CLA-2 CO:R:C:G 086407 JBW 828929

Mr. Murray Shulman
Vice President, Operations
AMAV Industries Ltd.
2345 Lapierre Street
Lasalle, Qubec

RE: Reconsideration of New York Ruling Letter (NYRL) 828929 and Headquarters Ruling Letter (HRL) 085801 Regarding Respectively the Classification of "Arts, Crafts & Activities" and "String Art"

Dear Mr. Shulman:

This letter is in response to your request of January 31, 1990, in which you seek reconsideration of NYRL 828929 that classified the components of your product, "Arts, Crafts & Activities," separately under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA). At this time, we are also reconsidering the classification in HRL 085801 of your "String Art" kit and the eligibility of both of these items under the United States-Canada Free Trade Agreement (FTA).


"Arts, Crafts & Activities," item number 3202, consists of the following components, manufactured in Canada or the countries noted:

Six double sided game boards, thirty six playing pieces, two dice (Hong Kong), five jars of poster paint (Israel), five felt tip marking pens (United States or Italy), two poster art sheets, two collage sheets, "self- stick" stickers, three spools of thread (Taiwan), "string art" pins and board, velour paper, stencils, tray of sixteen water color paints (Israel), brush (United States or Italy), calligraphy pen and grid, paper pad, two mixing cups, three sheets of colored paper, tissue paper, three grid art sheets, three color by number sheets, six origami sheets, construction paper, and an instruction book.

These components are packaged in a retail package that permits the user of the product to carry out the 202 activities listed in the instruction book. These activities may be generally categorized as crafts, arts, games, puzzles, and magic.

"String Art," item number 4671, includes sewing thread, pins, black flocked paper, corrugated cardboard, pins, and instructions to permit the user to create two designs. The thread is made in Taiwan, and the other components are made in Canada or the United States.


(1) Whether a product, which is capable of different activities, but is designed principally for amusement, is classifiable under the provision for "other toys, put up in sets"?

(2) Whether a product that consists of diverse components and an instruction book to permit the user to create "art" and to learn an "artistic" technique is a toy under the HTSUSA?

(3) Whether these articles, which include components of Canadian, United States, and other country origin, are eligible for preferential treatment under the FTA?


I. Classification of "Arts, Crafts & Activities"

The General Rules of Interpretation (GRI's) set forth the legal framework in which merchandise is to be classified under the HTSUSA. GRI 1 requires that classification be determined first according to the terms of the headings of the tariff and any relative section or chapter notes and, unless otherwise required, according to the remaining GRI's.

Subheading 9503.70, HTSUSA, provides for other toys, put up in sets. The first question that arises in the analysis of the scope of this provision is whether the term put up in sets carries the same requirements as the term is used in GRI 3(b). For the purposes of GRI 3(b), goods put up in sets for retail sale are defined to be goods that: (a) consist of at least two different articles that are classifiable in different headings; (b) consist of products 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 repackaging.

All goods classified in subheading 9503.70, HTSUSA, will not meet the GRI 3(b) set requirements. For example, subheading 9503.70.60, HTSUSA, is a provision for other toys, put up in sets, toy alphabet blocks. However, such blocks do not consist of at least two different articles classifiable in two different headings. Likewise, their use is susceptible to a variety of purposes or activities. A child may use the blocks to build or to spell. These two different activities serve different purposes: amusement and education. In sum, one may conclude that the requirements for sets established in GRI 3(b) are not correlative requirements for classification of items in subheading 9503.70, HTSUSA.

The term set is defined to mean: "A group of things of the same kind that belong together and are so used ...." American Heritage Dictionary 1122 (Second College Edition, 1985). The Explanatory Notes, which provide the official interpretation of the tariff at the international level, reflect in part this definition by stating that collections of items, which are classifiable in other headings if presented separately, are classified in Chapter 95 if put up in a form clearly indicating their use as toys. Reading these statements together, one may conclude that the provision for other toys, put up in sets, includes collections of items clearly identifiable as toys and collections of diverse components that when used together engage a child or an adult in an entertaining and pleasing activity. For both types of sets, the components must possess some nexus to suggest that the components belong together.

The use of "Arts, Crafts & Activities" is principally as a toy. The instruction book emphasizes the play and amusement value that the set provides. While the set is designed in part to enhance artistic technique and creativity, these objectives are achieved through activities designed to be fun. The utilitarian value of the set is secondary to the play value. Finally, although all of the components of the set will not be used simultaneously and some will not be used together at all, we determine that there exists a sufficient nexus, defined by the interrelated use of the components in the diverse activities outlined in the instruction book, to permit classification of the components together. The item is therefore classified under subheading 9503.70.80, HTSUSA, the provision for other toys, put up in sets.

