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Mobile Phone Cases Not Classified as Containers, Court Says

Thursday, June 18, 2015
Sandler, Travis & Rosenberg Trade Report

The Court of International Trade has ruled that two models of cases used to protect mobile phones are properly classified as other articles of plastics and other materials under HTSUS 3926.90.9980 (5.3 percent duty). U.S. Customs and Border Protection had classified the cases under HTSUS 4202.99.9000 (20 percent duty) as “similar containers” to those listed in heading 4202 (exemplars).

The CIT cited several reasons for rejecting CBP’s classification. First, the mobile phone cases are not the type of goods commonly thought of as containers because the items they enclose remain fully functional, whereas items placed inside the exemplars are unavailable for use. Second, the cases have only one of four essential characteristics of the exemplars, that of protection; they do not serve any organizational purpose, do not store anything (a condition that implies setting something aside for future use, whereas the cases allow the phones to be used in the present), and provide minimal carrying functionality. The court declined to address the question of whether an item must possess each of these four purposes or merely one of them to be classified as similar to the exemplars.

The plaintiff also sought a refund of its post-importation overpayment of duties on the value of assists for the entries at issue. Before importing these entries the plaintiff learned that it had failed to disclose and pay duties on the value of assists it provided in connection with the manufacture of certain merchandise. The plaintiff then filed a prior disclosure and eventually submitted the duties owed for the period preceding its prior disclosure. The plaintiff also undertook to enter CBP’s reconciliation prototype so that going forward it could pay the value of assists on reconciliation entries. Some of the assists for the subject entries were included in the reconciliation entries, and the plaintiff also made three interim payments for the assists supplied in connection with the subject entries between the time it submitted a prior disclosure and the time it was certified for the reconciliation program.

The CIT determined that the lower duty rate associated with HTSUS 3926.90.9980 applies to the entire transaction value of the entries at issue, including the value of assists paid subsequent to importation. The court thereby rejected CBP’s argument that the plaintiff’s tender of duties was voluntary and not a charge or exaction under 19 USC 1514(a) and therefore could not be reviewed by the court.

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