Details of CAFC Overruling CIT & CBP on CamelBak Pack Classification
The following are details of a June 16, 2011 decision by the Court of Appeals for the Federal Circuit (here) that overturned a lower court ruling and arguments by U.S. Customs and Border Protection on the classification of certain “CamelBak” back-mounted packs. CAFC agreed with Camelbak that its packs are made up of two different components 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.
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(See ITT’s Online Archives or 06/21/11 news, 11062123, for initial BP summary announcing the CAFC’s decision.)
(The subject products are back-mounted textile packs with shoulder straps that have both a cargo compartment and hydration system. Used for athletic and outdoor activities, they are designed to allow users to carry articles and consume water on-the-go without having to interrupt activity. From August 6-27, 2004, CBP liquidated and classified the packs as “other travel, sports and similar bags” under HTS 4202.92.30 (17.8%), using GRI 1. Camelbak filed a protest, which CBP denied. It then initiated a case with the Court of International Trade, which ruled in favor of CBP. See ITT’s Online Archives or 05/13/10 news, 10051348, for BP summary of CIT’s decision that the packs were properly classified under HTS 4202.92.30.)
CamelBak Says CIT Erred, Goods are Composite & Need Essential Character Test
CamelBak argued that the CIT erred in failing to conduct a GRI 3(b) essential character analysis when it classified the merchandise using GRI 1. CamelBak contended that the packs cannot be classified under HTS 4202.92.30 by reference to GRI 1 alone, because the “travel, sports and similar bags” provision does not cover the articles as a whole (i.e., the subject articles are not eo nomine backpacks).
Rather, CamelBak argues that the subject articles are composite goods made up of two components each of which is prima facie classifiable under a different subheading, i.e., the cargo component is prima facie classifiable under HTS 4202.92.30, and the hydration component, is prima facie classifiable under HTS 4202.92.04.
Using the GRI 3(b) essential character test, CamelBak said the goods should either be classified as “insulated food and beverage bags for dispensing potable beverages” under HTS 4202.92.04 (7%) or, alternatively, as “other insulated food and beverage bags” under HTS 4202.92.08 (7%).
CBP Says “Backpacks” Include those for Carrying Water, No Need for GRI 3(b)
CBP, relying on the common meaning of the term “backpack” and Additional U.S. Note 1 to Chapter 421, responded that CIT correctly sustained its classification of the subject articles under HTS 4202.92.30 as “travel, sports and similar bags” pursuant to GRI 1 because backpacks, as a whole, are designed to carry and organize a multitude of personal effects, including water. Thus, the backpack provision encompasses the subject articles in their entirety. CBP further contended that, as an eo nomine provision, HTS 4202.92.30 covers all forms of travel and sports bags, including those that carry water in a water bladder. Accordingly, CBP contended that a GRI 3(b) analysis is not triggered in this case and CIT correctly classified the subject articles pursuant to GRI 1.
CAFC Finds CIT Erred in Discounting Hydration Component as a “Feature”
The CAFC found that the CIT erred when it considered the hydration component of the packs to be a “mere feature” without considering the subject articles’ primary design and use. It notes that the hydration component has a different design and primary use from a backpack which is to provide a temperature-maintained, continuous source of hands-free hydration to a user while engaged in a sporting event or recreational activity.
Commercial Factors & Unique Identity Means They are Not Eo Nomine Backpacks
It adds that commercial factors, such as price and Camelbak’s reference to the products as “hydration packs” in its literature and marketing materials, further demonstrate that the packs are substantially different from conventional backpacks. In addition, CAFC states that the hydration component is not merely incidental to the cargo component but, instead, provides them with a unique identity and use that removes them from the scope of the eo nomine backpack provision. That is, the subject articles are not merely an improvement over the conventional backpack as the CIT concluded. Thus, the subject articles are not classifiable as a whole pursuant to GRI 1.
As Each Component Classifiable Under Separate HTS Number, GRI 3(b) Applies
Rather, the CAFC finds that they are composite goods made up of two components, which lack a single specific classification (i.e., there is no HTS provision for combination backpacks and hydration packs). As each component of the subject articles is classifiable under a separate HTS subheading, GRI 3(b) controls the classification of the subject articles.
Therefore, the CAFC reversed the CIT’s decision and remanded the case back to it to resolve the GRI 3(b) issue.
1Additional U.S. Note 1 to Chapter 42 states: ”For the purposes of heading 4202, the expression "travel, sports and similar bags" means goods, other than those falling in subheadings 4202.11 through 4202.39, of a kind designed for carrying clothing and other personal effects during travel, including backpacks and shopping bags of this heading, but does not include binocular cases, camera cases, musical instrument cases, bottle cases and similar containers.”