OT:RR:CTF:CPMM H309572MMM
Ms. Carrie Vanderhoff Santoki, LLC. 1100 N. Opdyke Rd. Suite 200
Auburn Hills, MI 48326
RE: Revocation of NY N306048; Classification of LEGO Notebook with Gel Pen from China
Dear Ms. Vanderhoff,
This is in reference to the New York Ruling Letter (NY) N306048, issued to you by U.S. Customs and Border Protection (CBP) on September 24, 2019, concerning classification of a LEGO notebook with a gel pen from China under the Harmonized Tariff Schedule of the United States (HTSUS). We have reviewed your ruling, and determined that it is incorrect, and for the reasons set forth below, are revoking your ruling.
FACTS:
In your ruling NY N306048, CBP stated as follows in reference to the subject merchandise, a LEGO Locking Notebook & Gel Pen; Blue:
This item is a 6.2” x 6.2”, 352 page notebook in various colors that resembles a 2” x 2” LEGO brick. The notebook has an embedded LEGO brick located in the back inside cover with a LEGO gel pen attached by the gel pens’ embedded LEGO brick.
CBP classified the merchandise in subheading 4820.10.4000.
ISSUE:
Whether the LEGO notebook with gel pen are classified in subheading 4820.10.2060, HTSUS, as a bound notebook, or subheading 4820.10.4000, HTSUS as “Other”.
LAW AND ANALYSIS:
Merchandise imported into the United States is classified under the HTSUS. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (GRIs) and, in the absence of special language or context which requires otherwise, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law for all purposes.
GRI 1 requires that classification be determined first 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 heading and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order. GRI 2(a) provides, in relevant part, that "[a]ny reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished articles has the essential character of the complete or finished article."
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 2020 HTSUS provisions under consideration are as follows:
4820: Registers, account books, notebooks, order books, receipt books, letter pads, memorandum pads, diaries and similar articles, exercise books, blotting pads, binders (looseleaf or other), folders, file covers, manifold business forms, interleaved carbon sets and other articles of stationery, of paper or paperboard; albums for samples or for collections and book covers (including cover boards and book jackets) of paper or paperboard:
4820.10 Registers, account books, notebooks, order books, receipt books, letter pads, memorandum pads, diaries and similar articles:
4820.10.20 Diaries, notebooks and address books, bound; memorandum pads, letter pads and similar articles
4820.10.2060 Other…
4820.10.4000 Other…
9608: Ball point pens; felt tipped and other porous-tipped pens and markers; fountain pens, stylograph pens and other pens; duplicating styli; propelling or sliding pencils (for example, mechanical pencils); pen-holders, pencil-holders and similar holders; parts (including caps and clips) of the foregoing articles, other than those of heading 9609:
The EN (X), to GRI 3(b) provides that the term “goods put up in sets for retail sale” refers to goods that:
Consist of at least two different articles which are prima facie classifiable in different headings;
Consist of products or articles put together to meet a particular need or carry out a specific activity; and
Are put up in a manner suitable for sale directly to users without repacking (e.g. in boxes or cases or on boards).
The subject merchandise consists of two different articles, the notebook and the gel pen, which are prima facie classifiable in different headings, 4820, HTSUS and 9608, HTSUS. They are also used together to carry out a specific activity (take notes, draw, etc.), and are put up in a manner suitable for sale directly to users without repacking.
The subject merchandise is a “good put up in a set for retail sale.” According to GRI 3(b), 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. Although the GRIs do not provide a definition of “essential character,” EN (VIII) of GRI 3(b) provides guidance. According to this EN, the essential character may 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.
It is well-established that a determination as to “essential character” is driven by the particular facts of the case at hand. Essential character has traditionally been understood as “that which is indispensable to the structure, core or condition of the article, i.e., what it is” and as “the most outstanding and distinctive characteristic of the article.” The most distinctive characteristic of the set is the notebook; the notebook makes up the bulk and weight of the set. Additionally, because the gel pens are packaged on the inside of the notebook and hidden from the consumer, the notebook is the indispensable and distinctive characteristic of the article. The set, in its entirety, will therefore be classified in the provision applicable to the notebook.
There is no dispute that the subject merchandise is properly classified in heading 4820, HTSUS. Further, there is no dispute it is classified in subheading 4820.10 as “Registers, account books, notebooks, order books, receipt books, letter pads, memorandum pads, diaries and similar articles.” Therefore, CBP’s analysis turns to whether the subject notebook is classified at the 8-digit level under subheading 4820.10.20, HTSUS, which provides for “Diaries, notebooks and address books, bound; memorandum pads, letter pads and similar articles” or under subheading 4820.10.40, HTSUS, as “Other.” The subject merchandise is a bound notebook and is classified at the 8-digit level under subheading 4820.10.20, HTSUS.
The LEGO notebook and gel pen is classified in subheading 4820.10.2060.
HOLDING:
By application of GRIs 1, 3(b), and 6, the LEGO notebook and gel pen are classified in heading 4820, HTSUS, specifically in subheading 4820.10.2060, HTSUS, which provides for: “Registers, account books, notebooks, order books, receipt books, letter pads, memorandum pads, diaries and similar articles, exercise books, blotting pads, binders (looseleaf or other), folders, file covers, manifold business forms, interleaved carbon set: Registers, account books, notebooks, order books, receipt books, letter pads, memorandum pads, diaries and similar articles: Diaries, notebooks and address books, bound; memorandum pads, letter pads and similar articles: Other.” The 2020 column one general rate of duty for subheading 4820.10.2060, HTSUS, is free.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 4820.10.2060, HTSUS, unless specifically excluded, are subject to an additional 25 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.03, in addition to subheading 4820.10.2060, HTSUS, listed above.
The HTSUS is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Note cited above and the applicable Chapter 99 subheading. For background information regarding the trade remedy initiated pursuant to Section 301 of the Trade Act of 1974, you may refer to the relevant parts of the USTR and CBP websites, which are available at https://ustr.gov/issue-areas/enforcement/section-301-investigations/tariff-actions and https://www.cbp.gov/trade/remedies/301-certain-products-china respectively.
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/tata/hts/.
EFFECT ON OTHER RULINGS
New York Ruling Letter N306048, dated September 24, 2019, is hereby REVOKED in accordance with the above analysis.
Sincerely,
for
Craig T. Clark, Director
Commercial and Trade Facilitation Division