CLA-2 CO:R:C:M 954418 MBR/KCC
Ms. Natouchka Patrice Rampy
Sharretts, Paley, Carter & Blauvelt, P.C.
Sixty-seven Broad Street
New York, N.Y. 10004
RE: Lewis Galoob Toys, Inc.; "Label Fun"; Label Maker; Toy; Office
Machine; Label Tape; Set; GRI 3(b); EN X to GRI 3(b);
Essential Character; EN Rule 3(b); Packaging; American Goods
Returned; John V. Carr & Sons, Inc.; Superscope, Inc.; T.D.
91-7
Dear Ms. Rampy:
This is in response to your letter of May 28, 1993, on behalf
of Lewis Galoob Toys, Inc., to the Area Director of Customs, New
York, Seaport, requesting the tariff classification of the "Label
Fun" label maker and tape set, under the Harmonized Tariff Schedule
of the United States (HTSUS). Your letter and submitted sample
were forwarded to this office for a response.
FACTS:
The "Label Fun" set consists of a label maker comprised of
plastic (except for two metal springs, a metal hinge, and metal
screws). It is rectangular shaped and has a dial on top depicting
the letters of the alphabet, numbers 2 through 9, and a "space"
selector. Numbers and letters may be chosen by rotating the dial
and then, placing the label maker on a table, desk or similar
surface, depressing the top section in order to print the desired
character in relief on the inserted label tape. The label maker
is entirely produced in China.
The label tape consists of a roll of plastic with an adhesive
backing and a paper protective strip which is peeled off to expose
the adhesive. The label tape is manufactured in the United States
and exported to China for packaging with the label maker. The
label tape is exported to China in rolled form ready for packaging
with the label maker. Two rolls of label tape are included with
the label maker which is blister-packed on a piece of cardboard
with pictures of the article on the front and instructions for its
use on the reverse side. The cardboard backing contains the
statement "Ages 4 and Up" and "Warning: Contains Small Parts."
ISSUE:
I. What is the classification of the "Label Fun" set consisting
of a label maker and two rolls of label tape, under the HTSUS?
II. Are the rolls of label tape eligible for the duty exemption
available under the subheading 9801.00.10, HTSUS?
LAW AND ANALYSIS:
I. Classification
The General Rules of Interpretation (GRI's) to the HTSUS
govern the classification of goods in the tariff schedule. GRI 1
states, in pertinent part:
...classification shall be determined according to the terms
of the headings and any relative section or chapter notes...
The "Label Fun" is unequivocally packaged and marketed for
children "Ages 4 and up." The Harmonized Commodity Description and
Coding System Explanatory Notes (ENs), page 1585, regarding the
classification of toys of chapter 95, HTSUS, state as follows:
GENERAL
This chapter covers toys of all kinds whether designed
for the amusement of children or adults....
The Explanatory Notes, although not dispositive, are looked to for
the proper interpretation of the HTSUS. 54 Fed. Reg. 35127, 35128
(Aug. 23, 1989).
However, there is nothing intrinsically "amusing" about the
activity of making labels. The ENs, page 1588, further state that:
"[c]ertain 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." The instant label maker is not of
limited use or capacity, and in fact, only the packaging denotes
its intention for children. Adults could just as likely use it to
make labels. Therefore, since it is not designed for the amusement
of children or adults and it is not of limited capacity, it is not
classifiable in chapter 95, HTSUS.
Therefore, we must consider the alternative classifications.
The Additional U.S. Rules of Interpretation state as follows:
1. In the absence of special language or context which
otherwise requires--
(a) 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.
It is Customs position that label makers in general are
principally used in offices, shops, etc., as "office machines."
The ENs to heading 84.72, page 1302, delineate, in pertinent part,
as follows:
This heading covers all office machines not covered by
the preceding three headings or more specifically by any other
heading of the Nomenclature.
The term "office machines" is to be taken in a wide
general sense to include all machines used in offices, shops,
factories, workshops, schools, railway stations, hotels, etc.
for doing "office work" (i.e., work concerning the writing,
recording, sorting, filing, etc., of correspondence,
documents, forms, records, accounts, etc.).
