United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 1992 HQ Rulings > HQ 0951126 - HQ 0951325 > HQ 0951281

Previous Ruling Next Ruling


HQ 951281


June 18, 1992

CLA-2 CO:R:C:F 951281 LPF

CATEGORY: CLASSIFICATION

TARIFF NO.: 9503.70.80, 9801.00.10, 9902.71.13

Jerrold E. Anderson, Esq.
Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, IL 60661-3693

RE: "Natures Watch" toy set; Subheading 9503.70.80; Other toys, put up in sets; Subheading 9902.71.13; Interpretation of the term "unit" for tariff purposes; Mattel; Subheading 9801.00.10; Superscope; Applicability of duty exemption to U.S. origin inserts

Dear Mr. Anderson:

This is in response to your letter of January 27, 1992 submitted on behalf of M-B Sales, regarding the proper classification, under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA), of a "Natures Watch" toy shovel and rake set. You submitted a sample with your request for a binding ruling.

FACTS:

The "Natures Watch" toy set, imported from China, consists of a plastic shovel, rake and one detachable plastic extension handle. The handle may be used interchangeably with the rake or shovel. The set will be packaged in clear polybags with an instruction insert. The articles, by design, have little functional use and are clearly intended for children's play activities.

An insert, which is printed in the United States, is sent abroad for packaging with the toy sets. The inserts are not altered in any way while packaged outside the U.S.

Customs agrees with the inquirer's submission that the "Natures Watch" toy set is classifiable in subheading 9503.70.80, as other toys; other toys put up in sets or outfits...: other: other.

ISSUES:

Whether, for purposes of duty-free treatment under subheading 9902.71.13, HTSUSA, the term "unit" means each separate article or individual toy making up a toy set or means the entire retail package of a toy set.

Whether the inserts of U.S. origin will qualify for the duty exemption under subheading 9801.00.10, HTSUSA, when returned to the U.S. with the toy sets.

LAW AND ANALYSIS:

Definition of a "unit" under subheading 9902.71.13, HTSUSA

If subject to a general column one rate of duty, subheading 9902.71.13 provides, in pertinent part, that articles (except parts) provided for in heading 9503, valued not over five cents per unit, are duty free.

In the case of Mattel, Inc. v. United States, Appeal No. 90- 1279 (Fed. Cir., decided February 13, 1991) the U.S. Court of Appeals for the Federal Circuit, in reversing the decisions of the U.S. Court of International Trade and the U.S. Customs Service, interpreted the term "unit" in item 912.20 Tariff Schedules of the United States (TSUS) as meaning each separate article or individual toy, rather than meaning "retail package." The inquirer contends that the decision of the Mattel court and its interpretation of the term "unit" controls in the instant situation. Customs disagrees.

The HTSUSA, which went into effect January 1, 1989, is a new tariff system with rules of interpretation and application somewhat different from the TSUS. As noted in H. Conf. Rep. No. 576, p. 550, decisions by the Customs Service and courts interpreting nomenclature under the TSUS are not deemed dispositive in interpreting the HTSUSA. Nevertheless, on a case- by-case basis, TSUS decisions should be considered instructive, in interpreting the HTSUSA, particularly where the nomenclature previously interpreted in those decisions remains unchanged and no dissimilar interpretation is required by the text of the HTSUSA. In this instance, a dissimilar interpretation is indicated by the text of the HTSUSA, which, contrary to the TSUS, includes a subheading providing for other toys, put up in sets or outfits. Therefore, we do not find the court's interpretation of the nomenclature under the TSUS instructive in this case.

The inquirer cites Headquarter's Ruling Letter (HRL) 085918, issued March 20, 1990, as proof that the term "unit" should be construed to mean each separate article or individual toy in the instant case. Customs' determination in HRL 085918 is inapposite to the instant situation. That ruling involved the classification of doll wigs imported individually into the U.S., which were not classifiable as "goods put up in sets for retail sale" pursuant to GRI 3(b), HTSUSA, nor classifiable as "other toys, put up in sets" pursuant to subheading 9503.70, HTSUSA. In this regard, HRL 086812, issued May 16, 1990, which incorporated a GRI 3(b) analysis, considered boxes containing multicolored crayons, an eraser and a crayon sharpener to be treated as one unit for tariff purposes. Customs' interpretation, in HRL 086812, of the term "unit" to mean the entire retail package, controls in the instant case.

Duty-free treatment under subheading 9801.00.10, HTSUSA

Subheading 9801.00.10, HTSUSA, provides for the free entry of products of the U.S. that are exported and returned without having been advanced in value or improved in condition by any process or manufacture or other means while abroad, provided the documentary requirements of section 10.1, Customs Regulations (19 CFR 10.1) are met.

In Superscope, Inc. v. United States, 13 CIT 997, 727 F. Supp. 629 (1989), the court held that certain glass panels of U.S. origin that were exported, repacked abroad with certain foreign components, and returned to the U.S. as part of unassembled audio cabinets, were entitled to duty-free entry under item 800.00, TSUS, (now subheading 9801.00.10, HTSUSA), since the U.S. panel portion of the imported article was "not advanced in value or improved in condition...while abroad, but [was] merely repacked." Id. at 631. Although the Superscope case concerned the TSUS, not the HTSUSA, the decision is considered equally applicable to similar situations arising under the HTSUSA, since item 800.00, and relevant Schedule 8, TSUS, headnotes were carried over virtually unchanged into the HTSUSA. This is corroborated by numerous HRL's decided under the HTSUSA.

The decision in Superscope is controlling in regard to the facts of the instant case. The mere repackaging of the U.S. manufactured inserts with the foreign articles composing the toy set neither advances the inserts in value nor improves them in condition. Therefore, a classification allowance in duty may be made under subheading 9801.00.10, for the cost or value of the inserts which are merely packaged abroad in the toy sets and returned. This presumes that the documentation requirements of 19 CFR 10.1 are met and that the district director of Customs at the port of entry is satisfied that the items are, in fact, of U.S. origin.

HOLDING:

The "Natures Watch" toy set is classifiable in subheading 9503.70.80, HTSUSA, as "Other toys;...Other toys, put up in sets or outfits, and parts and accessories thereof: Other: Other." The general column one rate of duty is 6.8 percent ad valorem.

As to the application of subheading 9902.71.13, HTSUSA, Customs posits that the term "unit" is interpreted to mean the entire retail package, rather than the separate articles or individual toys which compose the toy set. Duty-free treatment of the toy set is determined accordingly and does not apply to the instant merchandise.

A classification allowance in duty may be made under subheading 9801.00.10, HTSUSA, for the cost or value of the inserts that are merely packaged abroad with the toy sets and returned to the U.S.

Sincerely,

John Durant, Director

Previous Ruling Next Ruling

See also: