CBP Finds Smartwatch Classifiable as Radio Transceiver, not Watch
The radio transceiver of a Samsung Gear Live Android smartwatch is what gives the product its "essential character," said Customs and Border Protection in a recently released ruling. Samsung requested the prospective ruling from CBP on the classification for the smartwatch and whether the duty rates should be based on its function as a wristwatch.
The agency decided, in the ruling HQ H257947, that the essential character of the smartwatch is based on the communications components, so it's subject to a free duty rate. The Samsung Gear Live allows users to make calls and connect to the Internet when the device is "paired" with a mobile device, said CBP in the ruling dated July 14. The "wearable" apps on the paired smartwatch also can "communicate wirelessly with their companion handheld apps on the paired mobile device and are capable of performing a variety of functions," it said. When the watch isn't paired, users can't connect to the Internet or make full use of the apps, said CBP. "As result, an 'unpaired' Gear Live is unable to perform heavy processing related to the display, manipulation, and storage of data," though some "basic" app usage is still possible, said CBP.
The smartwatch includes several features that differentiate it from other watches in the agency’s HTS heading 9102, said CBP. "Although the Gear Live is capable of displaying basic timekeeping information while both 'paired' and 'unpaired' with a mobile device, the Gear Live is primarily designed to display, manipulate, and store data via the use of executable Android Wear OS wearable apps that communicate wirelessly with an Internet-connected mobile device." The substantial differences from the other goods in 9102 prove the smartwatch wouldn't be appropriately classified in that heading, the agency said.
Because the smartwatch is made of several component articles that are classifiable under two or more headings, CBP must consider which component provides the essential character. It's the ability to pair, through the radio transceiver, that allows for the most important functions, said CBP. "Although each of the Gear Live’s component articles" allow for important operations, "it is the radio transceiver that is indispensable to the core, essential condition of the Gear Live, because the radio transceiver facilitates the display, manipulation, and storage of data between the Gear Live and paired external devices."
The smartwatch is therefore best classified as a radio transceiver in subheading 8517.62.00, which provides for “other apparatus for transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network): Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus,” said CBP.