Revocation of NY K87306; Tariff Classification of the “Trendy Tee” Craft Kit

HQ W968017 April 23, 2012 CLA-2 OT:RR:CTF:TCM W968017 ASM CATEGORY: Classification TARIFF NO.: 8479.89.98 Mr. Joseph R. Hoffacker Barthco Trade Consultants, Inc. 7575 Holstein Avenue Philadelphia, PA 19153 RE: Revocation of NY K87306; Tariff Classification of the “Trendy Tee” Craft Kit Dear Mr. Hoffacker: This is in reference to New York Ruling Letter (NY) K87306, dated June 28, 2004, issued to you on behalf of Trendy Tee, concerning the tariff classification of a craft kit under the Harmonized Tariff Schedule of the United States (HTSUS). In that ruling, U.S. Customs and Border Protection (“CBP”) classified the merchandise in the provision for “Other” toys in subheading 9503.70.00, HTSUS. We have reviewed NY K87306 and found it to be in error. For the reasons set forth below, we hereby revoke NY K87306. Pursuant to section 625(c), Tariff Act of 1930 (19 U.S.C. Section 1625(c)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act, Pub. L. 103-182 107 Stat. 2057, 2186 (1993), notice of the proposed revocation of NY K87306, as described below, was published on December 28, 2011, in Vol. 46, No. 1, of the Customs Bulletin. No comments were received in response to the notice. FACTS: In NY K87306, the subject merchandise, identified as “Trendy Tee” (item number 89009), was described as a toy craft kit consisting of a stud tool, a plastic workstation, metal studs, plastic rhinestones, chalk, cardboard stencil pattern cards, and a sheet of instructions packaged inside an illustrated cardboard box. According to the description contained in NY K87306, the articles are used to decorate t-shirts by placing a paper stencil pattern card on the front of a t-shirt and then rubbing chalk over the holes (a t-shirt is not included in the kit). The user follows the decorative chalk pattern by attaching rhinestones and studs with the stud setting tool included in the kit. The box is marked as appropriate for children of 8 years of age and older. ISSUE: Whether the subject craft kit is classified as an “Other” toy in heading 9503, HTSUS, or as an “Other” machine and mechanical appliance in heading 8479, 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 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. When by application of GRI 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, they must be classified in accordance with GRI 3. GRI 3(b) states that “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 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.” The following HTSUS provisions are under consideration in classifying the craft kit: 8479 Machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof: Other machines and mechanical appliances: 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 4 to Chapter 95, HTSUS, states the following: Subject to the provisions of Note 1 above, heading 9503 applies, inter alia, to articles of this heading combined with one or more items, which cannot be considered as sets under the terms of General Interpretative Rule 3(b), and which, if presented separately, would be classified in other headings, provided the articles are put up together for retail sale and the combinations have the essential character of toys. 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 these headings. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989). The EN to GRI 3(b) states: (VII) 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. (VIII) The factor which determines the 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. The General EN for Chapter 95 states that the “chapter covers toys of all kinds whether designed for the amusement of children or adults.” The “Trendy Tee” craft kit consists of a manually operated plastic stud tool, a plastic desk, chalk, stencil pattern cards, and plastic rhinestone gems which are all packaged together with instructions in a cardboard box for retail sale at the time of importation. If the components of the craft kit were classified separately, the plastic stud tool would be classified in heading 8479, HTSUS, which provides for “Machines and mechanical appliances having individual functions, . . .” (See HQ 967824, dated December 6, 2005). The plastic desk would be classified in heading 3926, HTSUS, which provides for "Other articles of plastics". The chalk is classifiable in heading 9609, HTSUS, which provides for “… drawing charcoals, writing or drawing chalks and tailors’ chalks”. The cardboard stencils are classifiable in heading 4823, HTSUS, which provides for “ . . . other articles of paper pulp, paper, paperboard, cellulose wadding or webs of cellulose fibers” (See HQ 966198, dated July 21, 2003 and HQ 959189, dated September 25, 1996). The plastic rhinestone gems are classifiable in heading 3926, HTSUS, which provides for “Other articles of plastics and articles of other materials of headings 3901 to 3914”. None of the items on their own are classifiable in heading 9503 as toys. Hence, note 4 to Chapter 95 does not apply to this merchandise and it cannot be classified at GRI 1. Instead, the merchandise consists of articles of different headings, packaged for retail sale, for use in the specific activity of decorating an article of clothing. Hence, the merchandise must be classified as a set under