CLA-2 CO:R:C:M 956518 DWS
Mr. Paul S. Anderson
Sonnenberg, Anderson & Rodriguez
200 South Wacker Drive, 33rd Floor
Chicago, IL 60606
RE: Video Learning Aids Known As "Toby and His Wonder Bone";
and "Toby's Wonder Bone"; GRI 3(b); Set; Explanatory Notes
3(b)(VIII) and (X); T.D. 91-7; HQs 952560, 951507, and
088694; 9503.41.10; 8543.80.95
Dear Mr. Anderson:
This is in response to your letter of May 25, 1994, on
behalf of Tiger Electronics, Inc., concerning the classification
of video learning aids known as "Toby and His Wonder Bone" and
"Toby's Wonder Bone" under the Harmonized Tariff Schedule of the
United States (HTSUS).
FACTS:
The merchandise consists of "Toby and His Wonder Bone" and
"Toby's Wonder Bone" video learning aids, imported from China.
"Toby and His Wonder Bone" consists of a stuffed dog named
"Toby", a video cassette, and a plastic "Wonder Bone" module.
"Toby's Wonder Bone" consists of a video cassette and the "Wonder
Bone" module.
"Toby" is a brown, black, and white stuffed dog wearing a
satin jacket and a collar with a pendant. A computer chip is
housed inside the pendant which receives signals from the
accompanying video cassette when played on a video cassette
recorder (VCR). The chip transmits the signals received to a
mechanical apparatus housed within the body of the dog. Through
this transmittal, "Toby" is able to respond to actions, scenes,
and conversations appearing on the video cassette by speaking,
barking, moving its mouth, and wagging its tail.
The "Wonder Bone" unit consists of a plastic bone-shaped
module, containing three numbered key pads of different shapes
and colors with a cord and attachment harness. The "Wonder Bone"
is connected by fitting the harness over "Toby" and inserting an
attached cartridge into a slot located below the battery
compartment. As the instructions state, the "Wonder Bone" is to
be used by children ages 3 to 6 to answer questions posed by
"Toby" and other characters in the accompanying video cassettes
by pressing one of the three pads on the "Wonder Bone". The
"Wonder Bone" is used in this way in conjunction with "Toby" and
the video cassette as part of an educational and entertaining
interactive system designed for children.
The video cassette is manufactured in its entirety and
shrink-wrapped in the U.S., and then is exported abroad. In
China, the various components are packaged together in China, and
then are imported into the U.S. for retail sale.
The subheadings under consideration are as follows:
9503.41.10: [o]ther toys; . . . : [t]oys representing
animals or non-human creatures (for example,
robots and monsters) and parts and accessories
thereof: [s]tuffed toys and parts and
accessories thereof: [s]tuffed toys.
The general, column one rate of duty for goods classifiable
under this provision is 6.8 percent ad valorem.
8543.80.95: [e]lectrical machines and apparatus, having
individual functions, not specified or included
elsewhere in this chapter; parts thereof:
[o]ther machines and apparatus: [o]ther:
[o]ther.
The general, column one rate of duty for goods classifiable
under this provision is 3.9 percent ad valorem.
8524.23.10: [r]ecords, tapes and other recorded media for
sound or other similarly recorded phenomena,
including matrices and masters for the
production of records, but excluding products of
chapter 37: [m]agnetic tapes: [o]f a width
exceeding 6.5 mm: [v]ideo tape recordings.
The general, column one rate of duty for goods classifiable
under this provision is 0.66› per linear meter.
9801.00.10: [p]roducts of the United States when 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.
Goods classifiable under this provision receive duty-free
treatment.
ISSUES:
Whether "Toby and His Wonder Bone" and "Tony's Wonder Bone"
constitute sets under the HTSUS.
If so, whether the video cassette imparts the essential
character of each set.
Whether the U.S.-origin video cassettes are entitled to
duty-free treatment under subheading 9801.00.10, HTSUS, as
products of the U.S. when 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.
LAW AND ANALYSIS:
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.
The components in each set are classifiable as follows:
"Toby" is classifiable under subheading 9503.41.10, HTSUS, as a
stuffed toy; the "Wonder Bone" module is classifiable under
subheading 8543.80.95, HTSUS, as an other electrical apparatus,
having an individual function, not specified elsewhere under the
HTSUS; and the video cassette is classifiable under 8524.23.10,
HTSUS, as a video tape recording, of a width exceeding 6.5 mm.
The merchandise, as complete goods, are not described under
any headings of the HTSUS, and therefore cannot be classifiable
solely by authority of GRI 1. The merchandise is not
classifiable as toys under heading 9503, HTSUS, because, in our
view, it is not principally designed for the amusement of
children, but for the education of children. It is our position
that the "Toby and His Wonder Bone" and "Toby's Wonder Bone" are
educational learning devices and not toys. See HQ 088694, dated
July 10, 1991, and HQ 951507, dated July 2, 1992, for rulings in
which we distinguish educational devices from toys.
To determine whether "Toby and His Wonder Bone" and "Toby's
Wonder Bone" constitute sets, we must consult GRI 3(b). It
states that:
[m]ixtures, composite goods consisting of different
materials or made up of different components, and goods
put up in sets for retail sale, which cannot be classified
by reference to 3(a), shall be classified as if they
consisted of the material or component which gives them
their essential character, insofar as this criterion is
applicable.