II. Classification of "String Art"

"String Art" includes a variety of components that would ordinarily be separately classified if imported separately. The kit, however, not only provides materials and instructions to permit the user to engage in an amusing activity but also results in a decorative item.

We determine that the "String Art" kit is designed principally for the amusement of a child and therefore is classified as a toy. In choosing to purchase the kit, a parent or child is more likely to focus on the activity and not the final result. "String Art" requires that the user engage in intricate manipulations to create an artistic product from ordinary materials. Such activity encourages a variety of skills, including creativity and precision. At the same time, the activity engaged in by the user is pleasing and entertaining. Finally, although the final product is pleasing, it does not appear as likely that the ordinary consumer would purchase a completed string art product for use as a decoration.

Classification of the "String Art" kit may be distinguished from other kits in which the activity is secondary to the result. For example, a jewelry making kit, which includes beads and a string to make a necklace, involves simple technique and materials dedicated to a specific end. As described, such a kit would more likely be purchased and used as a necklace and would therefore be classified in Chapter 71 as imitation jewelry.

"String Art" meets the criteria set out above for classification in the provision for other toys, put up in sets, and is consequently classified under subheading 9503.70.80, HTSUSA.

III. Eligibility of the Sets under the United States- Canada Free-Trade Agreement

In HRL 085801, we determined that the "String Art" kit is eligible for preferential treatment under FTA. Upon review, we determine that this holding is incorrect.

General Note 3(c)(vii)(B), HTSUSA, defines "goods originating in the territory of Canada" for purposes of determining FTA eligibility. This note states, in relevant part, that goods are considered to be of Canadian origin for FTA purposes if they are (1) wholly obtained or produced in Canada or the United States, or (2) they have been transformed in the territory of Canada or United States so as to be subject to a change in tariff classification under the rules of General Note 3(c)(vii)(R), HTSUSA. Further, General Note 3(c)(vii)(C), HTSUSA, states:

(C) Goods shall not be considered to originate in the territory of Canada pursuant to subdivision (c)(vii)(B)(2) merely by virtue of having undergone--

(1) simple packaging or, except as expressly provided by the rules of subdivision (c)(vii)(R) of this note, combining operations....

The report of the House Committee on Ways and Means lends some clarity to these provisions. This report states:

Goods containing materials from third countries will qualify for preferential treatment only if the materials undergo a sufficient degree of processing or assembly in one or both Parties to result in physically and commercially significant changes in the product that change its tariff classification under the Harmonized System.

H. Rep. No. 816, Part 1, 100th Cong., 2d Sess.15 (1988) (emphasis added). The approach of the Ways and Means Committee places emphasis on the processing or assembly that the third-country materials undergo. Stated differently, each of the materials or components must undergo a processing or assembly that results in a change in tariff classification to confer eligibility on the good as a whole.

The packaging of components together in a set will generally result in the assignment of a single classification to components that, if imported separately, would be classified under separate headings. Most, if not all, components of a set undergo a classification change. However, applying General Note 3(c)(vii)(C), HTSUSA, a change in tariff classification resulting from the combining and packaging of a good is not sufficient to confer a transformation for FTA purposes. Thus, the rule that may be derived is that the simple packaging or combining in a set of a component of third-country origin, which is not subject to processing or assembly in Canada or the United States that results in a required classification change, will remove the set as a whole from the definition of "goods originating in the territory of Canada."

Applying this rule to "Arts, Crafts & Activities" and to "String Art," the addition of articles of third-country origin with articles of Canadian or United States origin works to deny eligibility of the set for preferential treatment under the FTA. Therefore, HRL 085801 is modified insofar as it granted FTA eligibility to the "String Art" kit. Likewise, the holding in NYRL 828929 insofar as it denies FTA eligibility to "Arts, Crafts & Activities" is affirmed.


"Arts, Crafts & Activities," item number 3202, is classified under subheading 9503.70.80, HTSUSA, as other toys, put up in sets. Because the set includes components of third country origin, the set is not eligible for preferential treatment under the FTA. NYRL 828929 is modified accordingly.

"String Art," item number 4671, is likewise classified under subheading 9503.70.80, HTSUSA, as other toys, put up in sets. Because the set includes components of third country origin, the set is not eligible for preferential treatment under the FTA. HRL 085801 is modified accordingly.

The modifications in this letter are made pursuant to 19 C.F.R. 177.9(d) (1989).


John Durant, Director
Commercial Rulings Division