Therefore, since label makers are designed for use in schools,
offices, shops, etc., for doing office work (filing, etc.), the
instant label maker is classifiable in subheading 8472.90.80,
HTSUS, which provides for: "[o]ther office machines...: [o]ther:
[o]ther."
When, by application of GRI 2, HTSUS, goods are prima facie
classifiable under two or more headings GRI 3, HTSUS, is
applicable. In this case, classification is determined by
application of GRI 3(b), HTSUS, which provides:
Mixtures, composite goods consisting of different materials
or made up of different components, and 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....
To determine what is a "set put up for retail sale" the Explanatory
Notes (EN) of the Harmonized Commodity Description and Coding
System (HCDCS) may be utilized. EN X to GRI 3(b) (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 facia, 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).
In the present case, the "Label Fun" consists of a label maker
(heading 8472), and 2 rolls of label tape (heading 3919) which are
classified under different tariff provisions. The label maker and
label tape are packaged together in a retail container for sale
directly to the consumer without repackaging. Additionally, the
label maker and label tape are put up together to meet a particular
need or carry out a specific activity, to make labels. Therefore,
the "Label Fun" is a set for tariff purposes. To determine the
proper classification, the essential character of the "Label Fun"
needs to be determined.
In general, essential character has been construed to mean the
attribute which strongly marks or serves to distinguish what an
article is; that which is indispensable to the structure, core or
condition of the article. In addition, EN Rule 3(b) (pg. 4),
provides further factors which help determine the essential
character of goods. Factors such as bulk, quantity, weight or
value, or the role of a constituent material in relation to the use
of the goods are to be utilized, though the importance of certain
factors will vary between different kind of goods.
We are of the opinion that the essential character of the
"Label Fun" set is imparted by the label maker. The label maker
is the principal component of the set as it actually makes the
labels. Therefore, the "Label Fun" set is classified under
subheading 8472.90.80, HTSUS, which provides for "[o]ther office
machines...: [o]ther: [o]ther."
II. 9801.00.10, HTSUS
Subheading 9801.00.10, HTSUS, provides for duty-free entry of
U.S. products that are exported and returned without having been
advanced in value or improved in condition by any means while
aborad. The packaging abroad of U.S.-made products will not
preclude classification under this tariff provision when there is
no improvement in condition or advancement in value of the products
themselves, apart from their containers. See, United States v.
John V. Carr & Sons, Inc., 69 Cust. Ct. 78, C.D. 4377 (1972), aff'd
61 CCPA 52, C.A.D. 1118 (1974) and Superscope, Inc. v. United
States, 13 CIT 997, 727 F. Supp. 629 (1989).
The operations performed abroad consist merely of repackaging
the U.S label tape with the foreign label maker. As the packaging
of the U.S. item with foreign item does not advance in value or
improve in condition the U.S. label tape, the portion of the "Label
Fun" set consisting of the U.S. label tape will be eligible for
the duty exemption under subheading 9801.00.10, HTSUS. See, T.D.
91-7, 25 Cust. Bull. 7 (1991). Therefore, the "Label Fun" set will
be dutiable on its full value at the rate found in subheading
8472.90.80, HTSUS, with a classification allowance for the cost or
value of the U.S. label tape. This assumes that the documentation
requirement of section 10.1, Customs Regulations (19 CFR 10.1), are
met and that the district director of Customs at the port of entry
is satisfied of the U.S. origin of label tape claimed to be
entitled to this duty exemption.
HOLDING:
The "Label Fun" is a set pursuant to GRI 3(b), HTSUS,
classified under subheading 8472.90.80, HTSUS, which provides for:
"[o]ther office machines...: [o]ther: [o]ther," at a 3.7% rate of
duty.
The U.S. rolls of label tape will not be advanced in value or
improved in condition while aborad as a result of the packaging
operations. Therefore, the U.S. label tape will qualify for the
duty exemption under subheading 9801.00.10, HTSUS, upon compliance
with the documentary requirements of 19 CFR 10.1.
Sincerely,
John Durant, Director