CLA-2: OT:RR:CTF:TCM H033695 KSH
Ms. Alicia Balderas
Sears Holding Corporation
3333 Beverly Road A3-366B
Hoffman Estates, IL 60179
RE: Classification of a KidiArt Studio™
Dear Ms. Balderas: This is in reply to your request of June 12, 2008, to the National Commodity Specialist Division in New York regarding the classification of a KidiArt Studio™ under the Harmonized Tariff Schedule of the United States (HTSUS). Your request was forwarded to this office for direct reply. A sample was included with your request.
FACTS:
The merchandise at issue is identified as the Vtech® KidiArt Studio™. It is described in the user’s manual as follows:
The KidiArt Studio™ is a unique interactive creative platform designed especially for younger children. With the KidiArt Studio™ , children can take off on wonderful journeys that can unleash their creativity and imagination. With a kid-friendly rotating camera, an interactive pen, and a removable, touch-sensitive art pad, being creative has never been so easy. The KidiArt Studio™ offers eleven activities, including drawing, stop motion movies, fun paper crafts, customs E-cards, games and more. All of the activities are done directly on the TV, and for an extra bonus, kids can even view, manage, print and share their masterpieces by connecting the studio to a PC. They can even send their favorite creations to friends and family!
The KidiArt Studio™ consists of cartridge, CD-ROM, USB cable, AV cable, a desk that incorporates a console consisting of a touch-sensitive art pad, a rotating camera and stylus and a detachable stool. When connected to a PC, the touch sensitive pen can control the cursor and can select an object on the PC screen. Information can be stored directly to the KidiArt Studio™ via use of KidiArt Studio™ cartridges. The touch-sensitive pad contains a printed circuit board that incorporates an X and Y grid pattern that transmits an electromagnetic signal to the stylus.
ISSUE:
Whether the KidiArt Studio™ is classified as a retail set in heading 8471, HTSUS, as a unit of a unit of an ADP or heading 9017, HTSUS, as a drawing instrument.
LAW AND ANALYSIS
Classification under the HTSUSA is made in accordance with the General Rules of Interpretation (GRI). GRI 1 provides, in part, that classification decisions are to be “determined according to the terms of the headings and any relative section or chapter notes….” In the event that 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 HTSUS provisions at issue are as follows:
8471 Automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data, not elsewhere specified or included:
8523 Discs, tapes, solid-state non-volatile storage devices, “smart cards” and other media for the recording of sound or of other phenomena , whether or not recorded, including matrices and masters for the production of discs, but excluding products of chapter 37:
9017 Drawing, marking-out or mathematical calculating instruments (for example, drafting machines, pantographs, protractors, drawing sets, slide rules, disc calculators); instruments for measuring length, for use in the hand (for example, measuring rods and tapes, micrometers, calipers), not specified or included elsewhere in this chapter; and parts and accessories thereof:
9403 Other furniture and parts thereof:
The KidiArt Studio™ consists of goods which are prima facie classifiable in more than one heading. As such classification cannot be resolved under GRI 1. GRI 2(b) directs that the "classification of goods consisting of more than one material or substance shall be according to the principles of rule 3."
GRI 3 provides 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:
The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings refer to only part 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 the goods, even if one of them gives a more complete or precise description of the good.
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, insofar as this criterion is applicable.
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 headings at issue only refer to part of the items in the set put up for retail sale. As such, they are regarded as equally specific and resort must be made to GRI 3(b).
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the HTSUS. 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 the headings. It is Customs and Border Protection (CBP) practice to follow, whenever possible, the terms of the ENs when interpreting the HTSUSA. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
EN X to GRI 3(b) provides guidance as to whether the KidiArt Studio™ constitutes “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 repacking (e.g., in boxes or cases or on boards).
As previously stated, the items comprising the KidiArt Studio™ are prima facie classifiable under different headings of the HTSUS. The KidiArt Studio™ is put up together to perform the specific activity of drawing or gaming. Further, the goods are imported in a manner suitable for sale to users without repacking.
Because the three criteria under EN X to GRI 3(b) are satisfied, the item is considered '’goods put up in sets for retail sale” and will be “classified as if it consisted of the material or component which gives it its essential character, insofar as this criterion is applicable.”
