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HQ 957933




July 12, 1995

CLA-2 R:C:M 957933 DFC

CATEGORY: CLASSIFICATION

TARIFF NO.: 9103.10.20

District Director of Customs
511 Broadway
Room 0198
Portland OR 97209

RE: Protest 2904-95-100084; Clip/clock, floating

Dear District Director:

This is in response to Protest 2904-95-100084, filed by surety for the importer, concerning your action in classifying and assessing duty on an article referred to as a "floating clip/clock" produced in China. A sample was submitted for examination.

FACTS:

The merchandise, identified as item AT8706, is a paper clip holder with a magnet built inside the top and bottom plastic cartridges. A digital clock with a watch movement is also contained in one of the cartridges. Paper clips can "float" between the two cartridges connected on one side by a clear plastic piece.

The entry covering this merchandise was liquidated on October 14, 1994, under subheading 9105.99.50, Harmonized Tariff Schedule of the United States (HTSUS), which provides for other clocks, other, other, other, valued not over $5 each. The applicable rate of duty for this provision was 15 cents each plus 6.4% ad valorem. When the importer refused to pay the liquidated duties demand was made on the surety for payment on January 25, 1995. A protest was timely filed by the surety on March 20, 1995, against your liquidation of the entry. See 19 U.S.C.

Protestant maintains that the merchandise is properly classifiable under subheading 3926.10.00, HTSUS, which provides for other articles of plastics, office or school supplies. The applicable rate of duty for this provision was 5.3% ad valorem.

ISSUE:

Does the merchandise qualify as a composite good within the purview of GRI 3(b), HTSUS?

What component of the floating clip/clock imparts the essential character thereto?

LAW AND ANALYSIS:

Classification of goods under the HTSUS is governed by the General Rules of Interpretation (GRI's). GRI 1 provides that "classification shall be determined according to the terms of the headings and any relative section or chapter notes, and, provided such headings or notes do not otherwise require, according to [the remaining GRI's]." In other words, classification is governed first by the terms of the headings of the tariff and any relative section or chapter notes.

The competing provisions are as follows:

3926 Other articles of plastics and articles of other materials of heading 3901 to 3914
3926.10.00 Office or school supplies

9103 Clocks with watch movements, excluding clocks of heading 9104:
9103.10 Battery powered:
9103.10.20 With opto-electronic display only . . . . .

9105 Other clocks:

9105.99 Other:

Other:
9105.99.50 Valued not over $5 each . . . . .

Note 3 to Chapter 91, HTSUS, reads, as follows:

3. For the purposes of this chapter, the expression "watch movements" means devices regulated by a balance wheel and hairspring, quartz crystal or any other system capable of determining intervals of time, with a display or a system to which a mechanical display can be incorporated. Such watch movements shall not exceed 12 mm in thickness and 50mm in width, length or diameter.

The Harmonized Commodity Description and Coding System Explanatory Notes (EN) to the HTSUS, although not dispositive, or legally binding, provide a commentary on the scope of each heading of the HTSUS, and are generally indicative of the proper interpretation of the HTSUS. See, T.D. 89-80, 54 FR 35128 (August 23, 1989).

The EN to heading 91.05 at page 1544 , reads in pertinent part, as follows:

This heading covers timekeepers not classified elsewhere in the Chapter, essentially constructed for indicating the time of day; they must, therefore, have movements other than watch movements. Clocks and alarm clocks with watch movements (as defined by Chapter Note 3) are excluded (heading 91.03).

Inasmuch as the digital clock contained in the floating clip/clock has a watch movement described in Note 3 to Chapter 91, HTSUS, it is precluded from classification under subheading 9105.99.50, HTSUS, noting the above-cited EN.

GRI 2(b), HTSUS, provides in part that "[t]he classification of goods consisting of more than one material or substance shall be according to the principles of Rule 3."

GRI 3, HTSUS, provides, in pertinent part, as follows:

3. When by application of Rule 2(b) or for any other reason, goods are prima facie classifiable under two or more headings, classification shall be effected as follows:

(a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods. . . those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.

(b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.

(c) When goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.

EN (IX) to GRI 3(b) at page 4, reads, as follows:

(IX) For the purposes of this Rule, composite goods made up of different components shall be taken to mean not only those in which the components are attached to each other to form a practically inseparable whole but also those with separable components, provided these components are adapted one to the other and are mutually complementary and that together they form a whole which would not normally be offered for sale in separate parts.

The floating clip/clock is not prima facie classifiable under heading 8505, HTSUS, which provides for electro-magnets, permanent magnets and articles intended to become permanent magnets after magnetization. EN 85.05 to Section XVI at page 1314 reads, in pertinent part, as follows:

The heading does not cover:

(b) Electro-magnets, permanent magnets or magnetic devices of this heading, when presented with machines, apparatus, toys, games, etc., of which they are designed to form part (classified with those machines, apparatus, etc.).

The floating clip/clock is prima facie classifiable under subheading 3926.10.00, HTSUS, as other articles of plastics, office or school supplies, or under subheading 9103.10.20, HTSUS, as clocks with watch movements.

Composite goods are classifiable as if they consisted of the component which gives them their essential character. EN VIII to GRI 3(b), at page 4, reads as follows:

(VIII) The factor which determines essential character will vary as between different kinds of goods. It may, for example, be determined by the nature of the materials or component, its bulk, quantity. weight or value, or by the role of a constituent material in relation to the use of the goods.

Protestant argues that the floating clip/clock's primary purpose is as a paper clip holder of a kind used in the office or school. The clock located at the top of the paper clip holder is too small to be of significance and is merely a decorative feature. Although the floating clip/clock functions as a paper clip holder, the clock performs a time keeping function which is equally significant as the clip holding function. Thus, we are unable to determine whether the clock or the plastic portion of the device imparts its essential character. Consequently, following GRI 3(c), HTSUS, classification under subheading 9103.10.20, HTSUS, is appropriate as " . . . the heading which occurs last in numerical order among those which equally merit consideration."

HOLDING:

The floating clip/clock is dutiable at the rate of 3.9% ad valorem on the movement and case plus 5.3% ad valorem on the battery.

Since reclassification of the merchandise as indicated above will result in a lower rate of duty than claimed, you are instructed to allow the protest in full. In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision together with the Customs Form 19, should be mailed by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, Freedom of Information Act and other public access channels.

Sincerely

John Durant, Director
Commercial Rulings Division


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