CLA-2 RR:CR:GC 961531 MMC
Mr. Joseph R. Hoffacker
Barthco Trade Consultants, Inc.
7575 Holstein Avenue
Philadelphia, PA 19153
RE: PD C84962, PD C84963 affirmed; Key chains
Dear Mr. Hoffacker:
This is in reference to your March 23, 1998, letter
requesting reconsideration, on behalf of Raymond Geddes and
Company, Inc., of rulings PD C84962 and PD C84963 both dated
March 13, 1998, concerning the classification of adorned key
chains under the Harmonized Tariff Schedule of the United States
(HTSUS). Samples were submitted for our examination.
FACTS:
The subject articles are identified as item nos. 3709, 3726
and 3727. Each consists of a steel chain with a steel key loop
attached to one end and a different adornment attached to the
other end. All of the subject articles are displayed in the
"Key Chains" section of the Raymond Geddes and Company, Inc.,
catalog. The adornments are described as follows:
1) Item # 3709 Puffy Pets Key Chain consists of a rubber-like ball approximately 50 mm in diameter with a smiley face
and yarn hair. The catalog describes these articles as
"[p]uffy Pets Key Chain: Three cheers for pompom pets. Tiny
puff balls comprise these cuddly and colorful key chains
shaped like dogs and cats. Puffy Pets keep keys on a short
leash! Assorted colors. 12 per bag. Costs: $5.50 dozen
(.46 each) Retail: .69."
2) Item # 3726 Stretch N Smile Key Chain consists of a
rubber-like ball with a smile face and yarn hair. The ball
measures 50mm in diameter. The catalog describes the
articles as "[f]rustration alleviation is just one of this
key chain's special talents. Colorful smiley faces with
yarn hair are stretchable, squeezable, squishable, and
scrunchable. If you can squish it out, then Stretchy Ball
can take it! Six assorted colors. 12 on a card. Costs:
$5.50 dozen (.46 each) Retail: .69."
3) Item # 3727 Glow-In-The-Dark Bendable Alien Key Chain
consists of a plastic-like bendable alien figurine. The
catalog describes the component as "[w]here were you when
the lights went out? Never mind that. Where are your keys?
They're easy to find when they're on a glowing alien.
Poseable key chains come in blue, yellow and green. 12 on a
card. Cost: $8.90 dozen (.74 ea) Retail: .99."
In PD C84963 and PDC84962, the subject articles were held to
be classifiable under subheading 7326.20.00, HTSUS, which
provides for [o]ther articles of iron or steel wire: [o]ther.
You contend that they are classifiable as toys of heading 9503,
HTSUS.
ISSUE:
Whether the subject adorned key chains are classifiable as
toys for tariff purposes.
LAW AND ANALYSIS:
Classification under the HTSUS is made in accordance with
the General Rules of Interpretation (GRIs). The systematic
detail of the Harmonized System is such that virtually all goods
are classified by application of GRI 1, that is, according to the
terms of the headings of the tariff schedule and any relative
Section or Chapter Notes. In the event that the goods cannot be
classified solely on the basis of GRI 1, and if the headings and
legal notes do not otherwise require, the remaining GRIs may then
be applied. The headings under consideration are as follows:
9503 Other toys; reduced-size ("scale") models and
similar recreational models, working or not;
puzzles of all kinds; parts and accessories
thereof
7326 Other articles of iron or steel
The term "toy" is not defined in the HTSUS. However, in
understanding the language of the HTSUS, the Explanatory Notes
(ENs) of the Harmonized Commodity Description and Coding System
may be utilized. The ENs, although not dispositive or legally
binding, provide a commentary on the scope of each heading, and
are generally indicative of the proper interpretation of the
HTSUS. See, T.D. 89-90, 54 FR 35127, 35128 (August 23, 1989).
The ENs to Chapter 95, HTSUS, state, in pertinent part, that
"[t]his Chapter covers toys of all kinds whether designed for the
amusement of children or adults." Although not set forth as a
definition of "toys," we have interpreted the just-quoted passage
from the ENs as equating "toys" with articles "designed for the
amusement of children or adults," although we believe such design
must be corroborated by evidence of the articles' principal use.
When the classification of an article is determined with
reference to its principal use, Additional U.S. Rule of
Interpretation 1(a), HTSUS, provides that, in the absence of
special language or context which otherwise requires, such 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. In other words, the
article's principal use at the time of importation determines
whether it is classifiable within a particular class or kind.
