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HQ 961020




September 25, 1998

CLA-2 RR:CR:GC 961020 MMC

CATEGORY: CLASSIFICATION

TARIFF NO.: 7326.20.0050

Mr. Arlen T. Epstein
Serko & Simon
One World Trade Center
Suite 3371
New York, NY 10048

RE: NYRL B89587 affirmed; Stuffed Jointed Teddy Bear Key Ring

Dear Mr. Epstein:

This is in reference to your October 10, 1997, letter, on behalf of Russ Berrie and Company, requesting reconsideration of New York Ruling Letter (NYRL) B89587 dated September 19, 1997, concerning, among other things, the classification of a stuffed, jointed, teddy bear key ring under the Harmonized Tariff Schedule of the United States (HTSUS). A sample was submitted for our examination.

FACTS:

The subject article, identified as item # 1813, is a steel chain with a stuffed 2 inches long teddy bear with jointed arms and legs, attached to one end and a steel key loop attached to the other end. It is made in China. The headings under consideration are as follows:

9503 Other toys; reduced-size ("scale") models and similar recreational models, working or not; puzzles of all kinds; parts and accessories thereof

7326 Other articles of iron or steel

ISSUE:

Whether the stuffed, miniature, jointed, teddy bear key ring is classifiable as a toy for tariff purposes.

LAW AND ANALYSIS:

Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). The systematic detail of the Harmonized System is such that virtually all 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 GRIs may then be applied.

In NYRL B89587, the steel key loop was determined to impart the essential character of the article. Therefore, the article was classified under subheading 7326.20.00, HTSUS, which provides for [o]]ther articles of iron or steel: [o]ther. You contend that the article should be classified in heading 9503, HTSUS, as a toy. The subject key chain consists of a metal key ring and chain attached to a stuffed, jointed, teddy bear. No one heading of the HTSUS specifically provides for the article as a whole. The teddy bear component of the article is described by heading 9505, HTSUS. The ring and chain component is described by heading 7326, HTSUS, as an article of iron or steel. As no one heading describes the article as a whole, the teddy bear key chain is considered a composite good consisting of both a toy and metal portion. As such, it cannot be classified according to GRI 1.

GRI 2(a) is inapplicable because it applies to incomplete or unfinished articles, and the key chain is imported in a finished complete condition. GRI 2(b) states, in pertinent part, that any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. The classification of goods consisting of more than one material or substance shall be according to the principles of GRI 3.

GRI 3(a) states that when, by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, 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 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. As the teddy bear key chain is a composite good, we must apply rule 3(b), which provides that composite goods are to be classified according to the component that gives the good its essential character.

In understanding the language of the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and Coding System may be utilized. The ENs, although not dispositive or legally binding, provide a commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUS. See, T.D. 89-80, 54 Fed. Reg. 35127 (August 23, 1989).

EN VIII to GRI 3(b) explains that "[t]he factor which determines essential character will vary as between different kinds of goods. It may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of the constituent material in relation to the use of the goods." We must determine whether the stuffed jointed bear or the metal key ring imparts the essential character to this article.

You claim that the essential character of the key ring is imparted by the teddy bear component because it comprises the substantial majority of the weight, value and bulk of the article. We disagree. We believe that, in this instance, these factors do not resolve the issue of essential character. It is the role of the constituent materials in relation to the use of the goods that imparts the essential character.

Customs has consistently held that, when a key chain has both a functional and non- functional component it is the functional component which provides the article's essential character. See Headquarters Ruling Letter (HRL) 950636, dated January 16, 1992. Further, in HRL 960118 dated July 28, 1997, we determined that a functional key chain/ring, not a voice synthesizer comprised a key ring's essential character. See also, HRL 959473 dated April 8, 1997 and HRL 958452 dated July 3, 1996. Concerning the subject article, it is the ring/chain component which makes up the utilitarian portion of the article, whereas the miniature teddy bear is primarily for decorative purposes. Moreover, we believe that the article will be used predominantly to hold keys. We therefore find that it is the metal key ring that imparts the essential character. As such it is classifiable in subheading 7326.20.0050, HTSUS, as: [o]ther articles of iron or steel: [a]rticles of iron or steel wire: [o]ther, with a column one duty rate of 4.3 percent ad valorem. NYRL B89587 is affirmed.

HOLDING:

The teddy bear key ring is classifiable in subheading 7326.20.0050, HTSUS, as: [o]ther articles of iron or steel: [a]rticles of iron or steel wire: [o]ther, with a column one duty rate of 4.3 percent ad valorem. NYRL B89587 is affirmed.

Sincerely,

John Durant, Director
Commercial Rulings Division

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