Trade Updates for Week of March 20, 2019

United States Court of International Trade

Summary Judgment Granted for Defendant

Before the Court in Apple Inc. v. United States Slip Op. 19-32, Court No. 13-00239 (March 13, 2019) were cross motions for summary judgment regarding the proper HTS classification of imported two IPad 2 Smart Covers, one made from leather and another made from plastic. When imported, CBP liquidated the plastic Smart Cover under subheading 6307.90.98, HTSUS, dutiable at seven percent, and the leather Smart Cover under subheading 4205.00.80, HTSUS, duty-free. Plaintiff then filed a protest to argue both covers were properly classified within subheading 8473.30.51, as “parts and accessories (other than covers, carrying cases and the like) suitable for use solely or principally with machines of headings 8469 to 8472: Parts and accessories of the machines of heading 8471: Other,” duty free. Id. at 4. CBP issued a ruling rejecting plaintiffs classification and ruled that the plastic iPad Smart Cover is properly classified subheading 3926.90.99, HTSUS, as an “Other articles of plastics and articles of other materials of headings 3901 to 3914: Other: Other,” dutiable at a rate of 5.3%. Id. at 4. Plaintiff filed this action to contest CBP’s denial of the protest. Before the Court, defendant also argued the Court lacked jurisdiction because CBP’s classification of the leather covers were liquidated duty-free and Plaintiff can claim no injury. For the following reasons the defendant’s summary judgment motion was granted.

“Plaintiff must demonstrate that its claim represents an injury in fact. An injury in fact is concrete and particularized and actual or imminent, not conjectural or hypothetical, fairly traceable to the challenged action, and likely to be redressed by a favorable decision.” Id. at 10. The Court said because “the leather Smart Covers were liquidated duty-free,” “plaintiff does not have standing to challenge Customs’ classification of the leather Smart Covers and therefore its claim is non-justiciable.” Id. at 11. In regards to the classification of the plastic cases, “Classification of merchandise under the HTSUS is governed by the principles set forth in the General Rules of Interpretation” (“GRIs”) applied in numerical order. Id. at 13. The Court may also use the nonbinding explanatory notes to provide guidance. Using the explanatory note for Heading 8473, the Court excluded the cover from the chapter because the note “affirmatively excludes parts or accessories that are “covers, carrying cases and the like.” Id. at 16.  The Court then said based on the undisputed facts the cover was “a composite good that is prima facie classifiable under either subheading 3926.90.99 … or subheading 6307.90.98.” Id. at 24. Turing to GRI 3b, the Court said the plastic outer layer gives the cover its essential character because “The plastic layer protects the screen and is the backing onto which the microfiber lining is attached,” “encapsulates the magnets that align with the sensor in the iPad 2 that prompt the machine to enter or exit sleep mode,” and “is folded to create the two different positions that prop up the iPad 2 to facilitate video watching and typing.” Id. at 24-25. As such the good was properly classifiable within subheading 3926.90.99.