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HQ 965102




November 5, 2001

CLA-2 :RR:CR:GC DBS

Category: CLASSIFICATION

Tariff No: 7326.20.0050

Mr. Stephen B. Keeney
Cap Toys, Inc.
26201 Richmond Road
Bedford Heights, OH 44146-1439

RE: NY Ruling 817268 revoked; Key chains with attached doll and toy musical instrument

Dear Mr. Keeney:

This letter is to inform you that Customs has reconsidered New York Ruling Letter (NY) 817268, issued to you on December 29, 1995, concerning the tariff classification of the “Micro Size Stretch Armstrong Key Chain” and the “Micro Jammers Key Chain” under the Harmonized Tariff Schedule of the United States (HTSUS). Customs ruled that the subject key chains were classified under subheadings 9502.10.0020, the provision for “dolls representing only human beings and parts and accessories thereof: whether or not dressed: other: not over 33 cm in height;” and 9503.50.0020, the provision for “toy musical instruments and apparatus,” respectively. We have reviewed this ruling and determined that these classifications are incorrect. For the reasons that follow, this ruling revokes NY 817268.

Pursuant to section 625(c), Tariff Act of 1930 (19 U.S.C. 1625(c)), as amended by section 623 of Title VI (Customs Modernization) of the North America Free Trade Agreement Implementation Act, Pub. L. 103-182, 107, Stat. 2057, 2186 (1993), notice of the proposed revocation of NY 817268 was published on September 19, 2001, in the Customs Bulletin, Volume 35, Number 38. Two comments were received. The essence of the arguments opposing the proposal and Customs response are included in the LAW AND ANALYSIS portion of this ruling.

FACTS:

According to NY 817268, a “Micro Size Stretch Armstrong Key Chain” consists of a human figure measuring approximately 4 inches in height with permanently attached key chain. The figure has painted facial features and wears a textile top and shorts. The “Micro Jammers Key Chain” comes in an assortment of three styles which include a miniature acoustic guitar, electric guitar and a boom box. The miniature articles are made of plastic and contain a non-replaceable battery which operates a sound reproducing device. Pressing any one of four buttons located on the toy will activate the prerecorded musical sounds. Both products are imported packaged, individually, on a blister card for retail sale.

We note that subheading 9502.10.0020, HTSUS, is now renumbered as subheading 9502.10.0060, HTSUS, and reworded to provide for “dolls representing only human beings and parts and accessories thereof: dolls, whether or not dressed: other.” Subheading 9503.50.0020, HTSUS, is now renumbered as subheading 9503.50.00, HTSUS, and reworded to provide for “toy musical instruments and apparatus and parts and accessories thereof.”

ISSUE:

Whether the key chains should be classified under headings 9502 and 9503, HTSUS, as dolls and toys respectively, or under heading 7326, HTSUS, as other articles of iron or steel.

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 and any relative Section or Chapter Notes. In the event that 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 understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes (ENs) may be utilized. The ENs, though not dispositive or legally binding, provide commentary on the scope of each heading of the HTSUS, and are the official interpretation of the Harmonized System at the international level. Customs believes the ENs should always be consulted. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).

The HTSUS provisions under consideration are as follows:

7326 Other articles of iron or steel:
7326.20.00 Articles of iron or steel wire Other

Dolls representing only human beings and parts and accessories thereof:
Dolls, whether or not dressed
9502.10.0060 Other

9503 Other toys; reduced-size (“scale”) models and similar recreational models, working or not; puzzles of all kinds; parts and accessories thereof:
.0000 Toy musical instruments and apparatus and parts and accessories thereof

The term “doll” is not defined in the HTSUS. However, EN 95.02 states, in pertinent part, as follows:

The heading includes not only dolls designed for the amusement of children, but also dolls for decorative purposes (e.g., boudoir dolls, mascot dolls), or for use in Punch and Judy or marionette shows, or those of a caricature type.

Dolls are usually made of rubber, plastics, textile materials, wax, ceramics, wood, paperboard, papier maché or combinations of these materials. They may be jointed and contain mechanisms which permit limb, head or eye movements as well as reproductions of the human voice, etc. They may also be dressed. (Emphasis added).

The term “toy” is also not defined in the HTSUS. However, the General EN for Chapter 95 states, in pertinent part, that the “Chapter covers toys of all kinds whether designed for the amusement of children or adults.” Further, EN 95.03(A) provides in pertinent part: “Certain toys (e.g., electric irons, sewing machines, musical instruments, etc.) may be capable of limited “use”; but they are generally distinguishable by their size and limited capacity . . . .”

GRI 1 provides that articles are to be classified by the terms of the headings and relative Section and Chapter Notes. For an article to be classified in a particular heading, the heading must describe the article, and not be excluded therefrom by any legal note.

The subject articles are novelty items consisting partly of a plastic doll described under heading 9502, HTSUS, and miniature music instruments under heading 9503, HTSUS, and partly of a steel split ring key chain under heading 7326, HTSUS. As such, the items are not specifically provided for in any one heading. Thus, for tariff purposes, they constitute goods consisting of two or more substances or materials. Accordingly, they may not be classified solely on the basis of GRI 1. Further, GRI 2(a) is inapplicable because it applies to incomplete or unfinished articles, and the key chains are imported in a finished complete condition. GRI 2(b) states that 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. We must determine whether the plastic figurines or the steel key ring imparts the essential character to these articles.

