CAFC Overturns Lower Court in Combo Weather and Clock Device HTS Classification Case
In a tariff classification case on clocks that forecast the weather (or meteorological instruments that tell the time), the Court of Appeals for the Federal Circuit on July 25 voided the judgments of both the lower court and CBP, finding in favor of importer La Crosse Technology. The dispute centered on whether the devices should be classified as clocks, thermometers/barometers/hygrometers, or meteorological instruments. CBP had said they’re all clocks, while the Court of International Trade had classified various models in each of the three categories. La Crosse on appeal argued the devices should all be classified as meteorological instruments because that subheading fully describes them. The appeals court agreed, but for different reasons.
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The electronic devices imported by La Crosse measure atmospheric conditions like indoor and outdoor temperatures and relative humidity, and display that information along with the time. The devices also include a barometer and microprocessor. The microprocessor uses an algorithm to forecast if the weather will improve or worsen. On the LCD display, this is represented by either a “tendency arrow,” a series of icons, or an image of a boy named Oscar whose clothes show what kind of weather is in the forecast (the “Oscar outlook”).
On liquidation, CBP classified the devices as clocks under Harmonized Tariff Schedule subheading 9105.91.40 (“Other clocks: Other: Electrically Operated: With opto-electronic display only”), dutiable at 3.9% on the movement and case plus 5.3% on the battery. After La Crosse challenged CBP’s classification, CIT ruled in 2012 that different models should be classified under different subheadings (see 12030917). While the lower court deemed CBP correct that some of the devices should be classified as clocks, the lower court said others should be classified as thermometers, barometers, and hygrometers under subheading 9025.80.10 (“Hydrometers …, thermometers, pyrometers, barometers … and any combination of these instruments: Other instruments: Electrical”), dutiable at 1.7%. And the third group of devices should be classified as meteorological instruments under subheading 9015.80.10, which enter duty free, CIT ruled.
La Crosse appealed, arguing the devices should be classified as meteorological instruments based on their ability to predict the weather. According to La Crosse, General Rule of Interpretation 1 applies because the subheading on meteorological instruments wholly describes the devices. CAFC agreed with the lower court, however, finding the devices were not classifiable according to GRI 1 because the devices also include clocks, which are not included in the terms of the meteorological instruments subheading. Instead classification required an essential character analysis under GRI 3(b) because the devices could be classified under multiple subheadings, CAFC said.
But the appeals court nonetheless found that the devices were classifiable as meteorological instruments in heading 9015, getting there a different way. CIT should not have classified some of the devices as clocks, because the weather measurement aspects of the devices set the price and consumer expectations and give them their essential character, the appeals court said. Turning to the two weather related categories, CAFC said classification under subheading 9025 would only be possible if the devices are combinations of only the items listed in the heading. Instead, La Crosse’s devices also included weather forecasting equipment not listed in heading 9025. So all of the La Crosse devices were correctly classified under subheading 9015.80.10, because the forecasting feature of the devices gives them their essential character, said the appeals court.
Dissent Says No ‘Clear Error’
Judge William Bryson dissented from the majority. Although he agreed that classification in heading 9025 was incorrect, he said the appeals court should not have overturned CIT’s determination that some of the devices were classifiable as clocks. That was a factual determination on the essential character of those models, and should not have been overturned without a “clear error,” he said.
(La Crosse Technology v. U.S., CAFC No. 2012-1370, dated 07/25/13, Judges O’Malley and Newman, Judge Bryson dissenting)
(Attorneys: William Rucker of Drinker Biddle & Reath for plaintiff-appellant La Crosse Technology, Ltd.; Amy Rubin for defendant-appellee U.S. government)