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HQ 952775


February 16, 1993

CLA-2 CO:R:C:F 952775 LPF

CATEGORY: CLASSIFICATION

TARIFF NO.: 9503.49.0020, 8524.21.30

Mr. Ed Baker
A.N. Deringer, Inc.
30 West Service Road
Champlain, NY 12919-9703

RE: Classification of "Imagine and Me" educational kit; Heading 9503, HTSUSA, other toy; Heading 8524, HTSUSA, records, tapes and other recorded media; GRI 3(b) set put up for retail sale; Tariff preferences under CFTA; HRL 951507

Dear Mr. Baker:

This is in response to your letter of September 22, 1992, submitted on behalf of Art Image Publications, Inc., regarding the proper classification, under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA), of an "Imagine and Me" educational kit. You submitted a sample with your request for a binding ruling.

FACTS:

The merchandise at issue is an "Imagine and Me" educational activity kit. It is comprised of various learning materials including two teacher's guide books, a student's book, three audio cassettes designed to accompany the books, printed matter including art prints, illustrations, cards and geometric shapes, fabric scarves (composed of 77 percent rayon and 23 percent nylon), and a puppet figure with a stuffed head and legs, but with an empty torso. All the components of the "Imagine and Me" kit are manufactured in Canada except for the puppet and scarves which are made in China and Japan, respectively. Furthermore, Mr. Claude Jodoin, of Art Image Publications, explained telephonically, on February 5, 1993, that the cassettes are entirely comprised of Canadian materials and are recorded in Canada. It is our understanding that the complete kit will be imported from Canada to the U.S. in one retail package.

ISSUE:

Whether the "Imagine and Me" educational kit is classifiable in heading 4901 as printed books and similar printed matter, heading 8524 as records, tapes and other recorded media, heading 4911 as other printed matter, heading 6214 as scarves, or heading 9503 as other toys; and whether it is considered a "good originating in Canada" for purposes of the United States - Canada Free Trade Agreement (CFTA) and, thus, is eligible for preferential tariff treatment.

LAW AND ANALYSIS:

Tariff Classification

The General Rules of Interpretation (GRI's) taken in their appropriate order provide a framework for classification of merchandise under the HTSUSA. Most imported goods are classified by application of GRI 1, that is, according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRI's may then be applied. The Explanatory Notes (EN's) to the Harmonized Commodity Description and Coding System, which represent the official interpretation of the tariff at the international level, facilitate classification under the HTSUSA by offering guidance in understanding the scope of the headings and GRI's.

The educational kit consists of various components which are classifiable as follows: the teacher's guides and student's books in heading 4901, the audio cassettes in heading 8524, the art prints and illustrations in heading 4911, the non-knit scarves in heading 6214, and the puppet in heading 9503. Chapter 85, Legal Note 6 provides that: "[r]ecords, tapes and other media of heading 8523 or 8524 remain classified in those headings, whether or not they are entered with the apparatus for which they are intended." The cassettes, therefore, are classified, pursuant to GRI 1, in 8524, as records, tapes and other recorded media. The applicable subheading is 8524.21.30. See Headquarters Ruling Letter 951507, issued July 2, 1992.

However, since separate HTSUSA headings provide for each of the other items, they are classified by applying GRI 3(a) which explains, in pertinent part, that merchandise which is classifiable under two or more headings is classified under the heading which provides the most specific description of the article. However, all such headings are regarded as equally specific when each refers to only part of the items in a set put up for retail sale.

In accordance with EN X to GRI 3(b), the merchandise is a set since: (a) at least two of the items are classifiable in different headings; (b) the merchandise consists of items put up together to meet a particular need, specifically, to serve as an educational device for children; and (c) the merchandise, in its retail package, is ready for direct sale without repacking.

Because the educational kit is a set, and the headings under which the items could be classified refer to only part of the items in the set, we turn to GRI 3(b) to classify the merchandise. This provides that the set is classified by the item which gives the set its essential character. "Essential character" is the attribute which strongly marks or serves to distinguish what an article, or set, is. EN VIII to GRI 3(b) explains that essential character may be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the article.

Although the art prints and illustrations represent the greatest value of the items and the puppet appears to represent the greatest bulk, neither alone is dispositive of essential character. Furthermore, based on use, no one item imparts essential character; rather all the items function coequally to create the educational kit.

Accordingly, GRI 3(c) explains that goods which cannot be classified by reference to 3(a) or 3(b) are classified under the heading which occurs last in numerical order among those which equally merit consideration. The merchandise, therefore, is classifiable in heading 9503, as other toys, the provision which occurs last in numerical order. The applicable subheading is 9503.49.0020.

United States - Canada Free Trade Agreement

Articles which are imported from Canada may be entitled to certain tariff preferences under the United States - Canada Free Trade Agreement (CFTA) if the articles are "originating goods" as defined by General Note 3(c)(vii)(B), HTSUSA. There are two primary means in General Note 3(c)(vii)(B) by which articles imported into the United States may be "goods originating in the territory of Canada." General Note 3(c)(vii)(B)(1) provides for goods "wholly obtained or produced in the territory of Canada and/or United States." General Note 3(c)(vii)(B)(2) provides for goods "transformed in the territory of Canada and/or the United States."

The set contains a puppet and scarves which are manufactured in third countries. Because the set contains foreign articles, the merchandise is not "wholly obtained or produced in the territory of Canada and/or the United States," in accordance with General Note 3(c)(vii)(B)(1).

Furthermore, the merchandise, made of foreign materials, is not transformed in Canada and/or the United States in accordance with General Note 3(c)(vii)(B)(2). A transformation is evident when a change in tariff classification occurs that is authorized by General Note 3(c)(vii)(R), HTSUSA. In this instance, the puppet is classified in subheading 9503.49.0020 when it enters Canada. Upon importation to the United States the puppet, now packaged with the other items in the set, remains classified in subheading 9503.49.0020. No change in classification occurs and the puppet is not transformed in Canada. Because the set is classified according to the foreign puppet, the set is not an article originating in the territory of Canada and is not eligible for preferential tariff treatment under the CFTA.

We note that the audio cassettes, which are classified separately in heading 8524, are "wholly obtained or produced in the territory of Canada and/or the United States." Because the cassettes are articles originating in the territory of Canada, they are eligible for preferential tariff treatment under the CFTA.

HOLDING:

"Imagine and Me" is not an originating good under General Note 3(c)(vii)(B)(2), for purposes of the CFTA. The merchandise is classifiable in subheading 9503.49.0020, HTSUSA, as "Other toys...: Toys representing animals or non-human creatures (for example, robots and monsters) and parts and accessories thereof: Other, Toys not having a spring mechanism: Other." The general column one rate of duty is 6.8 percent ad valorem.

The audio cassettes are originating goods under General Note 3(c)(vii)(B)(2) and are entitled to preferential tariff treatment under the CFTA. They are classifiable in subheading 8524.21.30, HTSUSA, as "Records, tapes and other recorded media for sound...: Magnetic tapes: Of a width not exceeding 4mm: Other recordings." The special column one rate of duty is 4.8 cents per square meter of recording surface.

Sincerely,

John Durant, Director
Commercial Rulings Division


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