CLA-2 OT:RR:CTF:TCM H123917 EG
Kelly Christensen
Kidz Delight, Ltd.
1121 Warren Ave., Suite 245
Downers Grove, IL 60515
RE: Reconsideration of New York Ruling Letter N108817; Classification of the “Light
N Sound Phonics” Electronic Learning Device
Dear Ms. Christensen:
This is in reply to your letter dated August 9, 2010, in which you requested reconsideration of New York Ruling Letter (NY) N108817, dated June 14, 2010, as it pertains to the classification of an electronic learning device under the Harmonized Tariff Schedule of the United States (HTSUS).
FACTS:
The merchandise at issue is identified as the “Light N Sound Phonics” electronic learning device, Kidz Delight Item No. K6425 (the learning device). The learning device is circular, portable and battery–operated. Its face contains 27 backlit letter keys, an ABC key and a repeat key. The user can play eight games that teach English and Spanish, two games that teach English and Spanish alphabets and phonics, a memory game and other English and Spanish games. The learning device includes flashing lights and audio to guide the user through the games.
In a letter dated June 4, 2010, you wrote to U.S. Customs and Border Protection (CBP) to request a tariff classification ruling for the learning device. In response, CBP issued NY N108817 which classified the learning device under heading 8543, HTSUS, as an electrical machine or apparatus with an individual function not classified elsewhere. Your letter dated August 9, 2010, requests that CBP reconsider and revoke NY N108817. You assert that the correct classification for the learning device is under heading 9503, HTSUS, as a toy.
ISSUE:
Is the learning device classified in heading 8543, HTSUS, as an electrical machine or apparatus with an individual function, or under heading 9503, HTSUS, as a toy?
LAW AND ANALYSIS:
Classification under the HTSUS is made in accordance with the General Rules of Interpretation. 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 GRIs 2 through 6 may then be applied in order.
The Explanatory Notes (EN) to the Harmonized Commodity Description and Coding System represent the official interpretation of the tariff 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 applicable HTSUS provisions at issue are as follows:
8543 Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter; parts thereof . . .
* * *
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 . . .
* * *
Section XVI, Note 1(p) provides:
This section does not cover… Articles of chapter 95.
* * *
Additional U.S. Rule of Interpretation 1(a) states that, in the absence of special language or context which otherwise requires:
A tariff classification controlled by use (other than actual 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 . . .
* * *
EN 95.03(D), which provides for “other toys,” states, in pertinent part:
This group covers toys intended essentially for the amusement of persons (children or adults)….This group includes:
All toys not included in (A) to (C). Many of the toys are mechanically or electrically operated. These include:
. . .
Toy sewing machines.
(xvii) Toy clocks and watches.
Educational toys (e.g., toy chemistry, printing, sewing and knitting sets) . . .
Certain toys (e.g., electric irons, sewing machines, musical instruments, etc.) may be capable of a limited “use”; but they are generally distinguishable by their size and limited capacity from real sewing machines, etc.
* * *
Section XVI, Note 1(p), HTSUS, which includes chapter 85, HTSUS, states that the section does not cover articles of Chapter 95, HTSUS. Accordingly, if the learning device is described by the terms of heading 9503, HTSUS, it cannot be classified in heading 8543, HTSUS. Thus, the issue is whether the instant merchandise is described by the terms of heading 9503, HTSUS, as an educational toy.
Although the term “toy” is not defined in the HTSUS, in Minnetonka Brands v. United States, 110 F. Supp. 2d 1020, 1026 (Ct. Int’l Trade 2000), the Court of International Trade (CIT) held that an object is a toy only if it is designed and used for amusement, diversion or play, rather than practicality. In Ideal Toy Corp. v. United States, 78 Cust. Ct. 28 (1977), the U.S. Customs Court (predecessor to the CIT) similarly held that when amusement and utility become locked in controversy, the question becomes one of determining whether the amusement is incidental to the utilitarian purpose, or whether the utility is incidental to the amusement provided.
In Minnetonka Brands, the CIT concluded that heading 9503, HTSUS, is a "principal use" provision within the meaning of Additional U.S. Rule of Interpretation 1(a), HTSUS. Minnetonka Brands, 110 F. Supp. at 1027. Therefore, classification under the heading is controlled by the principal use of goods of that class or kind to which the imported goods belong in the United States at or immediately prior to the date of the importation. In determining whether the principal use of a product is for amusement, and thereby classified as a toy, CBP considers a variety of factors, including: (1) the general physical characteristics of the merchandise; (2) the expectation of the ultimate purchasers; (3) the channels, class or kind of trade in which the merchandise moves; (4) the environment of the sale (i.e., accompanying accessories and the manner in which the merchandise is advertised and displayed); (5) usage, if any, in the same manner as merchandise which defines the class. United States v. Carborundum Co., 536 F.2d 373, 377 (1976).
