Appeal from the United States Court of International Trade in case no. 05-CV-0249, Judge Delissa A. Ridgway.
The opinion of the court was delivered by: Clevenger, Circuit Judge.
Before BRYSON, CLEVENGER, and PROST, Circuit Judges.
Opinion for the court filed by Circuit Judge CLEVENGER.
Dissenting opinion filed by Circuit Judge BRYSON.
This customs case concerns the proper classification of ten styles of CamelBak Products, LLC's ("CamelBak") back-mounted packs ("subject articles").*fn1 CamelBak appeals the judgment and decision of the United States Court of International Trade denying CamelBak's motion for summary judgment, granting the United States' (the "government") cross-motion for summary judgment, and holding that the merchandise at issue was properly classified as "travel, sports, and similar bags" under subheading 4202.92.30 of the Harmonized Tariff Schedule of the United States ("HTSUS").*fn2 CamelBak Prods., LLC v. United States, 704 F. Supp. 2d 1335 (Ct. Int'l Trade 2010) ("CamelBak"). For the reasons set forth below, we reverse and remand the case for further proceedings.
The subject articles are imported back-mounted packs used for outdoor activities and athletics, including cycling, running, hiking and skiing, and are designed to deliver water to the user in a "hands-free" fashion, allowing the user to consume water on-the-go without having to interrupt activity. Each of the subject articles is a textile bag with padded adjustable shoulder straps and features: (a) a polyurethane reservoir or bladder surrounded by a closed-cell polyethylene foam compartment designed to carry and maintain the temperature of water or another beverage; (b) a hydration delivery system composed of flexible tubing attached to the reservoir, a bite valve and a shutoff valve; and (c) a cargo compartment designed to hold food, clothing, gear and supplies. Each reservoir has a capacity of between 35 and 100 ounces of liquid, and each cargo compartment can accommodate between 300 and 1680 cubic inches, depending on the style of pack.
Between August 6, 2004 and August 27, 2004, U.S. Customs and Border
Protection ("Customs") liquidated and classified the merchandise at
issue under subheading 4202.92.30, HTSUS, as "Trunks, . . . traveling
bags, insulated food or beverage bags, . . . knapsacks and backpacks,
. . . sports bags . . . and similar containers . . . of textile
materials: . . . With outer surface of sheeting of plastic or of
textile materials: . . . travel, sports and similar bags" at a rate of
duty of 17.8% ad valorem, based on a prior Customs ruling.*fn3
After liquidation, CamelBak fileda protest.
Customs denied the protest and this action commenced, pursuant to 28
U.S.C. § 1581(a), in the Court of International Trade.
The parties filed cross-motions for summary judgment at the trial court addressing the proper classification of the subject articles. In its motion for summary judgment, CamelBak argued that the subject articles constituted "composite goods" made up of two components-the cargo component, which was prima facie classifiable as a "travel, sports, [or] similar bag" and the hydration component, which was prima facie classifiable as an "insulated beverage bag." CamelBak contended that the subject articles had to be classified pursuant to General Rule of Interpretation ("GRI") 3(b)'s essential character test because the two applicable subheadings refer to part only of the subject articles. Specifically, CamelBak argued that the following portions of HTSUS heading 4202 were relevant to the analysis:
4202 Trunks, suitcases, vanity cases, attache cases, briefcases, school satchels, spectacle cases, binocular cases, camera cases, musical instrument cases, gun cases, holsters and similar containers; traveling bags, insulated food and beverage bags, toiletry bags, knapsacks and backpacks, handbags, shopping bags, wallets, purses, map cases, cigarette cases, tobacco pouches, tool bags, sports bags, bottle cases, jewelry boxes, powder cases, cutlery cases and similar containers, of leather or of composition leather, of sheeting of plastics, of textile materials, of vulcanized fi-ber or of paperboard, or wholly or mainly covered with such materials or with paper:
4202.92 With outer surface of sheeting of plastic or of textile materials:
4202.92 Insulated food or beverage bags: With outer surface of textile materials
4202.92.04 Beverage bags whose interior incorporates only a flexible plastic container of a kind for storing and dispensing potable beverages through attached flexible tubing 7%
4292.92.30 Travel, sports and similar bags:
Applying the essential character test, CamelBak argued that the hydration component (i.e., the insulated beverage bag component) gave the subject articles their essential character and that the subject articles were properly classified as either "insulated food and beverage bags . . . whose interior incorporates only a flexible plastic container of a kind for storing and dispensing potable beverages through attached flexible tubing" under sub-heading 4202.92.04 or, alternatively, "insulated food and beverage bags . . . other" under subheading 4202.92.08, both dutiable at a rate of 7% ad valorem.
The government argued that the subject articles were not composite goods, but rather that a single tariff provision-the "travel, sports, and similar bags" provision- applied to the articles in their entirety. Thus, the gov-ernment contended that Customs properly classified the subject articles as a whole as "travel, sports, and similar ...