CLA-2 R:C:M 957933 DFC
District Director of Customs
511 Broadway
Room 0198
Portland OR 97209
RE: Protest 2904-95-100084; Clip/clock, floating
Dear District Director:
This is in response to Protest 2904-95-100084, filed by
surety for the importer, concerning your action in classifying
and assessing duty on an article referred to as a "floating
clip/clock" produced in China. A sample was submitted for
examination.
FACTS:
The merchandise, identified as item AT8706, is a paper clip
holder with a magnet built inside the top and bottom plastic
cartridges. A digital clock with a watch movement is also
contained in one of the cartridges. Paper clips can "float"
between the two cartridges connected on one side by a clear
plastic piece.
The entry covering this merchandise was liquidated on
October 14, 1994, under subheading 9105.99.50, Harmonized Tariff
Schedule of the United States (HTSUS), which provides for other
clocks, other, other, other, valued not over $5 each. The
applicable rate of duty for this provision was 15 cents each plus
6.4% ad valorem. When the importer refused to pay the liquidated
duties demand was made on the surety for payment on January 25,
1995. A protest was timely filed by the surety on March 20,
1995, against your liquidation of the entry. See 19 U.S.C.
1514(c)(3).
Protestant maintains that the merchandise is properly
classifiable under subheading 3926.10.00, HTSUS, which provides
for other articles of plastics, office or school supplies. The
applicable rate of duty for this provision was 5.3% ad valorem.
ISSUE:
Does the merchandise qualify as a composite good within the
purview of GRI 3(b), HTSUS?
What component of the floating clip/clock imparts the
essential character thereto?
LAW AND ANALYSIS:
Classification of goods under the HTSUS is governed by the
General Rules of Interpretation (GRI's). 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 GRI's]." In other words, classification is
governed first by the terms of the headings of the tariff and any
relative section or chapter notes.
The competing provisions are as follows:
3926 Other articles of plastics and articles of other
materials of heading 3901 to 3914
3926.10.00 Office or school supplies
* * *
9103 Clocks with watch movements, excluding clocks of
heading 9104:
9103.10 Battery powered:
9103.10.20 With opto-electronic display only . . . . .
* * *
9105 Other clocks:
* * *
9105.99 Other:
* * *
Other:
9105.99.50 Valued not over $5 each . . . . .
Note 3 to Chapter 91, HTSUS, reads, as follows:
3. For the purposes of this chapter, the expression
"watch movements" means devices regulated by a
balance wheel and hairspring, quartz crystal or
any other system capable of determining intervals
of time, with a display or a system to which a
mechanical display can be incorporated. Such
watch movements shall not exceed 12 mm in
thickness and 50mm in width, length or diameter.
The Harmonized Commodity Description and Coding System
Explanatory Notes (EN) to the HTSUS, 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 the HTSUS. See, T.D. 89-80, 54 FR 35128
(August 23, 1989).
The EN to heading 91.05 at page 1544 , reads in pertinent
part, as follows:
This heading covers timekeepers not classified
elsewhere in the Chapter, essentially constructed for
indicating the time of day; they must, therefore, have
movements other than watch movements. Clocks and alarm
clocks with watch movements (as defined by Chapter Note
3) are excluded (heading 91.03).
Inasmuch as the digital clock contained in the floating
clip/clock has a watch movement described in Note 3 to Chapter
91, HTSUS, it is precluded from classification under subheading
9105.99.50, HTSUS, noting the above-cited EN.
GRI 2(b), HTSUS, provides in part that "[t]he classification
of goods consisting of more than one material or substance shall
be according to the principles of Rule 3."
GRI 3, HTSUS, provides, in pertinent part, as follows:
3. When by application of Rule 2(b) or for any other
reason, goods are prima facie classifiable under two or
more headings, classification shall be effected as
follows:
(a) 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. . . 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.
(b) Mixtures, 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.
(c) When goods cannot be classified by reference to
3(a) or 3(b), they shall be classified under the
heading which occurs last in numerical order among
those which equally merit consideration.
EN (IX) to GRI 3(b) at page 4, reads, as follows:
(IX) For the purposes of this Rule, composite goods made up
of different components shall be taken to mean not only
those in which the components are attached to each
other to form a practically inseparable whole but also
those with separable components, provided these
components are adapted one to the other and are
mutually complementary and that together they form a
whole which would not normally be offered for sale in
separate parts.
The floating clip/clock is not prima facie classifiable
under heading 8505, HTSUS, which provides for electro-magnets,
permanent magnets and articles intended to become permanent
magnets after magnetization. EN 85.05 to Section XVI at page
1314 reads, in pertinent part, as follows:
The heading does not cover:
(b) Electro-magnets, permanent magnets or magnetic
devices of this heading, when presented with
machines, apparatus, toys, games, etc., of which
they are designed to form part (classified with
those machines, apparatus, etc.).
The floating clip/clock is prima facie classifiable under
subheading 3926.10.00, HTSUS, as other articles of plastics,
office or school supplies, or under subheading 9103.10.20, HTSUS,
as clocks with watch movements.
Composite goods are classifiable as if they consisted of the
component which gives them their essential character. EN VIII to
GRI 3(b), at page 4, reads as follows:
(VIII) The factor which determines essential character
will vary as between different kinds of goods. It
may, for example, be determined by the nature of
the materials or component, its bulk, quantity.
weight or value, or by the role of a constituent
material in relation to the use of the goods.
Protestant argues that the floating clip/clock's primary
purpose is as a paper clip holder of a kind used in the office or
school. The clock located at the top of the paper clip holder is
too small to be of significance and is merely a decorative
feature. Although the floating clip/clock functions as a paper
clip holder, the clock performs a time keeping function which is
equally significant as the clip holding function. Thus, we are
unable to determine whether the clock or the plastic portion of
the device imparts its essential character. Consequently,
following GRI 3(c), HTSUS, classification under subheading
9103.10.20, HTSUS, is appropriate as " . . . the heading which
occurs last in numerical order among those which equally merit
consideration."
HOLDING:
The floating clip/clock is dutiable at the rate of 3.9% ad
valorem on the movement and case plus 5.3% ad valorem on the
battery.
Since reclassification of the merchandise as indicated above
will result in a lower rate of duty than claimed, you are
instructed to allow the protest in full. In accordance with
Section 3A(11)(b) of Customs Directive 099 3550-065, dated August
4, 1993, Subject: Revised Protest Directive, this decision
together with the Customs Form 19, should be mailed by your
office 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 take steps to make the decision
available to Customs personnel via the Customs Rulings Module in
ACS and the public via the Diskette Subscription Service, Freedom
of Information Act and other public access channels.
Sincerely
John Durant, Director
Commercial Rulings Division