Explanatory Note VIII to GRI 3(b) explains, "[t]he 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 the constituent material in relation to the use of the goods." In this case, the principal reason for purchasing the KidiArt Studio™ is to draw. The essential character is the functionality that enables drawing i.e., the console. Not only does the console enable the functionality to be performed, it also far exceeds the weight and cost of the remaining components of the KidiArt Studio™. Accordingly, the classification of the KidiArt Studio™ is dependent on the classification of the console.
The pivotal issue is whether the console is classifiable as a unit of an ADP machine of heading 8471, HTSUS, or a drawing instrument of heading 9017, HTSUS. Note 1(m) to Section XVI, states that “This section [including heading 8471, HTSUS] does not cover: Articles of Chapter 90.” The EN to heading 9017, HTSUS, states, in relevant part:
This heading does not, however, include:
* * * *
(b) Graphic tablets and digitizers (heading 84.71).
In Hewlett-Packard Company v. United States, 189 F.3d 1346 (CAFC 1999), the Court of Appeals for the Federal Circuit, held that desktop pen plotters used to produce detailed business-related graphics as directed by software installed on a computer which transferred the data to the plotter that had pens and paper which moved along the x- and y- axes, was excluded from heading 9017, HTSUS, as the plotters did not create drawings. Id. at 1350. Like the pen plotters at issue in Hewlett-Packard, the KidiArt Studio™ does not draw. Rather it assists in the recording and displaying of what was created on the touch-sensitive pad. As such, it is excluded from heading 9017, HTSUS.
In order to be classified as a unit of an ADP machine, an article is subject to the terms of Note 5(C) to Chapter 84, HTSUS, which provides as follows: (C) Subject to paragraphs (D) and (E) below, a unit is to be
regarded as being part of an automatic data processing
system if it meets all of the following conditions: (i) It is of a kind solely or principally used in an automatic
data processing system;
(ii) It is connectable to the central processing unit either directly or though one or more other units; and
(iii) It is able to accept or deliver data in a form (codes or signals) which can be used by the system. * * *
However, keyboards, X-Y coordinate input devices and
disk storage units which satisfy the conditions of
paragraphs (C)(ii) and (C)(iii) above, are in all cases to
be classified as units of heading 8471.
The EN to heading 8471, HTSUS, provides the following, in relevant part:
* * * *
(5) X-Y co-ordinate input devices, which are units for inputting position data into automatic data processing machines. These devices include the mouse, the light pen, the joystick, the track ball and the touch-sensitive screen. Their common attribute is that their input consists of, or is interpreted as, data indicating position relative to some fixed point. Their common usage is to control the position of the cursor on the display unit, as a replacement for or a complement to the cursor keys on the keyboard.
This category also covers graphic tablets, which are X-Y co-ordinate input devices making it possible to capture and trace the co-ordinates of a curve or any other geometrical form. This apparatus is generally composed of a rectangular board with an active sensing surface, a pointer or pen used to create drawings, and a zoom linked to a cross-piece, making it possible to input data.
This category further covers digitizers, which have similar functions to graphic tablets. However, while graphic tablets are used for creating original art and drawings, as well as for application menu selection and on-screen object control, digitizers are generally used for the capture of existing drawings that exist only in hard-copy form. Digitizer pointing devices may assume any shape, but must be small enough to be hand-held and moved around the (active) sensing region of the digitizer. Cross-hair cursors are the most common shape.
The console meets the criteria in Note 5(C)(ii) and (C)(iii) as it is connectable to a CPU via USB cable and accepts or delivers data through an electromagnetic signal. It is described as an X-Y coordinate device as it is consists of a rectangular board with an active sensing surface, a pen used to create drawings, and a zoom linked to a cross-piece, making it possible to input data. Consideration under heading 9017, HTSUS, is not warranted, as Note 5(C) to Chapter 84, HTSUS, and the exclusionary EN to heading 9017, HTSUS, directs us to classify X-Y coordinate devices (graphic tablets) in heading 8471, HTSUS. See HQ 960434, dated August 2, 2002.
HOLDING:
By application of GRI 3(b), the KidiArt Studio™ retail set is classified in
heading 8471, HTSUS. It is provided for in subheading 8471.60.9050, HTSUS, which provides for: “Automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data, not elsewhere specified or included: Input or output units, whether or not containing storage units in the same housing: Other: Other…Other.” The column one, general rate of duty is Free.
Duty rates are provided for convenience only and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov/tata/hts/.
Sincerely,
Gail A. Hamill, Chief
Tariff Classification and Marking Branch