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." Recent court decisions on the essential character for 3(b) purposes have looked primarily to the role of the constituent material in relation to the use of the goods. See Better Home Plastics Corp. v. U.S., 915 F. Supp. 1265 (CIT 1996), aff’d 119 F. 3d 969 (Fed. Cir. 1997); Mita Copystar America, Inc. v. U.S., 966 F.Supp. 1245 (CIT 1997), rehear’g denied, 994 F. Supp. 393 (1998); Vista Int’l Packing Co. v. U.S., 890 F. Supp. 1095 (CIT 1995). See also Pillowtex Corp. v. U.S., 893 F. Supp. 188 (CIT 1997), aff’d 171 F. 3d 1370 (CAFC 1999).

Moreover, we have consistently held that where a composite good contains both functional and non-functional components, the functional component gives the item its essential character. See HQ 087831, dated November 27, 1990 (holding that under a GRI 3(b) analysis, the essential character of a split key ring with a non-utilitarian vinyl attachment was the steel element); HQ 950636, dated September 16, 1992 (following HQ 087831 to conclude that the essential character of a key ring with a plastic ornament in which a logo or photo could be placed was the steel element, and revoking numerous rulings that did not follow that analysis); HQ 960118, dated January 28, 1999 (holding that the key ring imparted the essential character because of its function, as opposed to the voice synthesizer that merely played prerecorded sounds). See also HQ 959473, dated April 8, 1997 (holding that flashlight on key ring is not subordinate to the key ring, as a toy would be, for purposes of determining essential character). In HQ 087831, we stated, in pertinent part, that “the steel component is what makes up the utilitarian portion of the key ring, whereas the plastic component is present primarily for decorative purposes.” Hence, as a general rule, the steel component is the essential character, and this type of composite good is classified under heading 7326.

A commentor opposed the proposed revocation of NY 817268 and modification of NY A83438, contending that Customs should take no action pending the outcome of litigation on substantially similar articles. The action taken here is merely conforming to the longstanding position Customs has maintained on this issue, as shown in the paragraph above, and will be reviewed on the outcome of the litigation. Another commentor stated that essential character should be determined by the value of the constituent parts and by “purchase decision.” Customs believes, as discussed above, that the functional component of a composite good usually imparts the essential character of that good.

However, Customs recognizes that where the doll or toy component has a significant amount of manipulative play value, the doll or toy imparts the essential character of the subject goods. See NY B85825, dated May 30, 1997. For example, in NY B85825, the toy component of a “Mr. Potato Head Key Ring” gave the good its essential character because the toy comes complete with attachable features, e.g. eyes, noses and ears, that are stored in the back of its head and can be repeatedly rearranged. The other key chains classified in that ruling had similar levels of manipulative play, justifying their classification in Chapter 95.

Here, the plastic ornament of the “Micro Size Stretch Armstrong Key Chain” is a human figure with painted facial features. Thus, it is a doll representing only human beings that is classifiable under heading 9502, HTSUS. The steel key chain component is classified as other articles of iron or steel under heading 7326, HTSUS. According to the GRI 3(b) analysis enunciated above, the functional component imparts the essential character. The steel key chain performs the function of holding keys, whereas the doll is present for decorative purposes and to add bulk to the entity. As such, it does not have any manipulative play value. Therefore, the essential character is the steel component.

The “Micro Jammers Key Chains” are comprised of plastic miniature musical instruments (acoustic and electric guitars and a boom box) containing sound devices that play prerecorded tunes. Accordingly, it is a toy musical instrument, provided for specifically in subheading 9503.50 and thus would be classified as such. Here, too, the steel key chain component is classified under heading 7326, HTSUS. As stated above, the ENs for heading 9503, HTSUS, distinguishes toy musical instruments from other toys by their limited capacity. The toys here play prerecorded sounds. They cannot be changed by the user. Therefore, they are not functional and have no manipulative play value. Moreover, we have previously held that a key chain with attached voice synthesizer with prerecorded sounds, which is substantially similar to the subjects at issue, is subordinate to the functional key chain component for purposes of essential character. See HQ 960118, supra at 4. Thus, the essential character is the steel key chain component.

We conclude that NY 817268 was in error because the function over form and significant manipulative play analyses were not applied to determine the essential character of the goods. The essential character of a key chain with a plastic doll or toy musical instrument attached is the key chain. These key chains are accordingly classifiable in subheading 7326.20.0050, HTSUS.

HOLDING:

The “Micro Size Stretch Armstrong Key Chain” and the “Micro Jammers Key Chain” are classifiable in subheading 7326.20.0050, HTSUS, which provides for: “other articles of iron or steel, articles of iron or steel wire, other.”

EFFECT ON OTHER RULINGS:

NY 817268, dated December 29, 1995, is revoked. In accordance with 19 U.S.C. 1625(c) this ruling will become effective 60 days after its publication in the Customs Bulletin.

Sincerely,

John Durant, Director
Commercial Rulings Division

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