CBP Finds Against Apple in Ruling on iPad Cases

CBP disagreed with Apple's assertion that leather and plastic iPad Smart Covers should be classified as accessories for automatic data processing (ADP) machines, the agency said in a ruling. Apple sought internal advice on the issue in May through the Electronics Center of Excellence and Expertise in Long Beach, Calif. CBP responded to Apple's request in HQ H216396, dated Oct. 9.

Ruling Highlighted by CBP

The ruling was highlighted by the agency by posting it to CBP's website, something not usually done by the agency. CBP "chose to publicize the issuance of this ruling because it involved a product that is well known to the trade and importing public community (IPad or tablet covers), thereby illustrating the broad impact of a ruling we just issued," said a CBP spokeswoman. The ruling is available (here).

According to Apple, plastic and leather iPad Smart Covers, can serve as stands, protective covers, battery conservation devices, and therefore should be classified under heading 8473, used for accessories for ADP machines. The covers help preserve iPad batteries through an embedded magnet that automatically puts the iPad in sleep mode when the cover is closed and the cover can be turned into a stand by folding it under the device, said Apple. While heading 8473 explicitly excludes covers, the additional features mean the Smart Covers shouldn't be excluded, said Apple.

Covers Explicitly Excluded

CBP disagreed with Apple's take on the classification. "Although the iPad Smart Cover has magnets and a folding function, it nevertheless functions as a cover because it is designed to cover the iPad," said CBP. It's also "advertised and marketed as a 'cover.' In fact, the principal purpose of the merchandise is to protect the iPad when it is not in use, either when it is being stored or carried. This is the essence of what a cover does. That it can also serve as a stand does not make it any less of a cover."

Without a heading that describes the item entirely, CBP looked at the materials involved that give the covers their essential character to determine classification, it said. The plastic cover consists of hard plastic, microfiber textile lining and small magnets. CBP said the plastic cover gives the item its essential character and is therefore classifiable under heading 3926 as articles of plastics. The item will be specifically classified as 3926.90.99, “other articles of plastics…: other: other…,” with a duty rate of 5.3 percent, said CBP.

The leather similarly gives the leather case its essential character, making it classifiable under heading 4205 as other articles of leather. That item is specifically classified under subheading 4205.00.80 as “other articles of leather or of composition leather: other: other: other …” with free duty rate.