Importer Says Cables Used in Telecommunications Systems Are 'Telecommunications Cables'
Cable importer Cyber Power Systems said in a March 28 motion for judgment that CBP misclassified its products, resulting in imposition of Section 301 duties. It claimed its cables fall under the tariff-free Harmonized Tariff Schedule provision for “telecommunications cables” because they serve as parts of larger telecommunications systems (Cyber Power Systems (USA) v. United States, CIT # 21-00200).
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.
The parties “agree on the six-digit classification of the cables, but disagree on the proper eight digit classification” of the cables, Cyber Power said. CBP liquidated the products under primary Harmonized Tariff Schedule subheading 8544.42.20 for “telecommunications cables,” which Cyber Power claims was correct, but the government now argues the cables should instead be classified under subheading 8544.42.90 for “other” cables.
The U.S., the importer noted, initially brought a counterclaim to that effect during pleading. The Court of International Trade dismissed the counterclaim as lacking a statutory basis and held that the argument was instead a defense (see 2207200052).
Cyber Power said that subheading 8544.42.20, at the eight-digit level, is a principal use provision because it covers cables “of a kind used in telecommunications.” Its cables meet the requirements of the subheading, it said -- even if they don’t directly connect users to, for example, phone services or the internet.
“Plaintiff notes that the use provision at issue covers ‘use in telecommunications’ and does not require the cable to transmit a specific type of data for classification,” it said.
It explained its “main” customers are “telecommunications companies such as Verizon.” These companies use the cables to connect “ONT devices that provide internet and phone services in homes and businesses around the country” with backup battery sources in case of a power surge or outage, it said.
The cables are used in the same way as telecommunications cables as a class because they, like all telecommunications cables, are “specifically designed” for use in telecommunications systems, it said. Its products also exhibit the physical characteristics of telecommunications cables as they are described by heading 8544’s explanatory notes, it said. And its products’ channels of trade “are specific to the needs of the telecommunications service industry,” while end users are “solely” telecommunications service providers, it said.