In understanding the language of the HTSUS, the Harmonized
Commodity Description and Coding System Explanatory Notes may be
utilized. The Explanatory Notes, although not dispositive or
legally binding, provide a commentary on the scope of each
heading of the HTSUS, and are generally indicative of the proper
interpretation of these headings. See T.D. 89-80, 54 Fed. Reg.
35127, 35128 (August 23, 1989). Explanatory Note 3(b)(X) (p. 4)
states that:
[f]or the purposes of this Rule, the term "goods put up in
sets for retail sale" shall be taken to mean goods which:
(a) consist of at least two different articles which are,
prima facie, classifiable in different headings . . .;
(b) consist of products or articles put up together to meet
a particular need or carry out a specific activity; and
(c) are put up in a manner suitable for sale directly to
users without repacking (e.g., in boxes or cases or on
boards)."
It is our position that "Toby and His Wonder Bone" and
"Toby's Wonder Bone" are sets for classification purposes. They
fully satisfy all three requirements of Explanatory Note 3(b)(X),
HTSUS. They consist of at least two different articles which
are classifiable under different headings of the HTSUS; they
consist of articles put up together to meet a particular need,
namely the education of young children; and they are packaged for
sale directly to users without repacking.
We must now determine which of the articles imparts the
essential character of each set. Explanatory Note 3(b)(VIII)
(p. 4) states 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 a
constituent material in relation to the use of the goods.
Further, it is our position that the video cassettes impart
the essential character of "Toby and His Wonder Bone" and "Tony's
Wonder Bone". Without the video cassette, each set would not be
able to perform its intended use. The recording on the video
cassette performs the program which is necessary for the children
to use "Toby" the dog and the "Wonder Bone" module as marketed by
the importer. Children cannot respond to questions posed by
"Toby" without the video cassette playing. Therefore, the video
cassettes perform a primary function in relation to the use of
each set.
In T.D. 91-7, dated January 8, 1991, 25 Cust. Bull. 7, we
stated that:
[t]he "conditions and requirements" of subheading
9801.00.10, HTSUS are (1) that the article be a product of
the U.S.; and (2) that it not be advanced in value or
improved in condition by any means while abroad.
In Superscope, Inc. v. U.S., 13 CIT 997, 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 treatment under item 800.00,
Tariff Schedules of the United States (TSUS) (now subheading
9801.00.10 (HTSUS). This was based on the fact that 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.
Finally, it is our position that the video cassettes meet
the requirements of subheading 9801.00.10, HTSUS, and are
therefore classifiable therein. They are products of the U.S.,
and, under Superscope, they are not "advanced in value or
improved in condition by any means" while in China.
Consequently, the video cassettes are classifiable under
subheading 9801.00.10, HTSUS. See HQ 952560, dated October 20,
1992.
Because the video cassettes impart the essential character
of the subject sets, we must determine how the other articles
within each set are dutiable. In T.D. 91-7, we stated that:
. . . we conclude that the use of GRI 3(b) or, if
applicable, 3(c), to classify sets or mixed or composite
goods should be accomplished without reference to the
eligibility of certain of the materials or components
contained therein for subheading 9801.00.10, HTSUS,
treatment. . . Our position on this issue is best
understood by applying it to a specific example. A battery
charger kit is imported consisting of a battery charger of
U.S. origin and two rechargeable batteries and a charger
adapter module of Korean origin. . . Because we determine
that the battery charger gives the set its essential
character, the entire set is classified in the Chapter 1-97,
HTSUS, heading applicable to the battery charger. Next, it
is necessary to determine whether any of the items in the
set are entitled to free treatment under subheading
9801.00.10, HTSUS. In consideration of Superscope and U.S.
Note 1, Chapter 98, HTSUS, we find that only the battery
charger meets the "conditions and requirements" of this
tariff provision and, therefore, a classification allowance
(from the full value of the set) is made for the cost or
value of the charger alone. The practical effect of
applying GRI 3(b) in this manner is that the foreign-made
batteries and adapter are assessed duties at the rate
applicable to the battery charger as if this item were
ineligible for subheading 9801.00.10, HTSUS, treatment.
Therefore, for the purposes of the subject merchandise,
because the video cassettes impart the essential character of the
sets, the foreign-made articles of "Toby and His Wonder Bone" and
"Toby's Wonder Bone" are dutiable at the rate under subheading
8524.23.10, HTSUS. The sets in their entirety are also
classifiable under subheading 8524.23.10, HTSUS.
HOLDING:
"Toby and His Wonder Bone" and "Toby's Wonder Bone" are, for
classification purposes, sets, and, because the video cassette
imparts the essential character of each set, they are
classifiable under subheading 8524.23.10, HTSUS, as video tape
recordings, of a width exceeding 6.5 mm.
The U.S.-origin video cassettes are classifiable under
subheading 9801.00.10, HTSUS, as products of the U.S. when
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. Articles classifiable under this provision receive duty-free treatment provided that the
documentation requirement of section 10.1, Customs Regulations
(19 CFR 10.1), are satisfied.
Sincerely,
John Durant, Director
Commercial Rulings Division