CLA-2 RR:CR:GC 966721 NSH
Port Director
11099 S. Lacienega Blvd.
Los Angeles, CA 90045
RE: Protest 2704-03-101491; Electronic learning system
Dear Port Director:
This is our decision on Protest 2704-03-101491, filed by counsel on behalf of LeapFrog Enterprises, Inc., against your classification, under the Harmonized Tariff Schedule of the United States (HTSUS), of the LeapPad® Learning System. The eighteen entries under protest were liquidated between March 21, 2003 and June 6, 2003, under subheading 8543.89.96, HTSUS, and this protest was timely filed on June 19, 2003. In reaching our conclusion, consideration was given to supplemental information provided via teleconference on February 9, 2004 and a written submission received on February 19, 2004.
FACTS:
The subject merchandise, the LeapPad® Learning System (hereinafter “Leap Pad”), is an education system for children ages four to ten, designed to teach the fundamentals of several academic subjects. This includes reading, phonics, vocabulary, foreign languages, geography, science and music. The system consists of two components, an electric pad powered by four “AA” batteries and one of a series of interactive books.
To operate the system, the book is placed on the electric pad and an attached electronic stylus is used to scan words and pictures within the book, resulting in various audible responses from the electronic pad in the form of words or music, dependent upon the undertaken exercise. Additionally, the stylus may be used in conjunction with the book to answer questions, execute commands, play games designed to test the child’s knowledge of the subject matter and play musical notes on pictures of instruments.
Supplementary interactive books on various subjects may be purchased separately. Information from the additional interactive books is programmed into the electric pad using a Read Only Memory cartridge that is included with the books. Although aspects of a book may be used without the electronic pad, such as printed text for reading, its full use as an interactive tutorial device cannot be applied without its electronic component.
Protestant claims classification under subheading 8543.89.92, HTSUS, which provides for electrical machines with translation or dictionary functions, or, in the alternative, under 9503.70.00, HTSUS, which provides for other toys, put up in sets or outfits.
ISSUE:
What is the tariff classification under the HTSUS of the Leap Pad Learning System?
LAW AND ANALYSIS:
Merchandise is classifiable under the HTSUS in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that classification shall be determined according to the terms of the headings and any relative section or chapter notes and, provided such headings or notes do not otherwise require, according to the remaining GRIs.
The Explanatory Notes (EN) to the Harmonized Commodity Description and Coding System represent the official interpretation of the tariff at the international level. The ENs, although neither dispositive or legally binding, facilitate classification by providing 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.
The HTSUS provisions under consideration are as follows:
8543 Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter; parts thereof:
Other machines and apparatus:
Other:
Other:
Other:
8543.89.92 Electrical machines with translation or dictionary functions; flat panel displays other than for articles of heading 8528
* * * * * *
Other
* * * * * *
9503 Other toys; reduced-size (“scale”) models and similar recreation models, working or not; puzzles of all kinds; parts and accessories thereof:
9503.70.00 Other toys, put up in sets or outfits, and parts and accessories thereof
Note 1(p) to Section XVI, which includes Chapter 85, states that the section does not cover articles of chapter 95. Therefore, before examining heading 8543, HTSUS, it must be determined whether the Leap Pad system is classified as a toy under heading 9503, HTSUS. The definition of the term “toy” is a question of law; it is not defined in the HTSUS and the courts consistently take their guidance from the common meaning of the term and relevant ENs.
EN 95.03 covers all types of toys and provides that heading 9503, HTSUS, covers toys intended essentially for the amusement of children or adults. EN 95.03 additionally states:
…Many of the toys of this heading are mechanically or electrically
operated.
These include:
…
Educational toys (e.g., toy chemistry, painting, sewing and knitting
sets).
…
Certain toys (e.g., electric irons, sewing machines, musical instruments, etc.) may be capable of a limited “use”; but they are generally distinguishable by their size and limited capacity from real sewing machines, etc.
In Minnetonka Brands v. United States, 110 F. Supp. 2d 1020, 1026 (CIT 2000), the court held that an object is a toy only if it is designed and used for amusement, diversion or play, rather than practicality. The court found its interpretation to be consistent with the holding in a prior and often cited case, Ideal Toy Corp. v. United States, 78 Cust. Ct. 28 C.D. 4688 (1977), which addressed the definition and treatment of the term “toy.” In Ideal, the Customs Court similarly held that when amusement and utility become locked in controversy, the question becomes one of determining whether the amusement is incidental to the utilitarian purpose, or the utility purpose is incidental to the amusement. Customs has repeatedly adhered to this standard as set forth in Ideal. See HQ 965734, dated September 5, 2002, HQ 088494, dated April 19, 1991 and HQ 088694, dated July 10, 1991.
The Minnetonka court concluded that heading 9503, HTSUS, is a “principal use” provision within the meaning of Additional U.S. Rule of Interpretation 1(a), HTSUS. Therefore, classification under the heading is controlled by the principal use of goods of that class or kind to which the imported goods belong in the United States at or immediately prior to the date of the importation. In determining whether the principal use of a product is for amusement, and thereby classified as a toy, Customs considers a variety of factors including general physical characteristics, the expectation of the ultimate purchaser, channels of trade, and the environment of sale (accompanying accessories, manner of advertisement and display).
In HQ 088494, Customs classified an educational device designed and marketed to teach children basic academic skills, including mathematics, vocabulary and music under 8543.89.96, HTSUS. Although certain aspects of the device, such as a “musical salute,” were considered amusing to children, Customs determined that the limited amusement value of the product was incidental to the utilitarian purpose of educational advancement that the product was designed for. See also Childcraft Education Corp. v. United States, 742 F.2d 1413 (1984).
