Request for Reconsideration of NY N243331; Tariff classification of an electric dirt bike

HQ H249753 April 15, 2015 CLA-2 OT: RR: CTF: TCM H249753 ERB CATEGORY: Classification TARIFF NO.: 8711.90.00 Mr. Michael G. Hodes Hodes Keating & Pilon 134 North LaSalle Street, Suite 1300 Chicago, Illinois 60602 RE: Request for Reconsideration of NY N243331; Tariff classification of an electric dirt bike Dear Mr. Hodes: This is in response to your letter dated September 20, 2013, on behalf of your client Dynacraft BSC, Inc. (Dynacraft), requesting the reconsideration of New York Ruling Letter (NY) N243331, issued on July 18, 2013. In NY N243331, CBP ruled that an electric dirt bike was classified in heading 8711, of the Harmonized Tariff Schedule of the United States (HTSUS), which provides for motorcycles. You request classification in heading 9503, HTSUS, which provides for tricycles, scooters, pedal cars and similar wheeled toys, and argue that the ruling was issued in error and is not in accord with the current view of CBP. Our response follows herein. FACTS: NY N243331 provides as follows: The item under consideration has been identified as an electric dirt bike, model 8801-23, “Avigo Extreme Dirt Bike.” The Aviago [sic] is powered by a 24 volt 250 watt electric motor and transports a total of 140 lbs. The applicable subheading for the Avigo Extreme Dirt Bike will be 8711.90.0000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Motorcycles (including mopeds) and cycles fitted with an auxiliary motor, with or without side-cars; side-cars: Other. The rate of duty will be Free. ISSUE: Whether the instant electric dirt bike is classified as a motorcycle, under heading 8711, HTSUS, or as a wheeled toy, under heading 9503, HTSUS. LAW AND ANALYSIS: Classification of goods under the HTSUS is governed by the General Rules of Interpretation (GRI). GRI 1 provides that classification shall be determined according to the terms of the heading 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 HTSUS provisions at issue are as follows: 8711 Motorcycles (including mopeds) and cycles fitted with an auxiliary motor, with or without side-cars; side cars: *** 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: Note 1 to Section XVII, which covers Chapter 87 states: This section does not cover articles of heading 9503… Thus, if an article is found to be classified in heading 9503, HTSUS, it is excluded from classification in Section XVII, specifically, chapter 87. The Harmonized Commodity Description and Coding System Explanatory Notes (ENs), constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of the headings. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989). The EN 87.11 states: This heading covers a group of two-wheeled motorised vehicles which are essentially designed for carrying persons. In addition to motorcycles of the conventional type, the heading includes motor-scooters, characterised by their small wheels and by a horizontal platform which joins the front and rear portions of the vehicle; moped, equipped with both a built-in engine and a pedal system; and cycles fitted with an auxiliary motor. This heading also covers two-wheeled, electrically-powered transportation devices, designed for carrying a single person, for use within low speed areas such as pavements (sidewalks), paths, and bicycle lanes…. The EN 95.03 states: This heading covers: (A). Wheeled toys. These articles are usually designed for propulsion either by means of pedals, hand levers or other simple devices which transmit power to the wheels through a chain or rod, or, as in the case of certain scooters, by direct pressure of a person’s foot against the ground. Other types of wheeled toys may be simply drawn or pushed by another person or driven by a motor. These toys include: Children’s tricycles and the like, but excluding bicycles of heading 87.12. Two- or three-wheeled scooters designed to be ridden by children, as well as youngsters and adults, with an adjustable or non-adjustable steering column and small solid or inflatable wheels. They are sometimes equipped with a bicycle-type handle-bar, a hand brake or a foot brake on the rear wheel. *** And it continues: (D) Other toys. This group covers toys intended essentially for the amusement of persons (children or adults)…. The Court of International Trade (CIT) opined on the wheeled toy provisions of heading 9503, HTSUS, in its decision in Streetsurfing LLC. v. United States, 11 F. Supp. 3d 1287 (Ct. Int’l Trade 2014). There, the CIT noted that heading 9503, HTSUS is a principal use provision. Principal use provisions are governed by the HTSUS Additional U.S. Rule of Interpretation 1, which states in part that “a classification controlled by use (other than actual 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.” See also HQ H233999, dated March 7, 2013 (classifying a Doodle Buddy). The language of the heading text, as well as the language of the ENs to 95.03 are clear that articles classified therein are done so because they are “toys”. Classification as a toy under heading 9503, HTSUS, requires that the article be principally used as a toy for amusement and should not serve a utilitarian purpose. See StoreWALL, LLC. V. United States, 644 F.3d 1358, 1365-66 (Fed. Cir. 2011). Toys have been found to include “articles whose principal use is amusement, diversion, or play, rather than practicality.” Processed Plastic Co. v. United States, 473 F.3d 1164, 1169 (Fed. Cir. 2006) (quoting Minnetonka Brands, Inc. v. United States, 24 CIT 645, 110 F. Supp. 2d 1020 (Ct. Int’l Trade 2000). See also HQ H236028, dated December 31, 2013 (classifying an Aquadoodle product as a “toy”). The CIT also acknowledged in Streetsurfing LLC v. United States, 11 F. Supp. 3d 1287, 1295 (Ct. Int’l Trade 2014) the following: [T]h[is] court is mindful that in Processed Plastics the Federal Circuit found that “wheeled toys” under HTSUS Heading 