CLA-2 RR:CR:GC 960279 MMC

Mr. Francis Brennan
De Angelus & Associates
1455 Pennsylvania Avenue, N.W.
Suite 1150
Washington, D.C. 20004

RE: HRL 958959 revoked; "ParentBanc" Educational Articles

Dear Mr. Brennan:

This is in reference to your February 6, 1997, request for reconsideration of Headquarters Ruling Letter (HRL) 958959 dated November 12, 1996, on behalf of ParentBanc Inc., concerning articles known as "ParentBanc", "ParentBanc Jr.", "ParentBanc Deluxe" and "ParentBanc Checkbook Refill Kit." In HRL 958959 you were advised that the articles did not meet the requirements to be considered "toy sets" as provided for in the Harmonized Tariff Schedule of the United States (HTSUS). As the "ParentBanc," "ParentBanc Jr.," "ParentBanc Deluxe," and "ParentBanc Checkbook Refill Kit," did not meet the toy set definition you were directed to separately classify each component of the various articles. Samples were submitted with your original request. In preparing this decision, consideration was given to the views expressed in the meeting held with Headquarters personnel on June 24, 1997.

Pursuant to section 625(c)(1) Tariff Act of 1930 [19 U.S.C. 1625(c)(1)], 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), notice of the proposed revocation of HRL 958959 was published, on November 5, 1997, in the Customs Bulletin, Volume 31, Number 45. No comments were received in response to the notice.

FACTS:

The ParentBanc articles are collections of items designed to teach children, ages six to twelve, principles of money management and personal record keeping skills. Parents act as bankers and their children act as bank customers. A child's allowance, gift money, earnings, etc., are entered as direct deposits on a check register without any money changing hands. To obtain money, the child writes a check to the parent who, in turn, provides the amount of money drawn on the account.

The first sample article, identified as "ParentBanc," consists of a threefold checkbook wallet, a wide-ruled check register pad, two pads of non-negotiable checks, a small calculator, a paper photo identification (i.d.) card, a clear plastic card holder, and various pieces of non-lithographically printed literature, including "Instructions for Children and Parents." The checkbook wallet has a hook and loop closure and an outer surface of plastic sheeting backed with a woven fabric. Its interior is fitted to contain the check register, check pads, and the i.d. card with holder. There are two additional card slots and an interior flap pocket with hook and loop closure, in which coins may be carried.

The sample identified as "ParentBanc Jr." consists of components similar to those included in the "ParentBanc" article, but has different packaging, contains no threefold checkbook wallet, and its calculator is of lower value. There is only one pad of checks. The check pad and check register are fitted into a checkbook cover of polyvinyl chloride (PVC) plastics.

The sample identified as "ParentBanc Deluxe" also consists of components similar to those included in the "ParentBanc" article, but has different packaging and contains three pads of checks, a higher quality calculator, a threefold wallet fitted to carry cards and coins (but not check pads or calculator), and a zippered carrying bag. The check pad and check register are fitted into a PVC checkbook cover. Both the threefold wallet and the carrying bag have an outer surface of cellular plastics backed with a woven fabric.

The sample identified as the "ParentBanc Checkbook Refill Kit" contains two check pads and a check register. Each of the four "ParentBanc" articles is imported in a retail package that is suitable for direct sale without repacking.

Excerpts from advertising and periodical literature submitted indicate that "ParentBanc" articles are marketed and described in a variety of ways, such as: "a fun and educational product," "a wonderful teaching tool," "turns money management into a game," "a way for kids to learn how to make wise decisions about spending and saving," "an excellent tool for parents," and "an excellent opportunity to confront money issues...early in a manner that is fun for the kids as well as educational." The items are photographically depicted alongside toys and games on the pages of catalogs including: JC Penney, F-A-O Schwarz, The Great Kids Company, The Westbury Collection, and Miles Kimball.

ISSUES:

1) Whether the articles are considered "educational toys" for tariff purposes.

2) Whether the articles constitute sets for classification purposes.

LAW AND ANALYSIS:

Classification under the Harmonized Tariff Schedule of the United States (HTSUS), is made in accordance with the General Rules of Interpretation (GRI). GRI 1 provides that the classification of goods 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 GRI may then be applied.

The tariff provisions under consideration are as follows:

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

9505 Other toys; reduced-size ("scale") models and similar recreational models, working or not; puzzles of all kinds; parts and accessories thereof

4202.31 Articles of a kind normally carried in the pocket or in the handbag

4817 Envelopes, letter cards, plain postcards and correspondence cards, of paper or paperboard; boxes, pouches, wallets and writing compendiums, of paper or paperboard, containing an assortment of paper stationery

4820 Registers, account books, notebooks, order books, receipt books, letter pads, memorandum pads, diaries and similar articles

4901 Printed books, brochures, leaflets and similar printed matter, whether or not in single sheets

4909 Printed or illustrated postcards; printed cards bearing personal greetings, messages or announcements, whether or not illustrated, with or without envelopes or trimmings

4911 Other printed matter, including printed pictures and photographs

8470 Calculating machines and pocket-size data recording, reproducing and displaying machines with calculating functions; accounting machines, postage-franking machines, ticket-issuing machines and similar machines, incorporating a calculating device; cash registers

The term "toy" is not defined in the tariff. 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. 89-90, 54 Fed. Reg. 35127, 35128 (August 23, 1989). General ENs to Chapter 95 of the HTSUS state, in pertinent part, that: "This Chapter covers toys of all kinds whether designed for the amusement of children or adults...." EN 95.03 states, in pertinent part, that:

This heading covers:

(A) All toys not included in headings 95.01 and 95.02.