While Additional U.S. Rule of Interpretation 1(a), HTSUS,
provides general criteria for discerning the principal use of an
article, it does not provide specific criteria for individual
tariff provisions. However, the U.S. Court of International
Trade has provided factors, which are indicative but not
conclusive, to apply when determining whether merchandise falls
within a particular class or kind. They include: general
physical characteristics, the expectation of the ultimate
purchaser, channels of trade, environment of sale (accompanying
accessories, manner of advertisement and display), use in the
same manner as merchandise which defines the class, economic
practicality of so using the import, and recognition in the trade
of this use. United States v. Carborundum Company, 63 CCPA 98,
C.A.D. 1172, 536 F. 2d 373 (1976), cert. denied, 429 U.S. 979.
The general physical characteristics of the articles
indicates that they are used as key chains. They have all the
necessary elements of a key chain. Furthermore, the chain and
ring are made of strong durable metal. The expectation of the
ultimate purchaser and environment of sale also indicates that
the articles are principally used as key chains. The catalog
indicates that the articles are designed and should be used as
holders for keys, not merely for amusement. While the key chains
do have elements which are amusing, we are of the opinion that,
based upon the factors discussed above, they are not
principally designed to amuse, but rather to hold keys. As such,
they do not fall within the scope of the tariff term "toy".
No one heading of the HTSUS specifically provides for the
subject key chains as a whole. The various adorned figures are
described by heading 9505, HTSUS. The ring and chain components
are described by heading 7326, HTSUS, as an article of iron or
steel. As no one heading describes the articles as a whole, the
adorned key chains are considered composite goods consisting of
both toy and metal components. As such, they cannot be
classified according to GRI 1.
GRI 2(a) is inapplicable because it applies to incomplete or
unfinished articles, and the key chain is imported in a finished
complete condition. GRI 2(b) states, in pertinent part, that any
reference in a heading to a material or substance shall be taken
to include a reference to mixtures or combinations of that
material or substance with other materials or substances. The
classification of goods consisting of more than one material or
substance shall be according to the principles of GRI 3.
GRI 3(a) states that when, by application of rule 2(b) or
for any other reason, goods are, prima facie, classifiable under
two or more headings, 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 or to part only of the items in a set
put up for retail sale, 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. As
the subject key chains are a composite good, we must apply rule
3(b), which provides that composite goods are to be classified
according to the component that gives the good its essential
character.
EN VIII to GRI 3(b) explains 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 the constituent material in relation to
the use of the goods." We must determine whether the plastic
figurines or the metal key ring imparts the essential character
to these articles.
You claim that the essential character of the key rings is
imparted by the figures because they comprise the substantial
majority of the weight, value and bulk of the article. We
disagree. We believe that, in this instance, these factors do
not resolve the issue of essential character. It is the role of
the constituent materials in relation to the use of the goods
that imparts the essential character.
Customs has consistently held that, when a key chain has
both a functional and non- functional component it is the
functional component which provides the article's essential
character. See Headquarters Ruling Letter (HRL) 950636, dated
January 16, 1992. Further, in HRL 960118 dated July 28, 1997, we
determined that a functional key chain/ring, not a voice
synthesizer comprised a key ring's essential character. See
also, HRL 959473 dated April 8, 1997 and HRL 958452 dated July 3,
1996.
Concerning the subject articles, we are of the opinon that
it is the ring/chain component which makes up the utilitarian
portion of the article. The figures are primarily placed at the
end of the key chain for decorative purposes. Moreover, these
articles are purveyed to the public, displayed and even named
"key chains". We believe that all of the articles will be used
predominantly to hold keys. Finally, we note that you cite
several New York Ruling Letters in which Customs determined that
the essential character of a toy/key chain combination was the
toy component. It is our understanding that in those instances,
the manipulative play value of the toy so outweighed any
potential functional aspect of the key chain, that the toy
component provided the article with its essential character.
Such is not the case in this instance. We therefore, find that it
is the metal key ring component that imparts the essential
character of the key chains As such they are classifiable in
subheading 7326.20.0050, HTSUS, as: [o]ther articles of iron or
steel: [a]rticles of iron or steel wire: [o]ther, with a column
one duty rate of 4.3 percent ad valorem. PD C84962 and PD
C84963 are affirmed.
HOLDING:
The key chains are classifiable in subheading 7326.20.0050,
HTSUS, as: [o]ther articles of iron or steel: [a]rticles of iron
or steel wire: [o]ther, with a column one duty rate of 4.3
percent ad valorem. PD C84962 and PD C84963 are affirmed.
Sincerely,
John Durant, Director
Commercial Rulings Division