CIT Holds Children’s E-Writers Are 'Finished Electronic Products,' Not 'LCD Screens'

The Court of International Trade ruled May 9 that an importer would recoup 22.4% of Section 301 duties it paid on an entry of kids’ erasable e-writing tablets from China.

In a classification dispute before the court, importer Kent Displays wanted its products reliquidated as “optical appliances not otherwise specified” under Harmonized Tariff Schedule heading 9013 and subheading 9903.88.19, the latter exempting it from Section 301 duties. It described its product as a “flexible pressure sensitive liquid crystal flat panel display device used as a surface for electronic writing.”

CBP accepted the former classification but not the latter, liquidating Kent’s entry under the 25% tariff rate. It denied Kent’s protest, saying that the merchandise actually probably belonged under heading 8543 for electrical devices with an individual function and that “[n]o correction has been made … as the result would be adverse to [Kent displays].”

Although subheading 8543.70.9960 carries a 2.6% duty -- compared with the relevant subheading in heading 9013, which is duty-free -- it wasn't subject to Section 301 duties at the time the goods were imported in July 2018. Only subsequently were Section 301 tariffs announced on the subheading.

When Kent brought the matter to the trade court in 2020, DOJ switched up its argument, instead saying on a cross-motion for judgment that the importer’s displays should have been classified under that heading 8543 and liquidated at the 2.6% rate. Kent also held up that change as an alternative if its primary claim for a Section 301 exemption failed.

Judge Claire Kelly agreed with the government, granting its motion and dismissing Kent’s.

Kent was wrong when it argued that nobody could change its products’ classification under heading 9013 because the liquidation was final, saying it had only protested the Section 301 classification, Kelly said.

“The Court’s mandate to reach the correct result moots the parties’ dispute regarding the extent of CBP’s authority to consider the classification in this case,” she said.

The importer’s other argument, an “appeal to general principles of equity,” was that Kent should have been able to reasonably rely on CBP’s classification of its goods in the past when it entered its shipment (see 2310270037).

But this was “unpersuasive” because, as Kent itself admitted, it “does not claim that CBP had an established and uniform practice” when liquidating its goods, and it acknowledged that the requirements of a “de facto established and uniform practice are stringent,” Kelly said. Instead, without authority, the importer was just appealing to the “essence” of CBP’s established practice doctrine, she said.

Considering both the two headings raised before the court and others which she thought might cover the displays, Kelly said the government’s proposed heading of 8543 fit best.

The explanatory note for the 2018 Harmonized System’s version of heading 9013 described its covered products as “[l]iquid crystal devices consisting of a liquid crystal layer sandwiched between two sheets or plates of glass or plastics ... presented in the piece or cut to special shapes,” the judge said. This, plus the heading’s plain language, suggests that is intended to apply to displays entered as “pieces.” But Kent’s product is “more than an LCD," she said.

Heading 8543, on the other hand, is a basket category that mostly covers finished electronic products, which Kent’s goods are, she said.

She ordered CBP to reliquidate Kent’s entry under subheading 8543.70.9960 and refund the importer the difference between the 25% Section 301 tariff it paid and the 2.6% duty it now owes.

(Kent Displays v. U.S., Slip Op. 24-57, CIT # 20-00156, dated 5/09/2024; Judge: Claire Kelly; Attorneys: Herbert Lynch of Sullivan & Lynch for plaintiff Kent Displays; Marcella Powell for defendant U.S. government)