* * *

These include:

* * *

(17) Educational toys (e.g., toy chemistry, printing, sewing and knitting sets).

* * *

Certain of the above articles (toy arms, tools, gardening sets, tin soldiers, etc.) are often put up in sets.

* * *

Collections of articles, the individual items of which if presented separately would be classified in other headings in the Nomenclature, are classified in this Chapter when they are put up in a form clearly indicating their use as toys (e.g., instructional toys such as chemistry, sewing, etc., sets).

* * *

You contend that the "ParentBanc" articles should be classified as educational toy sets, pursuant to the application of GRI 1, under heading 9503, HTSUS, or in the alternative as a general set pursuant to the application of GRI 3.

The EN term "educational toy" was first introduced with the adoption of the HTSUS in 1989. Prior to 1989, such articles were not considered within the scope of the tariff term "toy." Such articles were believed to be advanced in condition or "more than" toys because they provided an element (education) other than amusement.

Customs has identified a series of characteristics, which are indicative, but not determinative of articles which are considered "educational toys" classifiable in heading 9503, HTSUS. The criteria were identified by examining the exemplars provided in the ENs of educational toys and determining what universal characteristics they had. Our examination indicated that educational toys rely on or have:

1. self-learning: This characteristic incorporates the idea that natural curiosity spurs continued use of the article.

2. creative imagination

3. trial and error: This characteristic manifests itself in the inclusion of example instructions or experiments to follow to create an end product. Such articles lack clear positive reinforcement for the completion of the tasks outlined.

4. independent play value: This characteristics incorporates the idea that the article has play value independent of any learning which may or may not occur when using the article. We note that it has been Customs experience that generally, for an article to have play value independent of its educational feature, it must have some form of manipulative play value.

Examples of articles which are considered "educational" toys for tariff purposes include chemistry sets and most baby toys such as activity quilts, busy boards, etc.

Chemistry sets are considered educational toys for tariff purposes because a child's natural curiosity about the combination of elements is what generally spurs the article's use. Additionally, a child can use their own imagination or knowledge to create different combinations of elements and view different things with the various tools provided in a chemistry set. Moreover, chemistry sets generally provide instructions and experiments which may be followed. However, even if the instructions are not followed and no science is learned, a child can still manipulate the various articles, (microscope, chemicals, petri dishes) to pretend he is a scientist. See HRL 083048 dated October 12, 1989, and 084927 dated September 20, 1989, classifying chemistry sets.

Additionally, articles such as rattles, crib mirrors, and activity quilts are considered within the scope of the term "educational toy" because they serve as basic tools to aid in developing motor skills, sensory perception, hand-eye coordination, crawling, sitting, reaching, etc. It is a baby's natural curiosity about one of the above articles which spurs the learning of the listed skills. Many of the listed toys require the trial and error of discovering how to manipulate one of the listed articles so that it initiates a sound (shaking a rattle). Although the baby is learning he/she does not know that. They are merely having fun discovering new things. See HRLs 083257 dated February 21, 1990, 088983 dated August 12, 1991, 956309 dated August 19, 1994, and 958785 dated July 26, 1996.

Not all articles with educational elements are considered "educational toys" for tariff purposes. Articles which act primarily as surrogate instructors are not considered educational toys for tariff purposes. The act of surrogate instruction involves the giving of instructions or asking of questions and the confirmation of the correct answer. Such confirmation may have an element of "positive reinforcement" such as a pleasant sound verses a "sour" note. Unlike a child's own natural curiosity in an educational toy, it is this positive reinforcement which is offered to keep the child interested in the process. Articles with educational elements create no end product in and of themselves. It is the question/answer or record keeping, etc., the process itself, which provides the article's purpose. Examples of such educational articles include flash cards, and the various educational electronic learning devices classified in HRLs 085758 dated January 2, 1990, 086577 dated May 4, 1990, 086649 dated May 4, 1990, 087599 dated March 5, 1991, 088086 dated February 7, 1991, 088494 dated April 19, 1991, 088694 dated July 10, 1991, 951507 dated July 2, 1992, 955845 dated August 22, 1994, and 956518 dated September 22, 1994.