EN 95.03 refers to toy chemistry, printing, sewing and knitting sets as examples of educational toys. According to EN 95.03, these educational toys all have 1) limited use, 2) limited capacity and 3) are representational of a grown-up version of the same article. Educational toys are designed to allow the user to mimic or even undertake the basic activities of actual chemistry, printing, sewing or knitting sets. They take advantage of a child’s natural curiosity and desire to role-play at being an adult. Any actual learning of principles of chemistry or development of sewing skills is incidental to the entertainment value of role-playing.
CBP has already applied the aforementioned factors to educational toys and learning devices in several rulings. In Headquarters Ruling Letter (HQ) 966721, dated April 14, 2004, CBP considered the LeapPad® Learning System, which taught subjects such as reading, phonics, vocabulary, foreign languages, geography, science and music, and consisted of an electronic pad, book and stylus. The learning system involved placing a book on a pad while a stylus was used to scan words and pictures within the book, resulting in various audible responses from the electronic pad in the form of words or music. CBP noted that the device had amusement and/or entertainment value for children, but concluded that any amusement experienced by the child was secondary to the primary purpose of the system, which is to educate. The same reasoning applies to the instant articles. As CBP declared in HQ 966721, “any amusement experienced by the child is therefore meant to facilitate the learning process and thus make the system a better learning tool, but not to change its nature as a learning device.”
In HQ 962582, using a similar analysis, CBP classified another electronic learning device, the Leapfrog Create-a-Word Travel Mat, in heading 8543, HTSUS. This device was an interactive electronic talking toy that taught the alphabet, phonics, spelling and reading through games and quizzes. The device had the shape of a frog’s head silhouette. CBP found that the device’s design and marketing suggested that it would be used principally to teach the alphabet and words, and therefore the educational value of the speller predominated over whatever amusement value the frog-like features provide to the speller. As noted in HQ 966721, learning devices of the kind at issue are not classifiable as “educational toys” even if their user experiences some amusement.
In HQ 960279, dated December 9, 1997, CBP further clarified the difference between an “educational toy” of heading 9503, and an educational device:
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.
The subject learning device clearly falls into the category of “surrogate instructor” rather than that of an educational toy of the kind listed in EN 95.03. The learning device is intended to help the child learn the same basic skills taught in school, and as CBP noted in HQ 088494, dated April 19, 1991, “Although certain aspects of school can be amusing, we do not agree that school is designed for the amusement of children.” Nor does the subject learning device have a limited use or capacity regarding a representation of a grown-up activity. In fact, it has extended use and capacity regarding the activity for which it is used, namely teaching English and Spanish phonics and vocabulary. Furthermore, the learning device does not provide any entertainment value through role-playing. As such, the learning device is not the same class or kind of article as the educational toys enumerated in EN 95.03.
In addition to its role as “surrogate instructor”, the Kidz Delight 2010 Catalog advertises the learning device as “Bilingual Light N Sound Phonics.” See www.kidzdelight.com. The catalog description focuses entirely on the instructional games and educational aspects of the learning device. The catalog does not mention the purported amusement value of lights and sounds from the learning device.
You assert that the lights and sounds emitted by the learning device provide amusement value, and as such the learning device should be classified under heading 9503, HTSUS, as a toy. However, the educational device in HQ 962582 also had lights, sounds and was shaped like a frog’s head. Despite these three factors, CBP found that the amusement value was secondary to the utilitarian value of the phonics and alphabet lessons taught by the educational device. As such, the lights and sounds of the subject learning device are secondary to the utilitarian value of the instructional language, alphabet and phonics games.
HOLDING:
Pursuant to GRI 1 and Additional U.S. Rule of Interpretation 1(a), the learning device is classified in heading 8543, HTSUS. The learning device is specifically provided for in subheading 8543.70.96, which provides for “Electrical machines and apparatus…: other machines and apparatus: other: other: other…” The column one, general rate of duty is 2.6 percent ad valorem. Under the provisions of subheading 9902.85.43, HTSUS, educational devices of subheading 8543.70.96, HTSUS, are entitled to a temporary reduced duty rate of 1.6 percent ad valorem until December 31, 2012.
EFFECT ON OTHER RULINGS: NY N108817, dated June 14, 2010, is hereby affirmed.
Sincerely,
Myles B. Harmon, Director Commercial and Trade Facilitation Division