Customs, following some court cases, says that any one of the four criteria is sufficient to classify something in Heading 4202. I don't agree. Trunks, suitcases, vanity cases, etc. do all four of those things. I think what we have here is a semantic argument that has lost sight of the original ejusdem generis analysis. Nothing in the first part of Heading 4202 is exclusively protective without also helping to transport the articles inside. It seems to me that you need at least those two items together to be ejusdem generis with trunks, suitcases, spectacle cases, etc.
Lastly, I wonder whether it is correct to say that an iPod cover contains the iPod when it has opening to allow access to the controls. The cover certainly envelopes the iPod, but the iPod is exposed to the elements in a way that is not true for musical instrument cases, for example. When I was in high school carrying a bass clarinet from home to school, I could not play the instrument while it was in the case. That strikes me as very significant.
This issue will surely be before the Court of International Trade at some point. It looks to me to create the opportunity to further clarify what "carry" and "protect" mean in the context of Heading 4202. More important, it looks like a good opportunity to reverse course and recognize that protection alone is not enough to be ejusdem generis with the exemplars of Heading 4202.
Comments
To start off, the facts reference what is clearly a 4202 case. It's zippered, it may contain additional organizational compartments, etc. The description given in the facts describes a case that would not permit the use of the article while carrying it.
Where this ruling goes wrong is as it transitions to referring to the merchandise as an ipod cover. Generally, my rule for classifying ipod/phone cases is that if it only covers the back, it's probably in 39 and if it fully encloses and covers the front it's possibly 42. (I don't have the various rulings I've previously referenced handy, but they exists.) The ambiguity about what kind of case this is makes an analysis of this ruling problematic.