Protest and Application for Further Review No: 3901-07-100784; Light Wands and Key Chains

HQ H026659 January 11, 2010 CLA-2 OT:RR:CTF:TCM H026659 TNA CATEGORY: Classification TARIFF NO.: 9503.00.0080; 7326.20.00 Port Director, Chicago Service Port U.S. Customs and Border Protection 9915 Bryn MawrRosemont, IL 60018 Re: Protest and Application for Further Review No: 3901-07-100784; Light Wands and Key Chains Dear Port Director: The following is our decision regarding Protest and Application for Further Review No. 3901-07-100784, timely filed on June 21, 2007 by counsel on behalf of Buztronics, Inc., regarding the tariff classification of light wands and key chains under the Harmonized Tariff Schedule of the United States (HTSUS). FACTS: The merchandise at issue consists of plastic light wands and light wand key chains that allow for logos to be emblazoned on the sides of the light wands as a form of advertising. These products are designed to be given away as promotional items at tradeshows, parties and similar functions. The first type of light wand, identified as “Wand Tri-Glow Buzwands,” or Item Number 1041038, is an eight-inch clear plastic light stick that contains three different-colored LED lights in a brick-like pattern that perform three different functions: flashing, chasing and steady light. The lights are activated by pressing a button on the wand, which Buztronics contends diminishes the intensity of the light that the wand emits. The Wand Tri-Glow Buzwands are attached to a breakaway safety lanyard. The other type of light wand, also identified as the Wand Tri-Glow Buzzwand, Item Number 1041109, is similar to Item Number 1041038 but it is three inches long and contains only two different colored LED lights. This wand also has a breakaway safety lanyard. The “Wand Sparkling Fiber Optic,” Item Number 1037473, is seven inches long and features small fiber optic strands that glitter with the colors of the rainbow when waved back and forth. The subject merchandise also includes various keychains which are composed of light wands that are attached to steel key rings which can be worn on belt loops or backpacks by using the attached safety hook. The first type of key chain, identified as Mini BuzWands, Item Number 1037435, consists of a battery-operated wand that measures 4” in length. It contains a clear or translucent plastic shaft that measures 1.4” in length and is set into a metal handle. Attached to the end of the handle is a key ring and safety hook. It has a button-type on-off switch that incorporates an LED and a battery. Pressing the button activates the wand. Buztronics’ description of the Mini Buzwands states that when activated, the wands create a pulsating, pattern-changing effect. The company again states that the plastic shafts disperse the light rather than project a concentrated beam of light. The 7-Colour Bubble Wand Keychain, Item Number 1037355, consists of a 1 ½ inch translucent plastic shaft embedded with tiny bubbles that cycle through red, green, and blue light set into a metal base containing batteries, an LED and circuit and an on/off button. The key ring and safety hook is attached to the end of the surface of the base. The “Mission Space Wand Key Chain,” Item Number 1042928, consists of a 1 ½ inch clear plastic shaft set into a plastic base in the shape of a space ship with a key ring and safety hook attached to it. When the light on the space ship is activated, the item emits a continuous pulsating light designed to simulate a burst of rocket power from the plastic shaft of the space ship. The DisneyWorld Star Wars Plastic Light Wands Keychain, Item Numbers 1042776 and 1042777, comes in two different forms: a green lightwand in the shape of Yoda and a blue lightwand in the shape of Anakin. These light wands are intended to represent the light sabers from the Star Wars films. They consist of a 3 ½ to 4 inch clear or translucent plastic shaft set into a metal base containing batteries, an LED and a circuit. When activated, the item emits a continuous pulsating light. The key ring and safety hook is attached to the base of the item. The merchandise was entered in heading 8541, HTSUS, on May 3, 2006, which provides for “diodes, transistors and similar semiconductor devices; photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels; light-emitting diodes; mounted piezoelectric crystals; parts thereof.” The port liquidated the light wands and the key chains in heading 7117, HTSUS, which provides for “imitation jewelry.” Protestant now claims that the merchandise is classified in heading 9503, HTSUS, as toys, or, alternatively, in heading 8513, HTSUS, as flashlights. ISSUE: Whether the light wands are classified as imitation jewelry of heading 7117, HTSUS; as toys of heading 9503, HTSUS, or as flashlights of heading 8513, HTSUS? Whether the light wand key chains are classified as imitation jewelry of heading 7117, HTSUS; as toys of heading 9503, HTSUS; or as flashlights of heading 8513, HTSUS; or under 7326, HTSUS as other articles of iron or steel? LAW AND ANALYSIS: Initially, we note that the matter protested is protestable under 19 U.S.C. §1514(a) (2) as a decision on classification. The protest was timely filed, within 180 days of liquidation of the first.  (Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, § 2103(2) (B) (ii), (iii) (codified as amended at 19 U.S.C. § 1514(c) (3) (2006)). Further Review of Protest No. 3901-07-100784 is properly accorded to Protestant pursuant to 19 C.F.R. § 174.24 because Protestant alleges that the liquidation was inconsistent with prior CBP rulings and that, in the alternative, the decision against which the protest was filed involves specific factual and legal questions that have not been the subject of a Headquarters ruling or court decision. Specifically, in accordance with 174.24(a), Buztronics argues that similar light wands have previously been classified as toys under 9503. See, e.g., NY I84768, dated August 16, 2002; NY K84993, dated April 21, 2004; NY H83166, dated July 23, 2001; NY N006843, dated February 21, 2007. Merchandise imported into the United States is classified under the HTSUS. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (GRIs) and, in the absence of special language or context which requires otherwise, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law for all purposes. GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule and any relative section or chapter notes and, unless otherwise required, according to the remaining GRIs taken in their appropriate order. The HTSUS headings under consideration are the following: 7117: Imitation jewelry: Of base metal, whether or not plated with precious metal: 7117.19: Other: Rope, curb, cable, chain and similar articles produced in continuous lengths, all the foregoing, whether or not cut to specific lengths and whether or not set with imitation pearls or imitation gemstones, suitable for use in the manufacture of articles provided for in this heading: Valued not over 33 cents per meter: Other * * * * * * * * * * 7326 Other articles of iron or steel: 7326.20.00 Articles of iron or steel wire * * * * * * * * * * 8513: Portable electric lamps designed to function by their own source of energy (for example, dry batteries, storage batteries, magnetos), other than lighting equipment of heading 8512; parts thereof 8513.10: Lamps * * * * * * * * * * * * 9503: 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 9503.90 Other * * * * * * * * * * Chapter Note 9(a) to Chapter 71, HTSUS, reads, in pertinent part: For the purposes of heading 7113, the expression "articles of jewelry" means: (a) Any small objects of personal adornment (for example, rings, bracelets, necklaces, brooches, earrings, watch chains, fobs, pendants, tie pins, cuff links, dress studs, religious or other medals and insignia) Chapter Note 11 to Chapter 71, HTSUS, reads, in pertinent part: For the purposes of heading 7117, the expression "imitation jewelry" means articles of jewelry within the meaning of paragraph (a) of note 9 above (but not including buttons or other articles of heading 9606, or dress combs, hair slides or the like, or hairpins, of heading 9615), not incorporating natural or cultured pearls, precious or semiprecious stones (natural, synthetic or reconstructed) nor (except as plating or as minor constituents) precious metal or metal clad with precious metal. Note 1(l) to Section XV, HTSUS, reads, in pertinent part: This section does not cover:… (l) Articles of chapter 95 (for example, toys, games, sports equipment) Note 1(p) to Section XVI, HTSUS, reads, in pertinent part: This section does not cover:… (p) Articles of chapter 95 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. 89-80, 54 Fed. Reg. 35127 (August 23, 1989). The EN to heading 8513, HTSUS, reads, in pertinent part, the following: The lamps of this heading include: …. (7)   Fancy torches in the shape of pistols, lipsticks, etc. Composite articles composed of a lamp or torch and a pen, screwdriver, key ring, etc., remain classified here only if the principal function of the whole is the provision of light. Buztronics argues that its merchandise is “designed and marketed for amusement and diversion,” and that the advertisements that are placed on the products highlight the items’ entertainment value. The company notes that its light wands are marketed differently than its flashlights, which are marketed for their practical use. The company also argues against the products’ classification as flashlights, because the wands’ patterns diminish the intensity of the light the wands emit, thereby detracting from their utility as flashlights. As such, Buztronics argues, the wands actually disperse light rather than produce the solid beam of light that is a flashlight’s hallmark for tariff classification purposes. Previous CBP rulings have noted that “taken together, notes 9(a) and 11 to chapter 71, HTSUSA, indicate that the expression ‘imitation jewelry’ means any small objects of personal adornment such as bracelets, necklaces, brooches, earrings, watch chains, fobs, pendants, tie pins, cuff links, dress studs, religious or other medals and insignia.” See, e.g., HQ H015873, dated October 31, 2006. After an examination of the light wands at issue, it is apparent that they are not worn as jewelry in the same manner as bracelets, necklaces, and other items that are classified under 7117, HTSUS. As a result, the merchandise is not classifiable in heading 7117, HTSUS. I. Light Wands In accordance with Note 1(l) to Section XV, HTSUS, and Note 1(p) to Section XVI, HTSUS, CBP must first determine whether the light wands are classifiable as toys of heading 9503, HTSUS. The Court of International Trade construes Heading 9503 as a “principal use” provision, insofar as it pertains to toys. See Minnetonka Brands v. United States, 110 F.Supp. 2d 1020, 1026 (Ct. Int’l Trade 2000). In order for the merchandise to be considered a toy under heading 9503, HTSUS, the item’s principal use must be for amusement. In Ideal Corp. v. United States, 78 Cust. Ct. 28, C.D. 4688 (1977), the court noted that “when amusement and utility become locked in controversy, the question becomes one of determining whether the amusement is incidental