CLA-2 CO:R:C:S 555610 LS
7117.90.4000; 9801.00.10; 9802.00.80
Mr. John Moriarty
Import Manager
Spearhead Industries, Inc.
9971 Valley View Road
Minneapolis, Minnesota 55344
RE: Mini "lite stik" refills containing cyalume chemical, and
Halloween items containing a "lite stik"; repackaging;
Superscope; U.S. fabricated component
Dear Mr. Moriarty:
This is in response to your letters dated January 31 and
February 1, 1990, to the New York Seaport Customs office,
requesting a ruling on the tariff classification of six Halloween
items. Your letters, and the samples, were referred to our
office for a reply. We regret the delay in responding.
FACTS:
Item 24030 consists of two 60 mm. "lite stiks," blister
packaged on cardboard and known as "Mini Lite Stik Refills." The
lite stik or refill is a plastic tube which contains a vial of
cyalume chemical. When the user bends the plastic tube so that
it snaps, the chemical glows in the dark. The refill lite stiks
are made in Japan from a U.S. manufactured chemical exported from
the U.S. in liquid form. The other components are believed to be
of Japanese origin. The completed lite stiks are sealed in a
foil wrapper in Japan and then sent to Taiwan to be blister
packaged before being imported into the U.S. for retail sale.
Item 24020, known as a "Lite Stik Fun Ball," consists of a
plastic perforated ball packaged with a 60 mm. lite stik. The
ball itself is believed to be of Japanese origin. The lite stik
is made in Japan from the same components as those comprising
item 24030. Both the wrapped lite stik and ball are sent to
Taiwan where they are blister packaged together for retail sale.
When the consumer is ready to use the item, the lite stik is
removed from the foil wrapper, bent so as to activate the glow,
and inserted through the perforations in the ball so that it fits
inside.
Item 24040, known as a "Lite-Stik Whistler," consists of a
plastic "whistler" with a handle and string, and a 4 inch lite
stik in a foil wrapper, sold together in blister packaging.
This lite stik is manufactured and sealed in a foil wrapper in
the U.S. It is exported to Hong Kong where it is blister
packaged with the whistler, which is produced in China. When the
consumer is ready to use the item, the inner vial of the lite
stik is bent to allow it to glow, and the glowing lite stik is
inserted through the whistler until it snaps into place. After
the string is tied to the end of the lite stik, the user then
grips the handle and swings the lite stik whistler in a circular
motion to create a whistling sound.
Item 24060, known as a "Lite Stik Clip-On Costume Light,"
consists of a plastic sleeve, which depicts a ghost figure; a
plastic pin in the shape of a bat; and a lite stik sealed in a
foil wrapper. The lite stik is manufactured and sealed in its
wrapper in the U.S. It is then exported to Hong Kong where it is
blister packaged with the other articles, which are produced in
China. The costume light is used by inserting the glowing lite
stik into an opening in the plastic sleeve, and then attaching
the pin onto the hole of the lite stik. The item is then pinned
to a child's clothing as a Halloween decoration and safety light.
Item 24100, known as a "Lite Stik Glowing Ghost
Decoration," consists of a plastic ghost decoration, made in
China, and a 4 inch lite stik in a foil wrapper, made in the U.S.
These articles are exported to Hong Kong where they are blister
packaged together. The consumer uses this item by placing the
glowing lite stik on top of a stand inside the ghost decoration.
Item 24050, known as a "Lite Stik Pumpkin Light," consists
of a plastic holder, made in China, and a 4 inch lite stik in a
foil wrapper, made in the U.S. These articles are exported to
Hong Kong where they are blister packaged together. The
consumer uses this item by inserting the glowing lite stik onto
the holder, and then placing it on the bottom of a carved
pumpkin.
You requested a ruling on the tariff classification of
these six items. Because all of these items contain U.S. origin
articles which are exported abroad and returned, we also
considered whether any of them are eligible for the duty
exemption under subheading 9801.00.10, Harmonized Tariff Schedule
of the United States (HTSUS), upon their return to the U.S. We
also addressed whether items 24020 and 24030 are eligible for the
partial duty exemption under subheading 9802.00.80, HTSUS.
ISSUES
I. What is the proper classification of the above-described
merchandise?
II. Whether any of the items qualify for the duty
exemption under subheading 9801.00.10 or 9802.00.80, HTSUS.
LAW AND ANALYSIS:
ISSUE I
Classification of merchandise under the HTSUS is in
accordance with the General Rules of Interpretation (GRI's),
taken in order. GRI 1 provides that classification is determined
according to the terms of the headings and any relative section
or chapter notes.
