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HQ 966305




July 28, 2004

CLA-2 :RR:CR:GC MG

Category: CLASSIFICATION

Tariff No: 7326.20.0050

Port Director
Customs and Border Protection
301 E. Ocean Blvd.
Long Beach, CA 90802

RE: Protest number 2704-03-100046; Simon Key Chain Blister

Dear Port Director:

This is our decision regarding Protest number 2704-03-100046, filed against your classification of the Simon Key Chain Blister (“Simon key chain”), imported by Target Stores, under the Harmonized Tariff Schedule of the United States (“HTSUS”). The entry was liquidated on October 11, 2002, and the protest timely filed on December 31, 2002. No samples were submitted for our examination.

FACTS:

The subject article consists of a steel key chain with a battery operated digital electronic game attached and packaged in a colorful blister pack. The game has the following descriptions on the package: “Simon Fun 4 All” – “Flashlights Lights and Sounds” – “2 Levels of Difficulty” – “All New Colors” – “Try ME” – “For Ages 3 and Up.” The game is played by pushing the center button on the game which causes one of the four peripheral lights to go on and to give off sounds. The player must press the proper peripheral button to repeat the correct sequence of lights and sounds (in the manner of the game “Simon Says”). If the person fails to follow the proper sequence, a “raspberry” noise sounds. The game can be made more difficult by moving a switch on the reverse side of the game.

The Simon key chain was entered under subheading 7326.20.00, HTSUS, which provides for: “Other articles of iron or steel: Articles of iron or steel wire: Other.” Protestant claims that the Simon key chain is properly classified in subheading 9504.90.40, HTSUS, which provides for: “Articles for arcade, table or parlor games, including pinball machines, bagatelle, billiards and special tables for casino games: Automatic bowling alley equipment; parts and accessories thereof: Other.”

ISSUE:

Is the Simon key chain classified as an article of iron or as a game machine under the HTSUS?

LAW AND ANALYSIS:

At the outset, it is noted that the protest was timely filed (i.e., within 90 days after but not before the notice of liquidation; (see 19 U.S.C.§1514(c)(3)(A)) and the matters protested are protestable (see 19 U.S.C. §1514(a)(2) and (5)).

Merchandise imported into the U.S. is classified under the HTSUS. Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule and any relative section or chapter notes and, unless otherwise required, according to the remaining GRIs taken in order. GRI 6 requires that the classification of goods in the subheadings of headings shall be determined according to the terms of those subheadings, any related subheading notes and mutatis mutandis, to the GRIs 1 through 5.

The Harmonized Commodity Description and Coding System Explanatory Notes (EN’s) represent the official interpretation of the Harmonized System at the international level and facilitate classification under the HTSUS by offering guidance in understanding the scope of the headings and GRIs. The ENs, although not dispositive nor 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).

The HTSUS provisions under consideration are as follows:

7326 Other articles of iron or steel:
7326.20.00 Articles of iron or steel wire 7326.20.0050 Other

9504 Articles for arcade, table or parlor games, including pinball machines, bagatelle, billiards and special tables for casino games; automatic bowling alley equipment; parts and accessories thereof: 9504.90 Other:
9504.90.4000 Game machines, other than those operated by coins, banknotes (paper currency), discs or similar articles; parts and accessories thereof

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 at issue here are novelty items consisting partly of a battery operated electronic game piece described under heading 9504, and partly of key chain under heading 7326. 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. GRI 2(a) is also inapplicable because it applies to incomplete or unfinished articles and the Simon key chains is imported in a finished, complete condition. In this regard, according to GRI 2(b), 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 electronic game component or the metal 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 GRI 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).

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 964679, dated July 2, 2001. Specifically, it has long been our practice to classify utilitarian objects, such as key rings with toy-like motifs or play features, as key rings. See HQ 965102, dated November 5, 2001 and HQ 964748, dated November 27, 2001 (holding that under a GRI 3(b) analysis, a doll attached to a key chain is subordinate to the functional key chain component for purposes of essential character and citing numerous rulings upholding this).

See also, 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). 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.

In the instant case, protestant avers that although the electronic game component accounts for 88% of the total entered value, neither component of the Simon key chain (i.e., the key chain nor the game) is of sufficient importance to impart the essential character to the merchandise. Protestant concludes that because neither of theses two components imparts the essential character to the merchandise pursuant to GRI 3(b) that GRI 3(c) is applicable. Protestant bases its argument on NY G82468, dated October 13, 2000, wherein we classified an electronic game feature attached to a pen pursuant to GRI 3(c). In this regard, it should be noted, however, that in HQ 964679, supra, we affirmed this New York ruling and determined that “while cost, bulk and weight are factors to be considered, they are by no means overriding.”

Furthermore, and unlike the pen described in HQ 964679, it is the key ring/chain component that makes up the utilitarian portion of the Simon key chain acting as the holder and organizer of keys, whereas the miniature attached component serves a novelty play or appearance purpose. The article’s predominant use is to hold, store, and transport keys. It is this use which constitutes the principal role of the article (i.e., to hold keys). The level of manipulative or observant play of the attachment does not meet the significant amount required to impart the essential character to the Simon key chain.

Because the metal key ring imparts the essential character to the Simon Key Chain, it is classified in heading 7326, HTSUS, as: “Other articles of iron or steel,” by application of virtue of GRI 3(b). It is specifically provided for in subheading 7326.20.0050, HTSUSA, as: “Other articles of iron or steel: Articles of iron or steel wire: Other.”

HOLDING:

The Simon key chain is classified in subheading 7326.20.00.50, HTSUSA, as “Other articles of iron or steel: Articles of iron or steel wire: Other.”

The Protest is hereby DENIED.

Articles classified under this tariff provision have a column one, general rate of duty of 3.9 percent ad valorem. Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the Internet at www.usitc.gov.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision.

Sixty days from the date of the decision, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.CBP.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

Myles B. Harmon, Director
Commercial Rulings Division

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