eWriters and Protests

When I saw that the Court of International Trade decision in Kent Displays involves the classification of "a battery powered flexible eWriter device containing a pressure sensitive liquid crystal writing film," I had a moment of technology-geek excitement. That feeling stemmed from my personal conversion from yellow legal pads to a reMarkable "paper tablet."

Before I wax on in an ode to the reMarkable, let's deal with this case.

Kent Displays imported a product called the Dashboard, which it describes as a green replacement for paper. The device is based on a "bistable cholesteric reflective LCD." This review is of a different product from Kent Displays, but probably gives a good idea of how the Dashboard works. Here is an image from Kent Displays of its Blackboard Smart Pen Reusable Notebook. 

Kent had been importing this product under HTSUS item 9013.80.7000, which at the time of entry covered:

Liquid crystal devices not constituting articles provided for more specifically in other headings; lasers, other than laser diodes; other optical appliances and instruments, not specified or included elsewhere in this chapter; parts and accessories thereof: Other devices, appliances, and instruments: Flat panel displays other than for articles of heading 8528, except subheadings 8528.52 or 8528.62.

The rate of duty applicable to this tariff item was free. That is in the past tense because President Trump imposed a 25% tariff under Section 301. 

Understanding that to be the correct tariff classification, Kent took the reasonable proactive step and applied for an exclusion from Section 301 (at regulations.gov, Document ID USTR-2018-0025-0282). For reason that are unclear to me, there is some dispute as to whether the request was approved. That is unclear because on September 26, 2019, the USTR sent a letter to Kent Displays notifying it that the government "has determined to grant" the requested exclusion. That exclusion covered products classified in 9013.80.7000 that meet the description of "Flexible pressure sensitive LCD panel display devices used as a surface for electronic writing (described in statistical reporting number 9013.80.7000)."

The problem for Kent was that when CBP liquidated an entry of Dashboards, it classified the goods in 9013.80.7000 but declined to apply the exclusion. Kent protested CBP's decision to apply Section 301 duties but did not protest the main classification in Heading 9013. 

Apparently, during the protest review Customs decided that the goods are correctly classified as other electrical devices with an individual function in HTSUS item 8543.70.9960. That item, at the time was subject to a 2.6 rate of duty but no Section 301 duties. Customs did Kent a solid and did not rate advance the entry. Unfortunately, President Trump got around to extending Section 301 duties to 8543.70.9960, which brings the classification and the application of the exclusion back to the front burner.

This case raised a number of interesting questions. The first is whether CBP had the authority to change the classification when the importer had not protested it. Liquidation, one might think, made that classification final and conclusive.

The Court rejected this argument for two reasons. First, when an importer (or other authorized party) files a protest, it is challenging the liquidation of the entry. That liquidation, therefore, is neither "final" nor "conclusive." During its review of the protest, Customs may reconsider the entry as a whole to ensure that it receives the correct legal treatment. That is a risk to the importer and should be considered when protesting. The basis for this decision is explained in Cyber Power Systems (USA) Inc. v. United States, which had a somewhat similar fact pattern. As in this case, in Cyber Power, Customs found while reviewing a protest relating to Section 301 duties that the merchandise was incorrectly classified but did not reclassify the merchandise to a tariff item with a higher rate of duty. As a result, the Court did not decide whether CBP can find that a classification with a higher rate of duty is applicable when reviewing a protest that asserts a different challenge. 

The second relevant point is that the Court of International Trade has an independent obligation to get to the right classification. This is true even if the government does not or per Cyber Power cannot assert a counterclaim. Under this rule, from a case called Jarvis Clark, the Court should ensure that it has determined the correct classification and can order CBP to reliquidate the entry accordingly. If additional duties are owed, it can issue a judgment in favor of the United States in the amount owed.