Item 24030
Heading 3823, HTSUS, provides, in pertinent part, for
"chemical products and preparations of the chemical or allied
industries...not elsewhere specified or included." The
Explanatory Notes, which represent the official interpretation of
the tariff at the international level, offer guidance in
understanding the headings. The Explanatory Note to heading
3823, HTSUS, indicates that the preparations and chemical
products of this heading include, inter alia:
(34) Articles producing a lighting effect
by the phenomenon of chemiluminescence,
e.g., lightsticks in which the lighting
effect is obtained by a chemical reaction
between oxalic acid type esters and
hydrogen peroxide in the presence of
a solvent and a fluorescent compound.
Heading 3823 and its accompanying Explanatory Note
describe item 24030. Accordingly, the Mini Lite-Stik refills are
classifiable in heading 3823.
Items 24020, 24040, 24060, and 24100
Before items 24020, 24040, 24060, and 24100 can be used as
intended, they must be assembled. Consequently, GRI 2(a)
applies.
GRI 2(a) provides for unassembled goods. It mandates that
complete or finished articles entered unassembled or
disassembled are to be classified in the same heading as the
assembled article, provided that, as entered, they have the
essential character of the complete or finished article.
As each item contains several components whose end use is
readily apparent to the consumer and the assembly of these
components involves a simple process, the unassembled articles,
as entered, bear the essential character of their finished form.
Accordingly, each of these unassembled articles is classifiable
under the heading which applies to that article as completed.
Items 24020 and 24040
Heading 9503, HTSUS, provides, in pertinent part, for
"[o]ther toys." In the Explanatory Notes, the general notes for
Chapter 95 indicate that this chapter "covers toys of all kinds
whether designed for the amusement of children or adults." The
phrase "designed for the amusement of" is generally understood to
indicate that the use of an article will be a factor when
classificaton as a toy is being considered.
Additional U.S. Rule of Interpretation 1(a), HTSUSA,
provides that absent language to the contrary:
[A] tariff classification controlled by use
(other than actual 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.
Therefore, in order to be classified as toys, items 24020
and 24040 must be principally used for amusement.
These articles are principally used for amusement; the Lite
Stik Whistler is swung around in circles and the Fun Ball is
tossed about by children. Accordingly, they are classifiable as
other toys in heading 9503, HTSUS.
Item 24060
While the costume light ghost pin provides minimal
amusement, it is not of a comical nature nor does it feature
humorous words or sayings -- it is simply a novelty pin.
Consequently, it is not classifiable in heading 9503 as a toy.
Heading 9505, HTSUS, provides, in pertinent part, for
"[f]estive, carnival or other entertainment articles." The
Explanatory Note to heading 9505 indicates that the heading
covers:
(A) Festive, carnival or other entertainment articles which
in view of their intended use are generally made of non-
durable material. They include:
(1) Decorations such as festoons, garlands, Chinese
lanterns, etc., as well as various decorative articles
made of paper, metal foil, glass fibre, etc., for
Christmas trees (e.g., tinsel, stars, icicles),
artificial snow, coloured balls, bells, lanterns, etc.
Cake and other decorations (e.g., animals, flags)
which are traditionally associated with a particular
holiday are also classified here.
* * *
For the most part, the items described above function primarily
as decorative articles. Additionally, heading 9505 is generally
regarded as a use provision.
Here, the subject pin serves to adorn, not to decorate.
Moreover, while the instant article displays a holiday motif,
the pin itself does not belong to a class of merchandise whose
principal use is festive. Consequently, the pin is not
classifiable in heading 9505.
Heading 7117, HTSUS, provides for " [i]mitation jewelry."
Chapter 71, HTSUS, Note 10 indicates that "[f]or the purposes of
heading 7117, the expression 'imitation jewelry' means articles
of jewelry within the meaning of paragraph (a) of note 8
above...." Note 8(a) defines "articles of jewelry" as: "Any
small objects of personal adornment (gem set or not) (for example
rings...brooches...)...." A brooch is defined in the Jeweler's
Dictionary, 3rd edition, 1976, published by Jewelers' Circular
Keystone, as: "A piece of jewelry to be worn pinned to clothing,
as at the neck or shoulder, on the breast or hat, or in the
hair."
