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HQ 958959




November 12, 1996

CLA-2 RR:TC:TE 958959 GGD

CATEGORY: CLASSIFICATION

TARIFF NO.: 4202.32.1000; 4202.32.2000; 4202.92.4500 4817.10.0000; 4820.10.4000; 4901.10.0040
4909.00.2000; 4911.10.0080; 4911.99.8000
8470.10.0040

Mr. Robert P. Schaffer
De Angelus, Schaffer & Associates
1455 Pennsylvania Avenue, N.W.
Suite 1150
Washington, D.C. 20004

RE: "ParentBanc" Educational Articles

Dear Mr. Schaffer:

This letter is in response to your request of November 3, 1995, on behalf of your client, ParentBanc, Inc., concerning the classification under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA), of articles identified as "ParentBanc," "ParentBanc Jr.," "ParentBanc Deluxe," and "ParentBanc Checkbook Refill Kit," all products of China. Samples were submitted with your original request. Subsequent to your original request and submission, a conference was held with Headquarters personnel on July 12, 1996. An additional written submission, dated July 22, 1996, and additional samples, have been received and considered.

FACTS:

The ParentBanc articles are collections of items designed to teach children - ages six to twelve - principles of money management and personal record keeping skills. Parents act as bankers and their children act as bank customers. A child's allowance, gift money, earnings, etc., are entered as direct -2-
deposits on a check register without any money changing hands. To obtain money, the child writes a check to the parent who, in turn, provides the amount of money drawn on the account.

The first sample article, identified as "ParentBanc," consists of a trifold checkbook wallet, a wide-ruled check register pad, two pads of nonnegotiable checks, a small calculator, a paper photo identification (i.d.) card (with space for important numbers and names), a clear plastic card holder, and various pieces of nonlithographically printed literature, including "Instructions for Children and Parents." The checkbook wallet has a hook and loop closure and an outer surface of plastic sheeting backed with a woven fabric. Its interior is fitted to contain the check register, check pads, and the i.d. card with holder. There are two additional card slots and an interior flap pocket with hook and loop closure, in which coins may be carried.

The sample identified as "ParentBanc Jr." consists of components similar to those included in the "ParentBanc" article, but it has different packaging, contains no trifold checkbook wallet, and its calculator is of lower value. There is only one pad of checks. The check pad and check register are fitted into a checkbook cover of polyvinyl chloride (PVC) plastics.

The sample identified as "ParentBanc Deluxe" also consists of components similar to those included in the "ParentBanc" article, but it has different packaging and contains three pads of checks, a higher quality calculator, a trifold wallet fitted to carry cards and coins (but not check pads or calculator), and a zippered carrying bag. The check pad and check register are fitted into a PVC checkbook cover. Both the trifold wallet and the carrying bag have an outer surface of cellular plastics backed with a woven fabric.

The sample identified as the "ParentBanc Checkbook Refill Kit" contains two check pads and a check register. Each of the four "ParentBanc" articles is imported in a retail package that is suitable for direct sale without repacking.

Excerpts from advertising and periodical literature submitted indicate that "ParentBanc" articles are marketed and described in a variety of ways, such as: "a fun and educational product," "a wonderful teaching tool," "turns money management into a game," "a way for kids to learn how to make wise decisions about spending and saving," "an excellent tool for parents," and "an excellent opportunity to confront money issues...early in a manner that is fun for the kids as well as educational." The -3-
items are photographically depicted alongside toys and games on the pages of catalogs including: JC Penney, F-A-O Schwarz, The Great Kids Company, The Westbury Collection, and Miles Kimball.

ISSUES:

1) Whether the articles, which contain multiple components that allow users to learn principles of money management and personal record keeping skills, are designed principally for amusement.

2) Whether the articles constitute sets for classification purposes.

LAW AND ANALYSIS:

Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRI). GRI 1 provides that the classification of goods shall be determined 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 may then be applied. The Explanatory Notes (EN) to the Harmonized Commodity Description and Coding System, which represent the official interpretation of the tariff at the international level, facilitate classification under the HTSUS by offering guidance in understanding the scope of the headings and GRI.

