Key Ring With Vinyl Tab

HQ 087831 November 27, 1990 CLA-2 CO:R:C:G 087831 WAW CATEGORY: Classification TARIFF NO.: 7326.20.0050 Mr. Rich Hefner A.L. Fase & Co. 4849 N. Scott Street Suite 116 Schiller Park, IL 60176 RE: Key Ring With Vinyl Tab Dear Mr. Hefner: This letter is in response to your inquiry, dated July 24, 1990, on behalf of your client, Schweizer Emblem Co., requesting a tariff classification ruling for key rings with a vinyl attachment under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA). Your letter and a sample of the merchandise has been forwarded to us by our New York office for a classification ruling. FACTS: The sample article is described as a steel split key ring with a non-utilitarian vinyl attachment. A Diet Pepsi logo will be imprinted onto the vinyl portion of the key ring. It is anticipated that approximately 45 million of these articles will be imported into the United States from Taiwan. You maintain that the subject article is properly classified as other articles of iron or steel wire: Other, in subheading 7326.20.0050, HTSUSA, and dutiable at a rate of 5.7 percent ad valorem. We concur with the classification of these articles based on the reasons set forth below. ISSUE: Whether the subject merchandise is classifiable as an other article of plastic in subheading 3926.90.9050, HTSUSA, or as an other article of iron or steel wire in subheading 7326.20.0050, HTSUSA. LAW AND ANALYSIS: The General Rules of Interpretation (GRI's) set forth the manner in which merchandise is to be classified under the HTSUSA. GRI 1 requires that classification be determined first according to the terms of the headings of the tariff and any relative section or chapter notes and, unless otherwise required, according to the remaining GRI's, taken in order. With regard to the subject key rings, the two headings at issue are the following: (1) 3926, Other articles of plastics and articles of other materials of headings 3901 to 3914. (2) 7326, Other articles of iron or steel. In the instant case, we find no headings within the nomenclature whose terms would specifically include key chains which consist of both vinyl and steel. In addition, the key rings are not covered by any Legal Notes, at either the Section or Chapter level. GRI 1 is, therefore, inconclusive, and the remaining GRI's, taken in order, are used. The sample merchandise in this case is a composite good; i.e., it is composed of more than one material. Composite goods are classified by reference to GRI's 2 and 3. Under GRI 2, any reference to a material or an article made of a material includes goods made wholly or in part of that material. GRI 2 addresses classification of composite goods, and states, in pertinent part, that: 2(b) . . . Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of rule 3. Under GRI 2, this type of merchandise may be classified under any of the headings which include articles made of any one of the composite materials. GRI 3, HTSUSA, provides in pertinent part: 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. Since the plastic material and the steel material fall under separate headings in the tariff schedule each of which describes only a portion of the materials in the entire key chain, the headings are to be regarded as equally specific under GRI 3(a). Therefore, GRI 3(a) fails in establishing classification, and GRI 3(b) becomes applicable. GRI 3(b) states in pertinent part: (b) 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. Determination of essential character under GRI 3(b) is not made according to inflexible rules. While the Explanatory Notes (EN) provide guidelines for making essential character determinations, we cannot rely solely on those factors. The EN's to GRI 3(b) indicate that: (VIII) The factor which determines essential character will vary as between 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 believe that the EN language regarding bulk, weight, constituent role, etc., should be cited as instructive but not limiting to allow us to consider other pertinent factors in those cases where the EN factors do not provide complete criteria for an essential character determination. Of the headings which merit consideration under GRI 3(b), Heading 3926, HTSUSA, "Other articles of plastic" is the provision into which these items would fall if the essential character were defined by the plastic component. If, however, the component providing the essential character were the steel, then Heading 7326, HTSUSA, "Other articles of iron or steel" would be the proper classification. This office is of the opinion that, as between plastic and steel components, it is the steel element which provides the essential character of this item. We base this conclusion on two factors. First, on the basis of the GRI 3(b) Explanatory Note, the weight and value comparison of the key chain components clearly shows that the steel comprises the majority by weight and value of the composite material. Second, the steel component is what makes up the utilitarian portion of the key ring, whereas the plastic component is present primarily for decorative purposes. Therefore, the merchandise is classified in Heading 7326, HTSUSA, as other articles of iron or steel wire: Other. Legal Note 2 to Chapter 73 states that "[i]n this chapter the word "wire" means hot- or cold-formed products of any cross- sectional shape, of which no cross-sectional dimension exceeds 16 mm." The split key ring meets the definition of a steel wire in Chapter 73. Accordingly, the key ring is classified in the provision for Articles of iron or steel wire: Other in subheading 7326.20.0050, HTSUSA. HOLDING: The subject key ring is a composite article which is classified according to the constituent material which comprises the essential character of the entire article. Based on the foregoing analysis, we have determined that the steel wire constitutes the essential character of the article. Thus, the subject merchandise is classifiable under subheading 7326.20.0050, HTSUSA, which provides for Other articles of iron or steel: Articles of iron or steel wire: Other, dutiable at a rate of 5.7 percent ad valorem. Sincerely, John Durant, Director Commercial Rulings Division