The pin features a bar-pin clasp (the type of clasp
routinely used on jewelry pins or brooches) and is worn on the
breast. As the article adorns the body and presents features
associated with brooches, it is classifiable in heading 7117,
HTSUS, which provides for imitation jewelry.
Item 24100
This item is a plastic rendition of a traditional Halloween
ghost. Consequently, it qualifies as a festive article in
heading 9505, HTSUS.
Item 24050
No single heading in the HTSUS provides for a combination
glow stick and plastic holder as assembled; hence, a
classification determination cannot be made by way of GRI 2(a).
GRI 2(b) pertains to mixtures or combinations of a material
or substance, and goods consisting of two or more materials or
substances. This rule further provides: "The classification of
goods consisting of more than one material or substance shall be
according to the principles of rule 3." As item 24050 is made up
of two different materials (and, thus, classifiable in two
separate headings: heading 3823, HTSUS, for chemical products and
preparations of the chemical or allied industries, not elsewhere
specified or included; and heading 3926, HTSUS, other articles of
plastics), GRI 3 must be consulted.
Here, the two headings at issue refer to part only of the
subject Pumpkin Light, and according to GRI 3(a) are to be
regarded as equally specific, thereby making resort to GRI 3(b)
necessary. According to GRI 3(b), mixtures and composite goods
consisting of different materials, or made up of different
components, shall be classified as if they consisted of the
material or component which gives them their essential character.
The Explanatory Notes to GRI 3(b) indicate that "essential
character" may be determined by considering "the nature of the
material or component, its bulk, quantity, weight, value, or by
the role of the constituent material in relation to the use of
the goods."
The role that the glow stick plays in relation to the use of
the article strongly suggests that the glow stick represents the
essential character of item 24050. While the plastic holder
holds the glow stick in place, it is the stick which produces the
item's desired effect. The glow stick and holder, therefore, are
classifiable under heading 3823 -- the provision which provides
for chemical lightsticks.
ISSUE II
Subheading 9801.00.10, HTSUS, provides for the duty-free
entry of products of the U.S. that are returned after having been
exported, without having been advanced in value or improved in
condition by any process of manufacture or other means while
abroad, provided there has been compliance with the documentary
requirements of section 10.1, Customs Regulations (19 CFR 10.1).
Although some change in the condition of the product while it is
abroad is permissible, operations which either advance the value
or improve the condition of the product render it ineligible for
duty free entry upon return to the U.S. See Border Brokerage Co.
v. United States, 65 Cust. Ct. 50, C.D. 4052, 314 F. Supp. 788
(1970), appeal dismissed, 58 CCPA 165 (1970).
In Superscope, Inc. v. United States, 13 CIT ___, 727 F.
Supp. 629 (1989), the court held that certain glass panels of
U.S. origin that were exported, repacked abroad with certain
foreign components, and returned to the U.S. as part of
unassembled audio cabinets, were entitled to duty-free entry
under item 800.00, Tariff Schedules of the United States (TSUS)
(now subheading 9801.00.10, HTSUS), since the U.S. panel portion
of the imported article was "not 'advanced in value or improved
in condition . . . while abroad,' but [was] merely repacked."
Id. at 631. Although Superscope concerned the TSUS, not the
HTSUS, the decision is believed to be equally applicable to
similar situations arising under the HTSUS, since item 800.00,
TSUS, and relevant Schedule 8, TSUS, headnotes were carried over
virtually unchanged into the HTSUS.
We believe that the decision in Superscope is controlling
with respect to items 24040, 24050, 24060, and 24100. All of
them contain a lite stik which is manufactured and foil wrapped
in the U.S., then exported to Hong Kong for blister packaging
with foreign articles, and returned to the U.S. This mere
repackaging of the lite stiks with foreign articles neither
advances them in value nor improves them in condition.
Therefore, with respect to each of these items, a classification
allowance in duty may be made under subheading 9801.00.10, HTSUS,
for the cost or value of the U.S. manufactured lite stik. This
assumes that the documentation requirements of 19 CFR 10.1 are
met and that Customs at the port of entry is satisfied that the
lite stiks are, in fact, of U.S. origin.
Both items 24020 and 24030 contain lite stiks made from a
U.S. manufactured chemical exported to Japan in liquid form and
joined there with components believed to be of Japanese origin.
