Four Toy Vehicles: "Duracell Racer, Hot Wheels Camaro, Hot Wheels Dragster, and McDonald's Dragster;" Printed Paper Advertising Inserts: American Goods Returned

HQ 954344 April 14, 1994 CLA-2 CO:R:C:F 954344 GGD CATEGORY: Classification TARIFF NO.: 9503.90.60; 9801.00.10 Mr. Jerrold E. Anderson Katten Muchin & Zavis 525 West Monroe Street, Suite 1600 Chicago, Illinois 60661-3693 RE: Four Toy Vehicles: "Duracell Racer, Hot Wheels Camaro, Hot Wheels Dragster, and McDonald's Dragster;" Printed Paper Advertising Inserts: American Goods Returned Dear Mr. Anderson: This letter is in response to your inquiry of May 12, 1993, on behalf of your client, M-B Sales, concerning the classification under the Harmonized Tariff Schedule of the United States (HTSUS), of four toy vehicles imported from China. Each vehicle has a paper insert that has been printed with advertising in the U.S., then sent to China to be packaged with the toys and returned. Production sample toys were submitted with your inquiry. FACTS: Each of the toy cars at issue is free-wheeling, with a metal body, plastic wheels, and thin wire axles. The "Duracell Racer" and "Hot Wheels Camaro" measure approximately 3 inches in length, while the "Hot Wheels Dragster" and "McDonald's Dragster" measure approximately 4-1/2 inches in length. Each vehicle is imported in a sealed plastic bag with a paper advertising insert previously printed in the United States. ISSUES: 1) What is the proper classification of the toy cars? 2) Whether the U.S.-origin printed matter is entitled to a duty exemption under subheading 9801.00.10, HTSUS. -2- LAW AND ANALYSIS: Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). The systematic detail of the harmonized system is such that virtually all goods are classified by application of GRI 1, that is, 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 may then be applied. The Explanatory Notes (ENs) to the Harmonized Commodity Description and Coding System, which represent the official interpretation of the tariff at the international level, facilitate classification under the HTSUS by offering guidance in understanding the scope of the headings and GRIs. The proper heading in this case is clear, i.e., heading 9503, for other toys. Since none of the toy cars is a model, incorporates a motor, nor contains a spring mechanism, only one subheading is applicable. The toy cars are classified in subheading 9503.90.60, HTSUS. Subheading 9801.00.10, HTSUS, provides for the duty-free entry of products of the U.S. that are returned after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad. In Superscope, Inc. v. United States, 13 CIT 997, 727 F.Supp. 629 (1989), the court held that certain glass panels of U.S. origin that were exported, repacked abroad with certain foreign components, and returned to the U.S. as part of unassembled audio cabinets, were entitled to duty-free entry under item 800.00, Tariff Schedules of the United States (TSUS), since the U.S. panel portion of the imported article was "not 'advanced in value or improved in condition ... while abroad,' but [was] merely repacked." Id. at 631. Although the Superscope case concerned the TSUS, the decision is equally applicable to similar situations arising under subheading 9801.00.10, HTSUS, since that provision's predecessor - item 800.00, TSUS - and relevant Schedule 8, TSUS, headnotes, were carried over into the HTSUS, virtually unchanged. See also Headquarters Ruling Letter 555428, issued April 17, 1990. In this case, because the U.S.-origin printed advertising inserts are merely placed inside the plastic bags and sealed, they are not advanced in value or improved in condition while -3- abroad. Therefore, when the toy cars are imported, the printed matter will be entitled to duty-free treatment under subheading 9801.00.10, HTSUS, assuming compliance with the documentation requirements of 19 CFR 10.1. HOLDING: The four toy cars, identified as "Duracell Racer, Hot Wheels Camaro, Hot Wheels Dragster, and McDonald's Dragster," are properly classified in subheading 9503.90.60, HTSUS, the provision for "Other toys...and accessories thereof: Other: Other: Other toys (except models), not having a spring mechanism." The applicable duty rate is 6.8 percent ad valorem. The U.S.-origin printed advertising inserts are entitled to a duty exemption under subheading 9801.00.10, HTSUS, assuming compliance with the documentation requirements for this tariff provision. Sincerely, John Durant, Director Commercial Rulings Division