CLA-2 CO:R:C:F 951281 LPF
Jerrold E. Anderson, Esq.
Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, IL 60661-3693
RE: "Natures Watch" toy set; Subheading 9503.70.80; Other toys,
put up in sets; Subheading 9902.71.13; Interpretation of the
term "unit" for tariff purposes; Mattel; Subheading
9801.00.10; Superscope; Applicability of duty exemption to
U.S. origin inserts
Dear Mr. Anderson:
This is in response to your letter of January 27, 1992
submitted on behalf of M-B Sales, regarding the proper
classification, under the Harmonized Tariff Schedule of the
United States Annotated (HTSUSA), of a "Natures Watch" toy shovel
and rake set. You submitted a sample with your request for a
binding ruling.
FACTS:
The "Natures Watch" toy set, imported from China, consists
of a plastic shovel, rake and one detachable plastic extension
handle. The handle may be used interchangeably with the rake or
shovel. The set will be packaged in clear polybags with an
instruction insert. The articles, by design, have little
functional use and are clearly intended for children's play
activities.
An insert, which is printed in the United States, is sent
abroad for packaging with the toy sets. The inserts are not
altered in any way while packaged outside the U.S.
Customs agrees with the inquirer's submission that the
"Natures Watch" toy set is classifiable in subheading 9503.70.80,
as other toys; other toys put up in sets or outfits...: other:
other.
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ISSUES:
Whether, for purposes of duty-free treatment under
subheading 9902.71.13, HTSUSA, the term "unit" means each
separate article or individual toy making up a toy set or means
the entire retail package of a toy set.
Whether the inserts of U.S. origin will qualify for the duty
exemption under subheading 9801.00.10, HTSUSA, when returned to
the U.S. with the toy sets.
LAW AND ANALYSIS:
Definition of a "unit" under subheading 9902.71.13, HTSUSA
If subject to a general column one rate of duty, subheading
9902.71.13 provides, in pertinent part, that articles (except
parts) provided for in heading 9503, valued not over five cents
per unit, are duty free.
In the case of Mattel, Inc. v. United States, Appeal No. 90-
1279 (Fed. Cir., decided February 13, 1991) the U.S. Court of
Appeals for the Federal Circuit, in reversing the decisions of
the U.S. Court of International Trade and the U.S. Customs
Service, interpreted the term "unit" in item 912.20 Tariff
Schedules of the United States (TSUS) as meaning each separate
article or individual toy, rather than meaning "retail package."
The inquirer contends that the decision of the Mattel court and
its interpretation of the term "unit" controls in the instant
situation. Customs disagrees.
The HTSUSA, which went into effect January 1, 1989, is a new
tariff system with rules of interpretation and application
somewhat different from the TSUS. As noted in H. Conf. Rep. No.
576, p. 550, decisions by the Customs Service and courts
interpreting nomenclature under the TSUS are not deemed
dispositive in interpreting the HTSUSA. Nevertheless, on a case-
by-case basis, TSUS decisions should be considered instructive,
in interpreting the HTSUSA, particularly where the nomenclature
previously interpreted in those decisions remains unchanged and
no dissimilar interpretation is required by the text of the
HTSUSA. In this instance, a dissimilar interpretation is
indicated by the text of the HTSUSA, which, contrary to the TSUS,
includes a subheading providing for other toys, put up in sets or
outfits. Therefore, we do not find the court's interpretation of
the nomenclature under the TSUS instructive in this case.
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The inquirer cites Headquarter's Ruling Letter (HRL) 085918,
issued March 20, 1990, as proof that the term "unit" should be
construed to mean each separate article or individual toy in the
instant case. Customs' determination in HRL 085918 is inapposite
to the instant situation. That ruling involved the
classification of doll wigs imported individually into the U.S.,
which were not classifiable as "goods put up in sets for retail
sale" pursuant to GRI 3(b), HTSUSA, nor classifiable as "other
toys, put up in sets" pursuant to subheading 9503.70, HTSUSA. In
this regard, HRL 086812, issued May 16, 1990, which incorporated
a GRI 3(b) analysis, considered boxes containing multicolored
crayons, an eraser and a crayon sharpener to be treated as one
unit for tariff purposes. Customs' interpretation, in HRL
086812, of the term "unit" to mean the entire retail package,
controls in the instant case.
Duty-free treatment under subheading 9801.00.10, HTSUSA
Subheading 9801.00.10, HTSUSA, provides for the free entry
of products of the U.S. that are exported and returned without
having been advanced in value or improved in condition by any
process or manufacture or other means while abroad, provided the
documentary requirements of section 10.1, Customs Regulations (19
CFR 10.1) are met.
In Superscope, Inc. v. United States, 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 entry
under item 800.00, TSUS, (now subheading 9801.00.10, HTSUSA),
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 the Superscope
case concerned the TSUS, not the HTSUSA, the decision is
considered equally applicable to similar situations arising under
the HTSUSA, since item 800.00, and relevant Schedule 8, TSUS,
headnotes were carried over virtually unchanged into the HTSUSA.
This is corroborated by numerous HRL's decided under the HTSUSA.
The decision in Superscope is controlling in regard to the
facts of the instant case. The mere repackaging of the U.S.
manufactured inserts with the foreign articles composing the toy
set neither advances the inserts in value nor improves them in
condition. Therefore, a classification allowance in duty may be
made under subheading 9801.00.10, for the cost or value of the
inserts which are merely packaged abroad in the toy sets and
returned. This presumes that the documentation requirements of
19 CFR 10.1 are met and that the district director of Customs at
the port of entry is satisfied that the items are, in fact, of
U.S. origin.
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HOLDING:
The "Natures Watch" toy set is classifiable in subheading
9503.70.80, HTSUSA, as "Other toys;...Other toys, put up in sets
or outfits, and parts and accessories thereof: Other: Other."
The general column one rate of duty is 6.8 percent ad valorem.
As to the application of subheading 9902.71.13, HTSUSA,
Customs posits that the term "unit" is interpreted to mean the
entire retail package, rather than the separate articles or
individual toys which compose the toy set. Duty-free treatment
of the toy set is determined accordingly and does not apply to
the instant merchandise.
A classification allowance in duty may be made under
subheading 9801.00.10, HTSUSA, for the cost or value of the
inserts that are merely packaged abroad with the toy sets and
returned to the U.S.
Sincerely,
John Durant, Director
Commercial Rulings Division