The completed lite stiks are sealed in foil wrappers in Japan and
exported to Taiwan where they are blister packaged. In both the
mini lite stiks and the lite stik fun ball, the chemical is the
only U.S. manufactured article. We believe that the operation
performed in Japan of incorporating the chemical into the plastic
tube to form the completed lite stik significantly advances the
value of the chemical. As a result of this operation, the
chemical becomes an integral part of a new and different
commercial article, the lite stik. Therefore, the U.S.
manufactured chemical will not qualify for a duty exemption
under subheading 9801.00.10, HTSUS, when items 24020 and 24030,
containing the lite stik, are imported into the U.S.
Since the operation in Japan of forming the lite stiks in
items 24020 and 24030 may involve an assembly operation, we will
consider whether the U.S. origin chemical inside the stiks is
eligible for the partial duty exemption under subheading
9802.00.80, HTSUS.
Subheading 9802.00.80, HTSUS, provides a partial duty
exemption for:
[a]rticles assembled abroad in whole or in part of
fabricated components, the product of the United
States, which (a) were exported in condition ready for
assembly without further fabrication, (b) have not lost
their physical identity in such articles by change in
form, shape or otherwise, and (c) have not been
advanced in value or improved in condition abroad
except by being assembled and except by operations
incidental to the assembly process such as cleaning,
lubricating and painting.
All three requirements of subheading 9802.00.80, HTSUS, must be
satisfied before a component may receive a duty allowance. An
article entered under subheading 9802.00.80, HTSUS, is subject to
duty upon the full value of the imported assembled article
less the cost or value of the U.S. components, upon compliance
with the documentary requirements of section 10.24, Customs
Regulations (19 CFR 10.24).
Since the cyalume substance is a chemical product in liquid
form as exported, it does not qualify as a "fabricated
component, the product of the U.S." The legislative history of
subheading 9802.00.80, HTSUS, makes it clear that the partial
duty exemption applies to U.S-made fabricated components which
are of types designed to be fitted together with other
components, and does not apply to chemical products, food
ingredients, liquids, gases, powders, etc. H.R. Rep. No. 342,
89th Cong., 1st Sess. 49 (1965). Therefore, the cyalume chemical
is not eligible for the partial duty exemption under subheading
9802.00.80, HTSUS, when items 24020 and 24030 are imported into
the U.S. Therefore, we need not reach the question of whether
the formation of the lite stiks in Japan constitutes an
acceptable assembly operation for purposes of this provision.
HOLDING:
Items 24050 and 24030 are classifiable in subheading
3823.90.2900, HTSUS, which provides for prepared binders for
foundry molds or cores; chemical products and preparations of the
chemical or allied industries (including those consisting of
mixtures or natural products)...other: mixtures containing 5
percent or more by weight of one or more aromatic or modified
aromatic substances: other. The applicable rate of duty is 3.7
cents per kilogram plus 13.6 percent ad valorem.
Items 24020 and 24040 are classifiable in subheading
9503.90.6000, HTSUS, which provides for other toys; reduced-size
("scale") models and similar recreational models, working or not;
puzzles of all kinds; and accessories thereof: other: other:
other toys (except models), not having a spring mechanism. The
applicable rate of duty is 6.8 percent ad valorem.
Item 24100 is classifiable in subheading 9505.90.6000,
which provides for festive, carnival or other entertainment
articles, including magic tricks and practical joke articles:
parts and accesories thereof: other: other. The applicable rate
of duty is 3.1 percent ad valorem.
Item 24060 is classifiable in subheading 7117.90.4000,
HTSUS, which provides for imitation jewelry: other: other: valued
not over 20 cents per dozen pieces or parts. The applicable rate
of duty is 7.2 ad valorem.
As indicated in subheading 9902.71.13, HTSUS, toy jewelry
provided for in subheading 7117.90.40 valued not over 5 cents per
piece and articles provided for in heading 9503 or subheading
9505.90 valued not over 5 cents per unit may enter the U.S. free
of duty.
A classification allowance in duty may be made under
subheading 9801.00.10, HTSUS, for the cost or value of the U.S.
manufactured lite stik in items 24040, 24050, 24060, and 24100.
In each of these items, the U.S. origin lite stik is merely
packaged abroad with foreign articles and returned to the U.S.
In items 24020 and 24030, which contain lite stiks made in
Japan from a U.S. origin chemical exported from the U.S. in
liquid form, the chemical will not qualify for a duty exemption
under subheading 9801.00.10, HTSUS, when these two items are
imported into the U.S. In addition, this chemical is not
eligible for the partial duty exemption under subheading
9802.00.80, HTSUS.
Sincerely,
John Durant, Director
Commercial Rulings Division
cc: Asst. Area Director, NIS
(N.Y. 849404 - 849421)