CLA-2 OT:RR:CTF:TCM W968411 IDL
Stuart J. Kerzner, President
Watch Kit Corporation
20201 NE 15 Ct.
Miami, Florida 33179
Re: “My Watch Kit”; NY M84877 affirmed
Dear Mr. Kerzner:
This letter is in response to your request for reconsideration of New York Ruling Letter (NY) M84877, dated July 21, 2006, issued to you by the National Commodity Specialist Division, U.S. Customs and Border Protection (CBP). Your request for reconsideration consisted of an initial letter, dated August 1, 2006, and an amended letter, dated August 10, 2006. At issue in NY M84877 was the correct classification of the “My Watch Kit” under the Harmonized Tariff Schedule of the United States (HTSUS). We have reviewed NY M84877 and have found it to be correct. Our discussion on this matter is set forth below.
FACTS:
In NY M84877, the merchandise at issue was described as follows:
The My Watch Kit is an unassembled analog watch consisting of the following components: a watch case, a quartz movement with no jewels, a battery, a nylon watch strap, two analog watch dials in different colors, various small parts such as the winding stem, the crown small screws, the hour, minute and second hands, and tools consisting of a mini screwdriver, a setting tool, tweezers and a magnifier…. [T]he product will be sold to toy retailers….
In M84877, CBP took the position that the “My Watch Kit” could not be classified as an “educational toy of chapter 95, HTSUS, because it is not designed for amusement.” The “My Watch Kit” was classified in heading 9102, specifically, under subheading 9102.11.25, HTSUS, which provides for: “Wrist watches, pocket watches and other watches, including stop watches, other than those of heading 9101: Wrist watches, electrically operated, whether or not incorporating a stop watch facility: With mechanical display only: Having no jewels or only one jewel in the movement: With strap, band or bracelet of textile material or of base metal, whether or not gold- or silver-plated: Other”.
In arguing that the product is a toy in your request for reconsideration, you stated that the product is a plastic watch with a Velcro strap sold to toy outlets, rather than retailers of conventional watches or jewelry; that the product, as an unfinished article requiring an intricate assembly process, is an educational toy providing amusement and enjoyment; that retail prices for promotional watches in the U.S. range between $1.50 and $5.00, compared to the “My Watch Kit,” which retails at $19.95; and the kit includes specialized tools required for assembling the watch.
ISSUE:
Whether the “My Watch Kit” product described above is properly classified as a wrist watch under heading 9102, HTSUS, or as a toy under heading 9503, HTSUS?
LAW AND ANALYSIS:
Merchandise is classifiable under the HTSUSA in accordance with the General Rules of Interpretation (GRIs). The systematic detail of the HTSUS is such that most 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 2 through 6 may then be applied in order.
The 2009 HTSUS provisions under consideration are as follows:
9102 Wrist watches, pocket watches and other watches, including stop watches, other than those of heading 9101:
Wrist watches, electrically operated, whether or not incorporating a stop watch facility:
9102.11 With mechanical display only:
Having no jewels or only one jewel in the movement:
With strap, band or bracelet of textile material or of base metal, whether or not gold- or silver-plated:
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9102.11.25 Other. . . .
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9503.00.00 Tricycles, scooters, pedal cars and similar wheeled toys; dolls’ carriages; dolls, other toys; reduced-scale (“scale”) models and similar recreational models, working or not; puzzles of all kinds; parts and accessories thereof
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9503.00.0080 Other. . . .
Heading 9102, HTSUS, pertains to wrist watches, and, the “My Watch Kit” product, prima facie, is classifiable therein. Heading 9503, HTSUS, pertains to various types of toys. However, the term "toy" is not specifically defined in the tariff.
The court in Simon Marketing, Inc. and Perseco System Services, L.P. v. United States, 29 CIT 1111; 395 F. Supp. 2d 1280 (2005), held that “[t]oy watches are articles that resemble watches and can be manipulated to exhibit time, but do not keep or tell time on their own.” Although the subject watch is not a “toy watch,” the issue remains whether the article can be classified as “other toys” under heading 9503, HTSUS. Further, it has been CBP’s position that toys should be designed and used principally for amusement. Such design must be corroborated by evidence of the articles’ principal use. In order to be classified as a toy, an article needs to be principally used for amusement. When an article has the potential for both amusement and utility, the question of determining whether it is a toy becomes one of determining whether the amusement is incidental to the utilitarian purpose, or the utilitarian purpose is incidental to the amusement. Ideal Toy Corp. v. United States, 78 Cust. Ct. 28, C.D. 4688 (1977). See also, HQ 962595, dated June 4, 1999.
