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HQ 961531




September 23, 1998

CLA-2 RR:CR:GC 961531 MMC

CATEGORY: CLASSIFICATION

TARIFF NO.: 7326.20.0050

Mr. Joseph R. Hoffacker
Barthco Trade Consultants, Inc.
7575 Holstein Avenue
Philadelphia, PA 19153

RE: PD C84962, PD C84963 affirmed; Key chains

Dear Mr. Hoffacker:

This is in reference to your March 23, 1998, letter requesting reconsideration, on behalf of Raymond Geddes and Company, Inc., of rulings PD C84962 and PD C84963 both dated March 13, 1998, concerning the classification of adorned key chains under the Harmonized Tariff Schedule of the United States (HTSUS). Samples were submitted for our examination.

FACTS:

The subject articles are identified as item nos. 3709, 3726 and 3727. Each consists of a steel chain with a steel key loop attached to one end and a different adornment attached to the other end. All of the subject articles are displayed in the "Key Chains" section of the Raymond Geddes and Company, Inc., catalog. The adornments are described as follows:

1) Item # 3709 Puffy Pets Key Chain consists of a rubber-like ball approximately 50 mm in diameter with a smiley face and yarn hair. The catalog describes these articles as "[p]uffy Pets Key Chain: Three cheers for pompom pets. Tiny puff balls comprise these cuddly and colorful key chains shaped like dogs and cats. Puffy Pets keep keys on a short leash! Assorted colors. 12 per bag. Costs: $5.50 dozen (.46 each) Retail: .69."

2) Item # 3726 Stretch N Smile Key Chain consists of a rubber-like ball with a smile face and yarn hair. The ball measures 50mm in diameter. The catalog describes the articles as "[f]rustration alleviation is just one of this key chain's special talents. Colorful smiley faces with yarn hair are stretchable, squeezable, squishable, and scrunchable. If you can squish it out, then Stretchy Ball can take it! Six assorted colors. 12 on a card. Costs: $5.50 dozen (.46 each) Retail: .69."

3) Item # 3727 Glow-In-The-Dark Bendable Alien Key Chain consists of a plastic-like bendable alien figurine. The catalog describes the component as "[w]here were you when the lights went out? Never mind that. Where are your keys? They're easy to find when they're on a glowing alien. Poseable key chains come in blue, yellow and green. 12 on a card. Cost: $8.90 dozen (.74 ea) Retail: .99."

In PD C84963 and PDC84962, the subject articles were held to be classifiable under subheading 7326.20.00, HTSUS, which provides for [o]ther articles of iron or steel wire: [o]ther. You contend that they are classifiable as toys of heading 9503, HTSUS.

ISSUE:

Whether the subject adorned key chains are classifiable as toys 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. 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

The term "toy" is not defined in the HTSUS. However, 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. 89-90, 54 FR 35127, 35128 (August 23, 1989).

The ENs to Chapter 95, HTSUS, state, in pertinent part, that "[t]his Chapter covers toys of all kinds whether designed for the amusement of children or adults." Although not set forth as a definition of "toys," we have interpreted the just-quoted passage from the ENs as equating "toys" with articles "designed for the amusement of children or adults," although we believe such design must be corroborated by evidence of the articles' principal use.

When the classification of an article is determined with reference to its principal use, Additional U.S. Rule of Interpretation 1(a), HTSUS, provides that, in the absence of special language or context which otherwise requires, such use is to be determined in accordance with the use in the United States at, or immediately prior to, the date of importation, of goods of that class or kind to which the imported goods belong, and the controlling use is the principal use. In other words, the article's principal use at the time of importation determines whether it is classifiable within a particular class or kind.

While Additional U.S. Rule of Interpretation 1(a), HTSUS, provides general criteria for discerning the principal use of an article, it does not provide specific criteria for individual tariff provisions. However, the U.S. Court of International Trade has provided factors, which are indicative but not conclusive, to apply when determining whether merchandise falls within a particular class or kind. They include: general physical characteristics, the expectation of the ultimate purchaser, channels of trade, environment of sale (accompanying accessories, manner of advertisement and display), use in the same manner as merchandise which defines the class, economic practicality of so using the import, and recognition in the trade of this use. United States v. Carborundum Company, 63 CCPA 98, C.A.D. 1172, 536 F. 2d 373 (1976), cert. denied, 429 U.S. 979.

The general physical characteristics of the articles indicates that they are used as key chains. They have all the necessary elements of a key chain. Furthermore, the chain and ring are made of strong durable metal. The expectation of the ultimate purchaser and environment of sale also indicates that the articles are principally used as key chains. The catalog indicates that the articles are designed and should be used as holders for keys, not merely for amusement. While the key chains do have elements which are amusing, we are of the opinion that, based upon the factors discussed above, they are not principally designed to amuse, but rather to hold keys. As such, they do not fall within the scope of the tariff term "toy".

No one heading of the HTSUS specifically provides for the subject key chains as a whole. The various adorned figures are described by heading 9505, HTSUS. The ring and chain components are described by heading 7326, HTSUS, as an article of iron or steel. As no one heading describes the articles as a whole, the adorned key chains are considered composite goods consisting of both toy and metal components. As such, they 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 subject key chains are 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.

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 plastic figurines or the metal key ring imparts the essential character to these articles.

You claim that the essential character of the key rings is imparted by the figures because they comprise 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 articles, we are of the opinon that it is the ring/chain component which makes up the utilitarian portion of the article. The figures are primarily placed at the end of the key chain for decorative purposes. Moreover, these articles are purveyed to the public, displayed and even named "key chains". We believe that all of the articles will be used predominantly to hold keys. Finally, we note that you cite several New York Ruling Letters in which Customs determined that the essential character of a toy/key chain combination was the toy component. It is our understanding that in those instances, the manipulative play value of the toy so outweighed any potential functional aspect of the key chain, that the toy component provided the article with its essential character. Such is not the case in this instance. We therefore, find that it is the metal key ring component that imparts the essential character of the key chains As such they are 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. PD C84962 and PD C84963 are affirmed.

HOLDING:

The key chains are 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. PD C84962 and PD C84963 are affirmed.

Sincerely,

John Durant, Director
Commercial Rulings Division

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