CLA-2 RR:TC:MM 960118 HMC

Port Director of Customs
c/o Chief, Residual Liquidation
and Protest Branch
6 World Trade Center
Room 761
New York, NY 10048-0945

RE: PRD 1001-96-105627; "Final Word" Key Chain; Subheadings 7326.90.85, 9503.90.00 and 9505.90.20; GRI 3(b); Explanatory Note VIII to GRI 3(b); Explanatory Note 73.26; Other Articles of Iron or Steel; Other Toys; Practical Joke Articles; HQ 087831; HQ 950636; HQ 958452.

Dear Port Director:

This is our decision on Protest 1001-96-105627, filed against your classification of the "Final Word" Key Chain. The entries under protest were liquidated on May 31, 1996, and this protest timely filed on July 18, 1996.

FACTS:

The merchandise under protest is the "Final Word" key chain comprised of a metal key ring attached to a battery operated, novelty article, incorporating a pre-programed electronic voice synthesizer. This electronic synthesizer is stored within a plastic housing unit that resembles a keyless automobile door opener. When one of the corners located on the front of the novelty item is depressed, a synthesized voice emits one of four pre-programed messages.

The merchandise was entered as a practical joke article under subheading 9505.90.60 of the Harmonized Tariff Schedule of the United States (HTSUS). However, the entries were liquidated under subheading 7326.90.85, HTSUS, as an other article of steel.

The provisions under consideration are as follows:

7326 Other articles of iron or steel: Forged or stamped, but not further worked: 7326.90 Other:

Other: Other: 7326.90.85 Other...4%

* * * *

9503 Other toys; reduced-size ("scale") models and similar recreational models, working or not; puzzles of all kinds; and accessories thereof:

9503.90.00 Other...Free

* * * *

9505 Festive, carnival or other entertainment articles, including magic tricks and practical joke articles; parts and accessories thereof:

9505.90 Other: 9505.90.20 Magic tricks and practical joke articles; parts and accessories thereof...Free

ISSUE:

Whether the "Final Word" key chain is classifiable as an article of iron or steel under subheading 7326.90.85, HTSUS, as a practical joke article under subheading 9505.90.20, HTSUS, or as a toy of subheading 9503.90.00, HTSUS.

LAW AND ANALYSIS:

Merchandise is classifiable under the HTSUS in accordance with the General Rules of Interpretation (GRIs). GRI 1 states in part that for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes, and provided the headings or notes do not require otherwise, according to GRIs 2 through 6.

The subject key chain consisting of a metal key ring attached to a novelty item is not specifically provided in any one heading of the HTSUS. Protestant claims that the item is described in heading 9505, HTSUS, as a practical joke article and, in the alternative, as a toy of heading 9503, HTSUS. We note that the article is also described in heading 7326, HTSUS, as an article of iron or steel and in heading 8542, HTSUS, as an electronic microassembly.

GRI 3(a) states that when, by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, 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 or to part only of the items in a set put up for retail sale, 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. We agree with protestant's assertion that the key chain is a composite good. The key chain is made up of two different components which are mutually complementary and form a whole that would not normally be sold separately. Since the key chain is a composite good, described in part by two or more headings, we must apply rule 3(b), which provides that composite goods are to be classified according to the component that gives the good its essential character.

The Harmonized Commodity Description And Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized system. While not legally binding on the contracting parties, and therefore not dispositive, the ENs provide a commentary on the scope of each heading of the Harmonized System and are thus useful in ascertaining the classification of merchandise under the System. Customs believes the Notes should always be consulted. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).

Explanatory Note (VIII) to GRI 3(b), at page 4, states that 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. Protestant claims that the essential character of the article is imparted by the electronic voice synthesizer component because it comprises the substantial majority of the weight, value and bulk of the product. Protestant further claims that this novelty part meets the definition of a practical joke article of heading 9505, HTSUS, and that, in the alternative, it is a toy of heading 9503, HTSUS, because it is intended to amuse an unsuspecting listener. We disagree with protestant's contentions. We believe that, in this instance, these factors do not resolve the issue of essential character. It is the role of the constituent materials in relation to the use of the goods that imparts the essential character.

Customs has consistently held that, as between the plastic and steel components in key chains, it is the steel element which provides the essential character of the item. The steel component is what makes up the utilitarian portion of the key ring, whereas the plastic component is present primarily for decorative purposes. See HQ 087831, dated November 27, 1990, HQ 950636, dated January 16, 1992, and HQ 958452, dated July 3, 1996. In these rulings Customs found that the novelty items attached to the key chains did not possess any utilitarian purpose. Similarly, in this instance, we find that the voice synthesizer does not fulfill any utilitarian function. The device does not perform any advantageous function other than simply emitting a variety of pre-programed messages. Moreover, we believe that the key chain will be used predominantly to hold keys. It is the part that keeps keys that provides the primary function on this item. We therefore find that it is the metal key ring that imparts the essential character in the "Final Word" key chain.

Chapter 73, HTSUS, provides for articles of iron or steel. EN 73.26 states that heading 7326 covers all iron or steel articles. We believe the key chain meets the definition of the ENs. Accordingly, we find that the "Final Word" key chain is classifiable under subheading 7326.90.85, HTSUS.

HOLDING:

Under the authority of GRI 3(b), the "Final Word" key chain is provided for in heading 7326, HTSUS. It is classifiable in subheading 7326.90.85, HTSUS, as other articles of iron or steel, other, other, other, other. The 1995 rate of duty is 5.1%.

This protest should be DENIED. In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you should mail this decision, together with the Customs 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 of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in ACS and to the public via the Diskette Subscription Service, the Freedom of Information Act and other public access channels.


Sincerely,


John Durant, Director
Tariff Classification Appeals Division