CAFC Overrules CIT and CBP on Classification of CamelBak Packs
On June 16, 2011, the Court of Appeals for the Federal Circuit overruled the lower court and agreed with CamelBak Products LLC that its back-mounted packs are made up of two different components (a hydration component and a storage component), and are "composite goods" that should be classified by the essential character test, because the two applicable subheadings refer to only part of the subject articles. CBP had argued, and the lower court had affirmed, that the items were not "composite goods" and that a single tariff provision applied to the articles in their entirety.
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The subject merchandise is back-mounted textile packs with shoulder straps that also have a reservoir and hydration system. The articles are used for outdoor and athletic activities, and are designed to allow the user to carry articles and also consume water on-the-go without having to interrupt activity.
CBP had classified the goods as other travel, sports and similar bags under HTS 4202.92.30 (17.8%), using GRI 1. CamelBak argued that the merchandise is a composite good and should be classified using GRI 3(b)'s essential character test either as “insulated food and beverage bags . . . whose interior incorporates only a flexible plastic container of a kind for storing and dispensing potable beverages through attached flexible tubing” under HTS 4202.92.04 (7%) or, alternatively, as “other insulated food and beverage bags . . . other” under HTS 4202.92.08 (7%).
The CAFC reversed the Court of International Trade ruling, and remanded the case to the CIT for further proceedings to determine the item's essential character.
(See future issue of ITT for detailed summary, including the reasoning of the appeals court.)