We are of the opinion that the various "ParentBanc" articles function like an educational article rather than an educational toy. No self-learning exists when the ParentBanc products are used. Rather an instructional mode is created by the child approaching a parent banker with a "check" to make an actual withdrawal of their own money: either the amount for withdrawal exists or it does not. Furthermore, no trial and error characteristic exists as accurate records must be kept so that both the adult and child can be aware of the "account's" balance. A child cannot experiment by entering any old number into the register or writing a check for any conceivable amount, as this would destroy the accuracy of the balance and defeat the stated purpose of teaching money management. Finally, the ParentBanc articles have little if any independent or manipulative play value.

A child can not role play "banker" keeping a bank account balanced; it either is or it is not. "Pretending" would cause the account of the child's real money to be inaccurate. It requires adult interaction and supervision to function. Moreover, the only possible manipulative play value, independent of the article's educational aspects, is writing, specifically numbers. Customs has never considered writing, coloring, drawing or painting to be "manipulative play value." Nor does Customs classify the tools for writing, coloring, drawing or painting as toys since those tools are not designed to amuse.

Although heading 9503, HTSUS, does not describe the "ParentBanc Checkbook Refill Kit", the "ParentBanc Checkbook Refill Kit" nonetheless consists of components all described by heading 4820, HTSUS. Therefore, it is classifiable according to GRI 1, under subheading 4820.10.4000, HTSUS, which provides for "Registers, account books, notebooks, order books, receipt books, letter pads, memorandum pads, diaries and similar articles: Other."

Inasmuch as the "ParentBanc," ParentBanc Jr." and "ParentBanc Deluxe" are not described by heading 9503, HTSUS, and two or more headings, describe their various components, they cannot be classified according to GRI 1.

GRI 2(a) is inapplicable because it applies to incomplete or unfinished articles, and the ParentBanc articles are imported in a finished complete condition. GRI 2(b) states, in pertinent part, that any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. The classification of goods consisting of more than one material or substance shall be according to the principles of GRI 3.

GRI 3 states that when, by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:

(a) 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.

As the above mentioned headings describe only one particular component of the ParentBanc set, the headings are considered equally specific and GRI 3(b) must be examined.

EN Rule 3(b)(X) (pg. 4), provides a three-part test for "goods put up in sets for retail sale": For the purposes of this Rule, the term 'goods put up in sets for retail sale' shall be taken to mean goods which:

(A) consist of at least two different articles which are prima facie, classifiable in different headings....;

(B) consist of products or articles 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 (e.g., in boxes or cases or on boards).

"ParentBanc," "ParentBanc Jr." and "ParentBanc Deluxe" comprise sets put up for retail sale. Their various components are classifiable under different headings. Each of the articles is put up together to meet the need of teaching children how to manage their own money. Finally, all are imported in a condition which is suitable for sale directly to consumers without repackaging.

GRI 3(b) states:

(b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up 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.

According to EN GR 3, pg.4, 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. We are of the opinion that none of the various components of the "ParentBanc," "ParentBanc Jr." and "ParentBanc Deluxe" articles provides an essential character. Each of the components works together in concert to perform the goal of teaching children how to mange their money. Because none of the components constitutes an essential character, GRI 3(c) must be applied.

GRI 3(c) states:

When goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.

The heading which appears last in numerical order for the "ParentBanc", "ParentBanc Jr." and "ParentBanc Deluxe" is heading 8470, HTSUS. Classification to the 10 digit level will be under subheading 8470.10.0040, HTSUS, which provides for "Calculating machines and pocket-size data recording, reproducing and displaying machines with calculating functions; accounting machines, postage-franking machines, ticket-issuing machines and similar machines, incorporating a calculating device; cash registers: Electronic calculators capable of operation without an external source of electric power and pocket-size data recording, reproducing and displaying machines with calculating functions, Display only."

HOLDING:

The "ParentBanc Checkbook Refill Kit" is classifiable under subheading 4820.10.4000, HTSUS, which provides for "Registers, account books, notebooks, order books, receipt books, letter pads, memorandum pads, diaries and similar articles: Other." The 1997 general column one duty rate is free.

The "ParentBanc", "ParentBanc Jr." and "ParentBanc Deluxe" is classifiable under subheading 8470.10.0040, HTSUS, which provides for "Calculating machines and pocket-size data recording, reproducing and displaying machines with calculating functions; accounting machines, postage-franking machines, ticket-issuing machines and similar machines, incorporating a calculating device; cash registers: Electronic calculators capable of operation without an external source of electric power and pocket-size data recording, reproducing and displaying machines with calculating functions, Display only." The 1997 general column one duty rate is 2.6% ad valorem.

HRL 958959 is revoked. In accordance with 19 U.S.C. 1625(c)(1), this ruling will become effective 60 days after its publication in the Customs Bulletin. Publication of rulings or decisions pursuant to 19 U.S.C. 1625(c)(1) does not constitute a change of practice or position in accordance with section 177.10 (c)(1), Customs Regulations [19 CFR 177.10(c)(1)].

Sincerely,

John Durant, Director
Commercial RulingsDivision