to the utilitarian purpose, or the utilitarian purpose incidental to the amusement.” Ideal Corp, 78 Cust. Ct. 28 at 33. When examining the use of a product, CBP turns to the language of United States v. Carborundum Co., 63 C.C.P.A. 89; 536 F.2d 373; C.A.D. 1172. In Carborundum, the court had to decide whether powder was “of the same class or kind as that commonly used” as raw material, and laid out the current test for such determinations: Factors which have been considered by courts to be pertinent in determining whether imported merchandise falls within a particular class or kind include the general physical characteristics of the merchandise, the expectation of the ultimate purchasers, the channels, class or kind of trade in which the merchandise moves,  the environment of the sale (i.e., accompanying accessories and the manner in which the merchandise is advertised and displayed, the use, if any, in the same manner as merchandise which defines the class, the economic practicality of so using the import the recognition in the trade of this use. Susceptibility, capability, adequacy, or adaptability of the import to the common use of the class is not controlling. Carborundum, 63 C.C.P.A. at 102 (internal citations omitted). In the present case, the light wands at issue are designed to be given away at tradeshows, parties, and similar functions. They emit colored lights that flash, pulsate or hold steady. The steady light that these wands produce is diffused rather than a concentrated beam of light. As such, these items cannot be relied upon to produce enough illumination in a dark room, for example, such that they would have a utilitarian function. As a result, we find that the subject light wands are principally used for amusement. As such, they are classified under heading 9503. This classification is consistent with prior CBP rulings. See, e.g., NY N006843, dated February 21, 2007; NY 861185, dated April 13, 1991; NY N027041, dated May 21, 2008. II. Light wand Key Chains The light wand key chains are composed of a metal base, described in heading 7326, HTSUS, and a plastic lighted shaft, described in heading 9503, HTSUS. Because they are not completely described by any one heading, CBP turns to GRI Rule 3(b), which states: Mixtures, composite goods consisting or 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. Explanatory Note IX to GRI 3(b) states that: 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… As a general rule, the components of these composite goods are put up in a common packing. Upon examination of the merchandise, CBP finds that the light wands are physically attached to the key rings. Both parts complement each other, are sold together as one product, and would not be sold as separate components. As a result, the light wand key chains are composite goods and CBP must determine the light wand key chain’s essential character. With respect to determining the essential character of this composite good, EN VIII to GRI 3(b) provides the following guidance: 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. There have also been several court decisions on “essential character” for purposes of GRI 3(b). These cases have looked to the role of the constituent materials or components in relation to the use of the goods to determine essential character. Structural Industries v. United States, 360 F. Supp. 2d 1330, 1337-1338 (CIT 2005); Conair Corp. v. United States, 29 C.I.T. 888 (2005); Home Depot USA, Inc. v. United States, 427 F. Supp. 2d 1278, 1295-1356 (CIT 2006), aff’d 491 F.3d 1334 (Fed. Cir. 2007). In the present case, the subject merchandise consists of the key chain, used to transport keys, and the light wand. The merchandise will be used predominantly to hold keys or to attach them to a backpack. They are marketed and sold as key chains. Furthermore, the modest manipulative play value of the light wand does not outweigh the functional role of the key chain. As a result, the light wand key chains are classified as key rings in subheading 7326.20.00, HTSUS, as “other articles of iron or steel: articles of iron or steel wire.” This is consistent with a long line of prior CBP rulings which have classified key-rings with toys or other novelty objects as other articles of steel. See, e.g., HQ 966305, dated July 28, 2004; HQ 960118, dated July 28, 1998; HQ 961965, dated September 23, 1998. HOLDING: By application of GRI 1, both models of the Tri-Glow Buzwands, and the Wand Sparkling Fiber Optic are classified in heading 9503, specifically subheading 9503.00.80, HTSUS, as “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: other.” The general column one rate of duty in effect at the time of entry was free. By application of GRI 3(b), the Mini BuzWands, the Tri-Glow BuzWand with Keychain, the Mission Space Wand Key Chain, and the DisneyWorld Star Wars Plastic Light Wands with Keychain are classified in heading 7326, specifically subheading 7326.20.00, HTSUS, as “other articles of iron or steel: Articles of iron or steel wire.” The general column one rate of duty in effect at the time of entry was 3.9% ad valorem. You are instructed to ALLOW the protest. In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the protestant no later than 60 days from the date of this letter.  Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision. Sixty days from the date of the decision, the Office International Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.CBP.gov, by means of the Freedom of Information Act, and other methods of public distribution. Sincerely, Myles B. Harmon, Director Commercial and Trade Facilitation Division