Heading 9503, HTSUS, provides for "Other toys...and accessories thereof," i.e., all toys not specifically provided for in the other headings of chapter 95. Although the term "toy" is not defined in the tariff, the EN to chapter 95 indicate that a toy is an article designed for the amusement of children or adults. The EN to heading 9503 indicate that certain toys, including toy arms, tools, gardening sets, tin soldiers, etc., are often put up in sets, and that collections of items separately classifiable in other headings are classified in chapter 95 when put up in a form clearly indicating their use as toys (e.g., instructional toys such as chemistry sets, sewing sets, etc.).

The recently added "Subheading Explanatory Note to Subheading 9503.70" states in pertinent part that: -4-
for the purpose of this subheading: "sets" are two or more different types of articles (principally for amusement), put up in the same packing for retail sale without repacking. Simple accessories or objects of minor importance intended to facilitate the use of the articles may also be included.

You contend that the "ParentBanc" articles should be classified as educational toy sets. In support of your position, you cite to several Headquarters Ruling Letters (HQ), including HQ 950700, issued August 25, 1993, HQ 957894, issued December 14, 1995, and HQ 958785, issued July 26, 1996.

In Headquarters Ruling Letter (HQ) 950700, issued August 25, 1993, we discussed the circumstances in which certain items may be classified in subheading 9503.70, as toys put up in sets. The case involved the classification of three multiple-component articles - two of which were imported in two separate versions or assortments. Neither assortment of the article identified as a "Minnie N Me Looking Pretty Set" included a component that, standing alone, would be classified as a toy. One version consisted of a comb, necklace, sunglasses, and hairclip, and the other was composed of a comb, necklace, mirror, and bracelet. All the components bore a Minnie Mouse decoration.

We stated that the application of the toy set provision is relatively straightforward when each item within a set would individually be classified as a toy, but that a greater challenge arises when the merchandise consists partly or (as in the "ParentBanc" case) entirely of articles that, individually, would be classified elsewhere in the tariff. It was noted that in either instance, subheading 9503.70 encompasses a combination of two or more mutually complementary, complete articles in a retail package, the essential character of which is established by the combination of the items (not by any individual item), and that the components should generally be used together to provide amusement. The facts that advertising was directed toward child-customers and that the goods were sold in toy stores, were not deemed dispositive of either use or classification as toys. We determined, however, that the "Minnie N Me" assortments were designed and used principally for amusement. It was possible to envision children mixing, matching, exchanging, etc., the individual items in a temporary and playful manner. It was found that, when put up together, the items were complementary and worked together to provide amusement.

HQ 957894 involved the classification of an article containing the materials needed to make temporary tattoos. The retail package consisted of a combination carrying case/drawing -5-
surface, sheets of both tattoo designs and blank tattoo paper, colored markers, a small water applicator bottle, and instructions. Pursuant to GRI 3(b), the article was found to comprise a set classifiable under heading 3926, HTSUS. It was not classified in the toy set provision pursuant to GRI 1, because the components were put up in a form to be primarily used to trace, draw, cut, and transfer a tattoo image - not principally to provide amusement.

In HQ 958785, this office classified a "Lean On Me" activity bolster, which appeared to have a dual purpose, i.e., to function as a pillow or cushion, and to provide amusement to a baby by means of five separate toys attached to the bolster. We concluded that the primary value of the item was its play value, that its utilitarian aspect was temporary and incidental to the amusement factor, and that the item was therefore a toy.

In this case, none of the separately classifiable components of the "ParentBanc" articles is a toy. All of the components are fully functional. Although they are put up in colorful packaging which boldly states that "ParentBanc Is Easy, Fun and Educational," we find that the items in combination are not clearly indicated for use as toys. The type of interplay that was probable among the "Minnie N Me" components above is not present. Unlike the items that composed "Tattoo Graphix," the combination of "ParentBanc" items put up together does not indicate a specific activity that, when engaged in, would yield an end product such as a tattoo. It is likely that amusement will, to some degree, be a byproduct of using "ParentBanc" articles, but any amusement factor is incidental to the utilitarian or instructional aspect. As is indicated by the non-toy classification of "Tattoo Graphix," not all merchandise that provides amusement is a toy. We thus find that the "ParentBanc" articles are not designed principally for amusement, but as tools to help parents teach children valuable skills, regardless of the extent to which the process amuses the participants.

The articles are not classified in subheading 9503.70, HTSUS, and cannot be classified by reference to GRI 1 because the individual components are classifiable in several different headings, i.e., headings 8470 (calculators), 4820 (check pads and register pads), 4817 (envelopes), 4202 (flatgoods), and 4911, 4909, and 4901 (printed inserts). -6-

In pertinent part, GRI 2(b) states that:

The classification of goods consisting of more than one material or substance shall be according to the principles of rule 3.