In HQ 963907, concerning a “POKÉMON Animated Clip Buddy” watch, we affirmed the decision in New York Ruling Letter E89321 that such article’s classification was determined by the watch function. Citing Kraft, Inc. v. United States, USITR, 16 CIT 483 (1992); G. Heilman Brewing Co. v. United States, USITR, 14 CIT 614 (1990); and United States v. Carborundum Co., 63 CCPA 98, C.A.D. 1172, 536 F. 2d 373 (1976), cert. denied, 429 U.S. 979, we stated in HQ 963907 the following:
The U.S. Court of International Trade (CIT) 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.
See also, HQ 960859, dated June 5, 1998, concerning a child safety seat with toy features, wherein we stated that “[c]learly, elements of the [article] are designed to amuse a child. However,…those design elements are secondary to the article’s primary purpose…”; and HQ 085267, dated May 9, 1990, concerning a drawing kit that included a jacket, wherein we held that “[a]lthough they may tend to amuse those who use them, such amusement is incidental to their primary purpose.”
In the instant case, while we recognize that the “My Watch Kit” has some potential for amusement, i.e., its educational assembly requirement, we find that, for classification purposes, such amusement is incidental to a utilitarian purpose. The “My Watch Kit” requires one-time assembly, and then appears and operates as a conventional watch designed to keep correct time. Upon initial assembly, its amusement potential ceases entirely, and its utilitarian purpose of keeping time commences for the duration of its functional life.
In addition, the “My Watch Kit” features a “Japanese quartz movement” and a 2-year warranty, both indicative of a utilitarian purpose. Further, contrary to the importer’s argument that the “My Watch Kit” is only sold to toy outlets, rather than retailers of conventional watches or jewelry, in an Internet search, we found at least one conventional watch and jewelry source that carries and sells the “My Watch Kit.” Finally, our research shows that the retail price for the “My Watch Kit,” or similar product, ranges between $17.95 and $30.00, while the retail price for a conventional children’s watch, i.e., without the “build-it-yourself” feature, varies considerably, from far less to far more expensive, and is an unreliable factor in the instant case.
Consistent with prior decisions concerning controversies involving “amusement” and “utility,” for classification purposes, we find that the watch’s primary purpose, appearance, general design, and marketing support the position that the merchandise primarily serves a utilitarian function.
GRI 2(a) states the following:
(a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled
[emphasis added]. The EN for GRI 2(a) states, in pertinent part, as follows: RULE 2 (a) (Articles presented unassembled or disassembled)
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(V) The second part of Rule 2(a) provides that complete or finished articles presented unassembled or disassembled are to be classified in the same heading as the assembled article….
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(VII) For the purposes of this Rule, “articles presented unassembled or disassembled” means articles the components of which are to be assembled either by means of fixing devices (screws, nuts, bolts, etc.) or by riveting or welding, for example, provided only assembly operations are involved.
No account is to be taken in that regard of the complexity of the assembly method. However, the components shall not be subjected to any further working operation for completion into the finished state.
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GRI 2(a) is applicable in classifying the “My Watch Kit” because it is an
“article complete or finished…presented unassembled or disassembled,” and requires only assembly.
GRI 3 provides that classification of goods classifiable under two or more headings shall be effected as follows:
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.
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 [Rule] 3(a), shall be classified as if they consisted of the material or component which gives them their essential character….
The EN for GRI 3(b) states, in pertinent part, as follows:
* * *
In all these cases the goods are to be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.
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(X) For 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).
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The “My Watch Kit” is made up of different articles classified in different headings (the watch and the four tools) and is put up in a manner suitable for sale directly to users without repacking. We also conclude that the watch and tools are put up together to meet a particular need or carry out a specific activity, specifically to build the watch. We find this type of kit similar to a scrapbook kit, which consists of scrapbook materials and tools for the creation of the scrapbook. See, e.g. HQ W968385, dated May 16, 2007, and NY L84420, dated May 23, 2005. Therefore GRI 3(b) is applicable. The essential character of the product is that of a wrist watch, rather than the specialized tools that are included in the kit for the purpose of assembling the watch.
Accordingly, the “My Watch Kit” is classified as a wrist watch under heading 9102, HTSUS.
HOLDING:
By application of GRI 2(a) and 3(b), the “My Watch Kit” is classified in
heading 9102, HTSUS, and is specifically provided for under subheading 9102.11.25, HTSUS, as: “Wrist watches…, other than those of heading 9101: Wrist watches, electrically operated, whether or not incorporating a stop watch facility: With mechanical display only: Having no jewels or only one jewel in the movement: With strap, band or bracelet of textile material or of base metal, whether or not gold- or silver-plated: Other.” The 2009 column one, general rate of duty is “40¢ each + 8.5% on the case + 14% on the strap, band or bracelet + 5.3% on the battery.”
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web, at http://www.usitc.gov.tata/hts/.
EFFECT ON OTHER RULINGS:
NY M84877, dated July 21, 2006, is affirmed.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division