Chain, key, novelty w/pocket memo pad and pencil

HQ 089282 August 2, 1991 CLA-2 CO:R:C:M 089282 DFC CATEGORY: Classification TARIFF NO.: 7326.90.90 Mr. Steven M. Kott Manager Foreign Merchandise Services K-Mart Apparel Corporation 7373 West Side Avenue North Bergen, New Jersey 07047-6411 RE: Chain, key, novelty w/pocket memo pad and pencil Dear Mr. Kott: In a letter dated March 19, 1991, you inquired as to the tariff classification under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA) of a novelty key chain with a suede covered pocket memo pad and pencil produced in Taiwan. A sample was submitted for examination. FACTS: The merchandise involved consists of a split ring key chain, a 1-1/2 inch long wood pencil, and a suede covered miniature memo pad and paper. These components form an article which is a novelty key chain. This article measures 2.25 inches x 2 inches when contained in the suede tri-fold container. The memo pad is bound on one side by an adhesive material and is inserted in a loop holder within the cover. The memo paper consists of approximately ten sheets of paper which have an adhesive material on the back of each sheet and are inserted in a slit in the interior back cover. The suede cover is specially shaped and fitted to contain only the memo paper. The article is identified as style no. 2315 and is a product of Taiwan. -2- ISSUE: What component imparts the essential character to the article? LAW AND ANALYSIS: Classification of goods under the HTSUSA 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 taken in order]." In other words, classification is governed first by the terms of the headings of the tariff and any relative section or chapter notes. Inasmuch as the product is composed of different materials, GRI 3 is applicable. Its relevant portions read 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, . . . 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. -3- GRI 3(b), is relevant here because GRI 3(a) cannot be used in determining classification of the product. The Explanatory Notes to the HTSUSA (EN), although not dispositive, should be looked to for the proper interpretation of the HTSUSA. See 54 FR 35128 (August 23, 1989). EN (IX) to GRI 3(b) at page 4 reads as follows: (IX) For the purpose 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. It is our opinion that the components involved meet the definition of composite goods. They are separable items e.g., a pencil, a memo pad and paper, a key ring chain and a suede tri- fold cover. They are adapted for use together. Specifically, the suede cover is designed to hold the pencil, memo pad and paper and has a circular hole to which the key ring chain is attached. Additionally, these components are mutually complementary and are not normally offered for sale separately. 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 material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods. It is our observation that the metal key ring with chain gives the product its essential character. Our reason for this conclusion is that it is fairly obvious that the predominant use of this product will be as a key chain. The presence of the other components comprising the product is secondary to the key chain. Further, even if the paper and pencil were consumed and not replaced, the key chain could still be used. -4- The product is classifiable under subheading 7326.90.90, HTSUSA, as other articles of iron or steel, other, other, with duty at the rate of 5.7 percent ad valorem. HOLDING: The metal key ring chain imparts the essential character to the product. The composite article consisting of a split ring key chain, a pencil, and a suede covered miniature memo pad and paper is classifiable under subheading 7326.90.90, HTSUSA. Sincerely, John Durant, Director Commercial Rulings Division 6cc AD NY Seaport 1cc Kevin Gorman NY Seaport 1cc DD Los Angeles 1cc DD Chicago 1cc DD Dallas 1cc DD Savannah 1cc DD Charleston 1cc Port Dir Columbus Ohio 1cc Port Dir Atlanta 1cc Legal Reference cahilllibrary/peh 089282