In the instant case, although the system is marketed in toy stores, uses cartoon characters, music, humorous audible sounds, and on the back of the book it is referred to as the “#1 Educational Toy,” its main purpose is none other than practicality, to teach children fundamental educational skills. Customs believes that this educational purpose is paramount to the ultimate purchaser of the system. Therefore, despite aspects of the system’s marketing and notwithstanding the considerable amusement experienced by a child using the Leap Pad system, these factors are plainly secondary to the primary purpose of the system, which is to educate children. Any amusement experienced by the child is therefore meant to facilitate the learning process and thus make the system a better learning tool, but not to change its nature as a learning device. A similar analogy can be made by noting that although certain aspects of school are designed to be amusing to children, it cannot be disputed that the ultimate purpose of school is to educate a child. In addition, we note that the Leap Pad system is marketed on its box as a “Learning System” that “Teaches Fundamental Reading Skills” and is recognized as the “#1 Educational Learning System.”
Protestant has also asserted that because EN 95.03 provides for “educational toys,” the Leap Pad system should qualify as such. However, Customs believes that the limited provision referred to in the EN does not include the instant product. The toy chemistry, printing, sewing and knitting sets referred to in the EN are not intended to be learning devices, but rather semi-functional representations of the actual products, i.e. the toy representations have a limited capacity use whereby they are manufactured to permit the user to undertake the basic activities of the represented product. However, these representations are incapable of performing the inclusive functions of real chemistry, printing, sewing and knitting sets. In addition, these representations, because of their physical characteristics, allow for the user to role-play the actual activities of a fully functional product. In contrast, the Leap Pad system is distinguishable because it is not a limited use representation of another product that would allow for this type of role-play activity and, as previously mentioned, its primary use is as an educational system and not as a toy. It should be noted that many products designed for use by children and meant to be entertaining are not classifiable as toys. Furthermore, products similar to the Leap Pad system, which may provide greater amusement than certain educational toys, are still not classifiable as toys if that amusement is plainly secondary to the products’ primary purpose, unless the product is a limited use representation that provides for role-playing. In view of the foregoing, the Leap Pad system is not classifiable as a toy under heading 9503, HTSUS.
Protestant also claims that the Leap Pad system is properly classified under subheading 8543.89.92, HTSUS, as an electrical machine with translation or dictionary functions. To determine the proper subheading classification for the Leap Pad System, GRI 6 directs us to apply GRIs 1-5 once again at the subheading level.
Customs agrees with Protestant’s determination that the Leap Pad system is a GRI 3(b) set and that the electronic component imparts the essential character of the set. With respect to classifying proposed sets, GRI 3(b) provides, in pertinent part, that goods put up in sets for retail sale shall be classified as if they consisted of the material component which gives them their essential character. EN Rule 3(b) (X) states that, for purposes of this Rule, the term “goods put up in sets for retail sale” shall be taken to mean goods which:
consist of at least two different articles which are, prima facie, classifiable in different headings…;
consist of products or articles put together to meet a particular need or carry out a specific activity; and
are put up in a manner suitable for sale directly to users without repacking (e.g. in boxes or cases or on boards).
The Leap Pad system consists of two components which, if imported separately, are classifiable under different headings; the electronic pad is classified under heading 8543, HTSUS, and the accompanying book is classified under heading 4901, HTSUS. Both components are put up together to carry out the specific activity of educational exercises. Lastly, as imported, the Leap Pad system is packaged in a manner suitable for retail sale to the ultimate purchaser, without the need for repacking. As such, pursuant to GRI 3(b), the Leap Pad system is a set and is classified according to its essential character.
There is no question that the Leap Pad system has a limited translation ability. However, this translation ability, wherein six sentences of one to three words in length may be translated into four foreign languages, is only one of several academic subjects. And, given the limited extent of this translation ability, it is one of the least emphasized subject areas incorporated into the system. As such, the translation ability is one small aspect of the well-rounded curriculum of what is intended to be a learning device and therefore does not impart the essential character to the system.
Protestant cites to HQ 964779 to support its claim that the mere presence of the translation function necessitates classification of the Leap Pad system under subheading 8543.89.92, HTSUS. In HQ 964779, Customs classified two models of RCA “ebook” electronic reading devices wherein both models were preprogrammed with an eDictionary (Random House Webster’s Pocket American Dictionary, 3rd Ed.). Customs held that the “mere presence” of a dictionary function was all that was required for classification within the subheading. However, in that case, the only function of the ebooks was that of an electronic reader, of which the dictionary was an integral part. Therefore, the dictionary was substantial enough to the basic functioning of the electronic readers that it could affect classification. In this case, the Leap Pad system performs multiple educational functions, of which no single one defines its essential character. Therefore, the essential character is imparted by these activities as a whole, i.e. as a child’s learning device, and no one activity is controlling as to classifying the product. Furthermore, as previously discussed, the translation function is not only extremely limited, but also not intended to represent the system’s essential character.
In view of the foregoing, the Leap Pad system does not derive its essential character from its limited translation or dictionary functions within the meaning of subheading 8543.89.92, HTSUS, nor as a toy within the meaning of subheading 9503.70.00, HTSUS. Rather, the Leap Pad system is designed to be an educational device and it is that design purpose from which it derives its essential character. Educational devices are not specifically provided for in the HTSUS and therefore are classified under the residual subheading for electrical machines and apparatus that are not specified or included elsewhere in the chapter, 8543.89.96, HTSUS.
HOLDING:
The Leap Pad system is classified under subheading 8543.89.9600, HTSUS, as “[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: [o]ther: [o]ther.” The applicable rate of duty (2002) is 2.6 percent ad valorem.
You are instructed to DENY the protest.
In accordance with the Protest/Petition Processing Handbook (CIS HB, January 2002, pp. 18 and 21), 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 in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP 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