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January 27, 1999

CLA-2-95:RR:NC:2:224 D86320

CATEGORY: CLASSIFICATION

TARIFF NO.: 7326.20.0050

William J. Maloney
Rode & Qualey
295 Madison Ave.
New York NY 10017

RE: The tariff classification of novelty key chains made in China. Dear Mr. Maloney:

In your letter dated November 12, 1998, you requested a tariff classification ruling on behalf of Gund, Inc. We regret the delay in our response.

Two sample key chains, also referred to as key holders, were provided for our examination. Each key chain or key holder consists of a spiral, split steel ring (23 mm in diameter) to hold keys attached by a short steel chain mechanism to an ornament in the form of a miniature, three-dimensional character figure depicting a fanciful teddy bear. The key ring portion of one article believed to be style #40114 measures 4 centimeters. Its associated cartoon figure measures an additional 9 cm in length and possesses a soft, textile outer covering or skin stuffed with polyester fibers. The Style #2456 article key ring element measures 4 cm in length and is attached to a 10 cm long figure with a plush skin stuffed with polyester fibers. Your samples are being returned with this letter.

In your letter, you contend that the two key chains are designed primarily to amuse and that their utility as key holders is diminished by the presence of the bear figures. You maintain that the bear portion is a toy and is as functional as the key ring component in the overall concept of the key chains, as well as being superior in value, weight and size. Therefore, you reason, the toy bears impart the essential character to the articles and determine the articles’ classification. Merchandise is classifiable under the Harmonized Tariff Schedule of the United States (HTSUS), in accordance with the General Rules of Interpretation (GRIs). GRI 1 states in part that for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes, and provided the heading or notes do not require otherwise, according to GRI’s 2 through 6 of the HTSUS.

The subject key holders consisting of a metal ring and chain mechanism with an attached novelty ornament are not specifically provided for in any one heading of the HTSUS. Key chains made up of spiral split metal rings are described by heading 7326, HTSUS, as articles of iron or steel (other articles of iron or steel wire). The miniature animal depictions you claim are best described in heading 9503, HTSUS, as toys (representing stuffed animals).

The key holders cannot be classified by reference to GRI 1 because the components are prima facie classifiable in different headings. GRI 3(a) states that when, by application of GRI 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.

In this instance we have a composite good. Both sample key chains or key holders are made up of a miniature novelty bear figure attached to a split metal ring. The different components are mutually complementary and form a whole that would not normally be sold separately. Since the merchandise is a composite good, described in part by two headings, we must apply GRI 3(b), which provides that composite goods are to be classified according to the component that gives the good its essential character.

The Harmonized Commodity Description And Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized system. While not legally binding on the contracting parties, and therefore not dispositive, the ENs provide a commentary on the scope of each heading of the Harmonized System and are thus useful in ascertaining the classification of merchandise under the System. Customs believes the ENs should always be consulted. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).

Explanatory Note (VIII) to GRI 3(b), states that 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 material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods. You assert that the essential character of the key rings is imparted by the miniature stuffed animal component because they comprise the substantial majority of the weight, value and bulk of each sample article.

We disagree. We believe that, in this instance, these factors do not resolve the issue of essential character. Instead, it is the role of the material components (metal split ring w/mechanism and animal figure) in relation to the use of the goods (key rings) that imparts the essential character to the goods. We are well aware that the ornamental animal figure comprises a substantial portion of the article and indeed may be the dominant feature of the article in a visual sense. However, the U.S. Customs publication Harmonized System Handbook states in pertinent part that “the essential character of a product has generally been construed to mean ‘the attribute which strongly marks or serves to distinguish what an article is; that which is indispensable to the structure, core or condition of the article.’” Applying this test to the key chain articles, we find that the working component which is the metal key ring itself is the component which gives the key chains their essential character. The key ring component plays the most significant role in the use of the key chains and is indispensable to the key chain’s - even a novelty key chain’s - condition or structure.

Customs has held on a number of occasions that, as between the various attachments and metal key rings that comprise this class or kind of key chains, it is the metal key ring element which provides the essential character of the key chain. The metal key ring is what makes up the utilitarian or working portion of the key chain, whereas the novelty attachments are present usually for decorative purposes or for a limited manipulative play value. See HQ 087831, dated November 27, 1990, HQ 950636, dated January 16, 1992, and HQ 958452, dated July 3, 1996. In these rulings Customs found that the novelty elements attached to the key chains did not possess any utilitarian purpose.

The function of carrying and organizing keys for convenience, comfort and security in a manner that is practical while being entertaining is, we believe, the primary function of the subject articles. The merchandise will be purchased for this key carry/organizer function and not simply for its play value. The key holding function of the metal ring is primary to the secondary role of the attachment. In relation to the primary use of the goods as a key carry/organizer tool, the metal key ring/mechanism element plays the primary, indeed the sole, role in achieving this use of the key chain. We therefore conclude that the role of the key ring component determines the essential character of the submitted sample articles and the articles are classified as if they consisted of the metal key ring/mechanism only.

The determination that the metal key ring elements impart the essential character to the sample composite goods and govern the classification of the goods is in accord with Headquarters rulings HQ 961531, HQ 961398, HQ 961020 and HQ 961965 where merchandise comprising various objects attached to metal key rings were ruled to be classifiable in the tariff provision that describes the metal key ring portion. See also HQ 950636 dated January 16, 1992, and HQ 960118 dated July 28, 1997, wherein it was ruled that between a key chain’s functional key ring and its associated non-functional adornment component, it will be the functional component, the key ring, that comprises the key chain’s essential character.

HOLDING:

The primary function of the class of key chains represented by your submitted samples is to carry keys for comfort, convenience and security but in a manner that is entertaining or amusing while also being practical. This carry/organizer function is the principle use of any key chain of this class or kind, including the subject key chains. The metal ring/mechanism component plays the primary and most significant role in supporting or achieving this principal function or use whereas the role of the novelty or decorative figure attachment in relation to the ultimate use of the goods is, of course, minimal. Because the metal key ring performs the most important role in the use of the goods, this element imparts the essential character to the whole article and consequently, the subject key chains are classifiable as if they consisted only of their metal key split rings.

Under the authority of GRI 3(b), HTSUS, the subject key chains or key holders numbered 2456 and 40114 are classifiable in subheading 7326.20.0050, HTSUS, which provides for other articles of iron or steel: articles of iron or steel wire: other. The rate of duty will be 3.9 percent ad valorem.

This ruling is being issued under the provisions of Section 177 of the Customs Regulations (19 C.F.R. 177).

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialists Tom McKenna, 212-466-5475 or Mel Birnbaum, 212-466-5487.

Sincerely,

Robert B. Swierupski Director, National Commodity Specialist Division


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