According to the CIT, Kent's argument that the classification of its ewriters was not protested and was, therefore, final would mean that the Court does not have the ability to determine the correct classification. As a result of Jarvis Clark and Cyber Power, the Court rejected that approach. No one asked me, but I note those two things are not exactly the same. It is possible that the classification is final if not protested UNLESS the unhappy importer files a summons. At that point the CIT would be empowered to find the correct classification. Prior to that, CBP's authority would be limited to reviewing the protested decision. 

Next, what is the right classification for these items?

Heading 8543 covers "Electrical machines and apparatus, having individual punctions, not specified or included elsewhere in this chapter . . . ." On its face, that does not preclude any overlap with articles of Chapter 90. However, Section XVI, Note 1(m) states that the section, and hence Heading 8543, does not cover articles of Chapter 90. Moreover, the Explanatory Notes indicates that 8543 does not cover articles "covered more specifically by a heading of any other Chapter of the Nomenclature." Consequently, if the Dashboard is an article of Chapter 90, it cannot be classified in 8543. 

Heading 9013, at the time of the relevant entries, covered "Liquid crystal devices not constituting articles provided for more specifically in other headings . . . ." According to the 2018 version of the Explanatory Notes, "liquid crystal devices" are entered on a "piece" basis or cut into special and particular shapes. Liquid crystal devices classified in 9013, therefore, are not finished articles such as the Dashboard ewriter. 

The Court considered and rejected several other possible classifications. Heading 9017 was an interesting option. It covers "Drawing, marking-out or mathematical calculating instruments (for example, drafting machines, pantographs, protractors, drawing sets, slide rules, disc calculators); instruments for measuring length, for use in the hand (for example, measuring rods and tapes, micrometers, callipers), not specified or included elsewhere in this Chapter." Drawing instruments seems a reasonable description of these products, but the EN indicates the heading covers apparatus and instruments that facilitate the act of drawing. Those items include, for example, compasses, set squares, and protractors. The Dashboard is more like the paper than it is like these devices, which presumably could be used on the Dashboard (careful with the compass point). 

Having excluded other options, the Court concluded that the correct classification of the Dashboard is in 8543 and, therefore, the Section 301 exclusion on flexible ewriters described in 9013 does not apply. 

Coming back to the reMarkable, I think it is a nearly perfect device for lawyers. It is essentially a legal pad that never runs out of pages and ensures I never lose my notes. I can take notes in a meeting or while doing research and immediately save those notes as PDFs to the appropriate client file.  That is an improvement over having to find the correct pad, scan the notes, and save them. For me, that's all I expected and that is what the reMarkable does really well. There is a keyboard available for the reMarkable, but I never wanted a keyboard for my legal pads. That is why I also have a laptop. 

I know people might be thinking that you can take notes on any pen-enabled tablet. That is true. But the experience of writing on a reMarkable is much closer to the experience of writing on paper. Other tablets with a glass screen have less drag on the pen and don't feel as natural. The matte surface of the reMarkable feels like paper. It can also convert handwriting to text when connected to Wi-Fi and search text notes. Honestly, I never do that. A subscription cloud service allows notes to be edited perpetually. In my workflow, I do not use the cloud service. Like paper notes, once I save my reMarkable notes, they are a fixed record. Anything new will be a new note.

I have read many comments about all the things the reMarkable cannot do. Some of those are legitimate gripes. Yes, the screen is only grey scale. A color screen would be nice. On the current model, I can choose ink and highlighter colors, but can only see the real color in the saved PDF. The reMarkable also lacks basic tools not related to writing. For example, there is not even a simple calculator, clock, or dictionary. There are third-party solutions filling some of those gaps. There is no backlight which makes using it as an ebook reader less than great. On the other hand, I did not buy the reMarkable to replace my phone or laptop. Other devices, including the Kindle Scribe have additional features and may be worth considering, but I am very happy with my device as a replacement for paper notes. Also, and this is more important than it may sound, the lack of additional features on the reMarkable encourages uninterrupted concentration. That is a valuable feature.


Popular posts from this blog

CAFC Decision in Double Invoicing Case

Target on Finality

Counter-Counterclaim Decision