GRI 3(a) states, in pertinent part, that:
when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, 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.

Therefore, to determine under which provision the articles may be classified, we look to GRI 3(b), which states in pertinent part that:

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.

With respect to whether the components of the "ParentBanc" articles constitute "goods put up in sets," we look for guidance to Explanatory Note X to GRI 3(b), which indicates that for purposes of the rule, the term "goods put up in sets for retail sale" means goods which:

(a) consist of at least two different articles which are prima facie, classifiable in different headings;

(b) consist of products or articles put up together to meet a particular need or carry out a specific activity; and

(c) are put up in a manner suitable for sale directly to users without repacking (e.g., in boxes or cases or on boards).

As previously found, the subject articles meet criteria (a) and (c). With regard to criterion (b), it was previously indicated that the combination of "ParentBanc" items put up together does not carry out a specific activity. Each item is -7-
used in an ongoing program involving parent and child that may instill an understanding of where money comes from, and develop control over when and where it is spent. We do not find that the process meets a particular need or carries out a specific activity. Therefore, the "ParentBanc" articles do not comprise sets and must be classified in the subheadings applicable to the individual items.

HOLDING:

The components comprising the articles identified as "ParentBanc," "ParentBanc Jr.," "ParentBanc Deluxe," and "ParentBanc Checkbook Refill Kit," are separately classifiable under the specific subheadings provided below:

The trifold wallet and the trifold checkbook wallet are classified in subheading 4202.32.1000, HTSUSA, the provision for "Articles of a kind normally carried in the pocket or in the handbag: With outer surface of sheeting of plastic or of textile materials: With outer surface of sheeting of plastic: Of reinforced or laminated plastics." The applicable rate of duty is 12.1 cents per kilogram plus 4.6 percent ad valorem.

The clear plastic identification card holder is classified in subheading 4202.32.2000, HTSUSA, the provision for "Articles of a kind normally carried in the pocket or in the handbag: With outer surface of sheeting of plastic or of textile materials: With outer surface of sheeting of plastic: Other." The applicable rate of duty is 20 percent ad valorem.

The zippered carrying bag is classified in subheading 4202.92.4500, HTSUSA, the provision for "Travel, sports and similar bags: Other." The applicable rate of duty is 20 percent ad valorem.

The envelope for refill orders is classified in subheading 4817.10.0000, HTSUSA, the provision for "Envelopes...of paper or paperboard...: Envelopes." The applicable rate of duty is 3.2 percent ad valorem.

The nonnegotiable check pads and check register pads (including PVC fitted checkbook covers) are classified in subheading 4820.10.4000, HTSUSA, the provision for "Registers, account books, notebooks, order books, receipt books, letter pads, memorandum pads, diaries and similar articles: Other." The applicable duty rate is free. -8-

The printed leaflet entitled "How To Use ParentBanc" is classified in subheading 4901.10.0040, HTSUSA, the provision for "Printed books, brochures, leaflets and similar printed matter, whether or not in single sheets: In single sheets, whether or not folded, Other." The applicable rate of duty is free.

The printed product registration card which states "Thank You For Purchasing...." is classified in subheading 4909.00.2000, HTSUSA, the provision for "Printed or illustrated postcards; printed cards bearing personal greetings, messages or announcements, whether or not illustrated, with or without envelopes or trimmings: Postcards." The applicable rate of duty is 3.2 percent ad valorem.

The printed leaflet entitled "Children Love To See Their Name In Print" is classified in subheading 4911.10.0080, HTSUSA, the provision for "Other printed matter, including printed pictures and photographs: Trade advertising material, commercial catalogs and the like, Other." The applicable rate of duty is free.

The printed identification card is classified in subheading 4911.99.8000, HTSUSA, the provision for "Other printed matter, including printed pictures and photographs: Other: Other: Other: Other." The applicable rate of duty is 3.9 percent ad valorem.

The battery-powered calculators are classified in subheading 8470.10.0040, HTSUSA, the provision for "Calculating machines...: Electronic calculators capable of operation without an external source of electric power and pocket-size data recording, reproducing and displaying machines with calculating functions, Display only." The applicable rate of duty is 2.9 percent ad valorem.

Sincerely,

John Durant, Director

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