GRI 3(b) as to its essential character. There have been several court decisions on "essential character" for purposes of classification under GRI 3(b). See, Conair Corp. v. United States, 29 C.I.T. 888 (2005); Structural Industries v. United States, 360 F. Supp. 2d 1330, 1337-1338 (Ct. Int’l Trade 2005); and Home Depot USA, Inc. v. United States, 427 F. Supp. 2d 1278, 1295-1356 (Ct. Int’l Trade 2006), aff’d 491 F.3d 1334 (Fed. Cir. 2007). "[E]ssential character is that which is indispensable to the structure, core or condition of the article, i.e., what it is." Home Depot USA, Inc. v. United States, at 1293 quoting A.N. Deringer, Inc. v. United States, 66 Cust. Ct. 378, 383 (1971). In particular in Home Depot, the court stated "[a]n essential character inquiry requires a fact intensive analysis." 427 F. Supp. 2d 1278, 1284 (Ct. Int’l Trade 2006). The plastic desk and fastening machine, i.e., “stud tool”, are the bulkiest components in the set. The rhinestones number the greatest quantity, but the stud tool is the heaviest. While we have no information on the value of each article, the stud tool is the most complex and likely has the greatest value in the set. As for the role of the constituent material and the nature of the components in relation to the use of the goods, the craft kit is designed to affix decorative studs and/or rhinestones to a t-shirt. Thus, the plastic fastening machine, i.e., “stud tool”, is the most important component in the set because the plastic tool allows the user to permanently attach decorative elements to an article of clothing. Therefore, the stud tool provides the essential character to the set. The issue thus becomes, whether the stud tool is, in fact, a toy of heading 9503, HTSUS. The U.S. Court of International Trade (CIT) construes heading 9503, HTSUS, as a "principal use" provision, insofar as it pertains to "toys." See Minnetonka Brands v. United States, 110 F. Supp. 2d 1020, 1026 (CIT 2000). Thus, to be a toy, the "character of amusement involved [is] that derived from an item which is essentially a plaything." Wilson's Customs Clearance, Inc. v. United States, 59 Cust. Ct. 36, C.D. 3061 (1967). It has been CBP’s position that the amusement requirement means that toys should be designed and used principally for amusement. For articles that are both amusing and functional, we look to Ideal Toy Corp. v United States, 78 Cust. Ct. 28 (1977), in which the court stated that "when amusement and utility become locked in controversy, the question becomes one of determining whether amusement is incidental to the utilitarian purpose, or whether the utility purpose is incidental to the amusement." For articles governed by 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 United States v. Carborundum Company, 63 CCPA 98, C.A.D. 1172, 536 F. 2d 373 (1976), the court provides the following factors, which are indicative but not conclusive, to 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.  Here, the physical characteristics and actual use of the stud-setting tool are as a tool with a primary purpose to decorate articles of clothing with rhinestones. The ultimate purchaser expects to use the tool to that end with a degree of skill, care, and patience that is more typically exemplified in older children (ages 8 years old and up) and involves activity that is not necessarily amusing. The item is marketed as part of a craft set for older children to decorate their clothing. The foregoing application of the Carborundum criteria indicates that the stud tool is not a good of a kind designed for amusement. Accordingly, any amusement derived from the tool is incidental to its utilitarian purpose of decorating clothing. See HQ 967824, dated December 6, 2005 (“Girlfitti”® “Style Setter” craft kit which consisted of a manually operated plastic fastening machine, plastic rhinestone gems with metal backings, a fabric belt, simple cardboard stencils, and a pencil, packaged together for retail sale classified pursuant to GRI 3(b) in heading 8479 HTSUS, as an other machines or mechanical appliance). In view of the foregoing, we find that the subject “Trendy Tee” craft kit is properly classified as a set pursuant to a GRI 3(b) analysis. We further find that the “stud tool” provides the essential character to the set and is utilitarian rather than amusing. Therefore, the subject merchandise is classified as an “Other” machine and mechanical appliance in heading 8479, HTSUS. HOLDING: The subject merchandise, identified as the “Trendy Tee” craft kit (item number 89009) is correctly classified in subheading 8479.89.98, HTSUS, which provides for “ Machines and mechanical appliances having individual functions, not specified or included elsewhere in the chapter; parts thereof: Other machines and mechanical appliances: Other: Other, Other”. This provision is dutiable at 2.5 percent ad valorem under the general column one rate of duty. 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 internet at www.usitc.gov. EFFECT ON OTHER RULINGS: NY K87306, dated June 28, 2004, is hereby revoked consistent with the foregoing analysis. In accordance with 19 U.S.C. Section 1625(c), this ruling will become effective 60 days after publication in the Customs Bulletin. Sincerely, Myles B. Harmon, Director Commercial and Trade Facilitation Division