9503 must be principally used for amusement, [but] the Explanatory Note accompanying this heading makes clear that the provision is narrower than plaintiff claims. That is, Heading 9503 does not cover every item with wheels that is principally used for amusement…Rather, the Explanatory Notes indicate that, in additional to being principally used for amusement, a wheeled toy properly classifiable under HTSUS heading 9503 is also characterized by other common features. Ultimately, the court applied the ENs to the subject waveboards at issue there, and held that a wheeled toy under heading 9503 is characterized by the following features: (1) the absence of a training requirement prior to its use; (2) the absence of a meaningful risk of injury involved in its use; (3) the lack of acquired skill to fully utilize the item; (4) the lack of exercise or athletic aspect in the item’s use; and (5) the presence of an assistive device. Streetsurfing LLC v. United States, 11 F. Supp. 3d 1287, 1296-98 (Ct. Int’l Trade 2014). These five enumerated characteristics of “wheeled toys” are persuasive and relevant here, insofar as they elaborate on the possible scope of heading 9503, HTSUS. The subject merchandise has a 250 watt motor powered by a 24-volt rechargeable battery. The dirt bike can support a maximum weight of 140 pounds (lbs) and attains a top speed of 14-miles per hour (mph). The dirt bike itself weighs 59 lbs. It also features a hand twist throttle, a rear friction brake and several bright decals to “create a fantasy dirt bike riding experience.” Dynacraft reasons that because the subject dirt bikes are a smaller scale dirt bike as compared to those for adults, and because of the limited speed, power, seat height, and weight capacity, as compared to a dirt bike for adults, then it is principally used for amusement, and is prima facie classifiable only under heading 9503, HTSUS. Put another way, Dynacraft asserts that “children will enjoy pretending to be on a real dirt bike.” But this reasoning side-steps that children will actually be riding on a dirt bike, capable of moving at high speeds, presenting a demonstrable risk of injury. It is thus, just like a “real” dirt bike. Further, “a “junior edition” of a larger, more expensive article is classifiable under the same provision as the more expensive article, if the cheaper article performs the same function on a smaller scale.” See New York Merchandise Co. v. United States, 62 Cust. Ct. 38, 40 (Cust. Ct. 1969). The dirt bike requires coordination of a user’s balance, steering, and propulsion in unison, as well as a knowledge and understanding of a hand twist throttle and rear friction brakes. Thus, users require training prior to using the product and acquire a skill in the process. The dirt bike is capable of going up to 14 mph. The instruction manual and safety instructions that come with this product are extensive. Dynacraft highly recommends users wear a helmet, as well as strongly urging parental supervision during use. Specifically, the safety manual states: The age grade for the electric dirt bike is for ages 14 and older. Just because someone is within the age and weight limitations specified for the electric dirt bike, does not mean that his/her size is appropriate to fit or maintain control of the electric dirt bike or that he/she is capable of safely operating the electric dirt bike. You are the best judge of whether you or your child is at the appropriate developmental stage for safe use of the electric dirt bike….A parent’s decision to allow their child to use the electric dirt bike should be based on the child’s maturity, skill and their ability to follow rules. Thus, there is a demonstrable risk of injury to users here. It is unclear if the dirt bike would provide exercise to a user, and insofar as the dirt bike has an assistive device by means of its motor, the subject motor is more powerful than motors in wheeled articles which CBP previously classified as “wheeled toys.” See NY N222337, dated July 11, 2012 (classifying an Avigo Electric Scooter which has a 12V rechargeable battery and can go up to 10 mph). As the CIT noted, all articles listed as wheeled toys are propelled “by means of pedals, hand levers or other simple devices which transmit power to the wheels through a chain or rod, … by direct pressure of a person’s foot against het ground,” or by “simply [being] drawn or pushed by another person or driven by a motor.” See Streetsurfer LLC, supra, at 1295, citing EN 95.03. Overall, the subject dirt bikes fall outside the scope of a “wheeled toy” pursuant to the framework crafted by the CIT. As such, the exclusionary language in Note 1 to Section XVI, which includes Chapter 87 does not apply. Dynacraft argues that the scale, price, and place of sale (e.g. toy stores) means the goods are classified as “toys,” and points to various CBP rulings to bolster this point. But the subject dirt bikes are not mere playthings. They are of sufficient size and weight such that they may be used for the utilitarian purpose of transportation, especially because they are primarily used by teens and young adults. The dirt bike is fully functional in all the same meaningful ways as a dirt bike designed for an adult. Thus, as the product is powered by a 24 volt 250 watt electric motor, the subject electric dirt bike is described by heading 8711, HTSUS. HOLDING: By application of GRI 1, the subject merchandise is properly classified under heading 8711, HTSUS. It is specifically provided for in subheading 8711.90.00, HTSUS, as “Motorcycles (including mopeds) and cycles fitted with an auxiliary motor; with or without side-cars; side-cars: Other.” The general column one rate of duty is free. NY N243331 is thus AFFIRMED. Duty rate are provided for your convenience and subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov. Sincerely, Myles B. Harmon, Director Commercial and Trade Facilitation Division