Logitech Wins Classification Dispute, Gets Duty-Free Treatment for Webcams
Swiss computer peripheral and software company Logitech won its tariff classification challenge in the Court of International Trade, getting duty-free treatment for its webcams and ConferenceCams, per an Aug. 24 decision. Senior Judge Leo Gordon ruled that the webcams fit under Harmonized Tariff Schedule heading 8517, as argued by Logitech, as opposed to heading 8525, dutiable at 2.1%, as suggested by the government. Finding that the products in dispute fall under both headings, Gordon said the duty-free heading describes the goods “with a greater degree of accuracy and certainty.”
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
“It was a hard-fought case that's gone on for quite a long time, but we really got everything that we wanted, and the decision is very, very solid, so even if the government appeals, and they might, we feel that we have a very strong case on appeal and that the decision would be affirmed,” said Patrick Gill of Sandler Travis, counsel for Logitech. “We're very pleased with the outcome, and hopefully it won't even be appealed because it was such a good decision, and it's primarily fact based.”
Logitech launched its case in 2016, appealing CBP's denial of its protest seeking classification under heading 8517. The case pitted the government's argument that the webcams and ConferenceCams were “television cameras” under 8525.80.3010 against Logitech's position that they are properly classified as “other apparatus for the transmission or reception of void, images or other data, including apparatus for communication in a wired or wireless network” under heading 8517.
Gordon said the products fit under the 8525 subheading on an eo nomine basis, but this was not enough to preclude the products' classification under heading 8517. Gordon undertook a principal use analysis, the factors for which were established in the U.S. v. Carborundum Co. case. Gordon found that considerations such as the general physical characteristics, economic practicality and expectations of the ultimate purchaser bolstered the case for classification in heading 8517.
For instance, one of the factors is whether the merchandise is used in the same manner as the merchandise that defines the class. The U.S. argued that since the use of the webcams is to capture, convert and transmit images to a computer, the products exceed the use that defines subheading 8517. While the cams sometimes are used for audio-only calls -- what the government believes to be the true use of 8517 -- it is rare. The court should not consider this “fugitive use” in its principal use analysis, the government said. “Although the record establishes that the subject merchandise is seldom used for audio-only calls, the audio function is integral to the broader (and apparently most common) use of the subject merchandise, videoconferencing,” Gordon said.
The court also considered the General Rule of Interpretation 3, which says that when goods are classifiable under two or more headings, the heading with the most specific description is the relevant one. “Heading 8517 has requirements that are more difficult to satisfy and describe the article with a greater degree of accuracy and certainty,” Gordon said. “The principal use of the subject merchandise cannot be said to be the mere capture, conversion, and transmission of images, any more than the principal use could be narrowly limited to the conveyance of audio information with the microphone. Rather, the principal use of the subject merchandise combines these features to allow for interactive multi-person real-time communication (i.e., videoconferencing).”
(Logitech, Inc. v. United States, Slip Op. 21-106, CIT # 16-00017, dated 08/24/21, Judge Gordon. Attorneys: Patrick Gill of Sandler Travis for plaintiff Logitech; Jamie Shookman for defendant U.S. government)