Slip Op. 05-118
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
________________________________________
SIMON MARKETING, INC. and :
PERSECO SYSTEM SERVICES, L.P., :
:
Plaintiffs, :
: Court No. 00-00332
v. :
:
UNITED STATES, :
:
Defendant. :
________________________________________:
[Plaintiff’s motion for summary judgement is denied;
defendant’s cross-motion for summary judgment is granted.]
September 1, 2005
Neville Peterson LLP (Michael K. Tomenga, Lawrence J. Bogard,
George W. Thompson, and Laura Martino) for Simon Marketing, Inc.
and Perseco System Services, L.P., plaintiffs.
Peter D. Keisler, Assistant Attorney General; Barbara S.
Williams, Attorney-in-Charge; International Trade Field Office,
Commercial Litigation Branch, Civil Division, United States
Department of Justice (Mikki Graves Walser); of counsel: Michael W.
Heydrich, Office of the Assistant Chief Counsel for International
Trade Litigation, Bureau of Customs and Border Protection, for
United States, defendant.
OPINION
TSOUCALAS, Senior Judge: Before the Court is a motion and
cross-motion for summary judgment pursuant to USCIT R. 56 arguing
there are no genuine issues as to any material facts. Plaintiffs,
Simon Marketing, Inc. and Perseco System Services, L.P. (“Simon”)
challenge the classification of its merchandise under the 1998
Harmonized Tariff Schedule of the United States (“HTSUS”) by the
Court No. 00-00332 Page 2
Bureau of Customs and Border Protection1 (“Customs”). Simon
contends that the merchandise is properly classified as “other
toys” under HTSUS subheading 9503.90.00, which is duty free.
Customs cross-moves for summary judgment stating that the Court
should sustain its classification under HTSUS subheading 9102.91.20
as a “watch,” with a duty rate of 3.9 percent ad valorem on the
movement and case and 5.3 percent ad valorem on the battery.
JURISDICTION
The Court has jurisdiction over this matter pursuant to 28
U.S.C. § 1581(a) (2000).
STANDARD OF REVIEW
On a motion for summary judgment, the Court must determine
whether there are any genuine issues of fact that are material to
the resolution of the action. See Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986). A factual dispute is genuine if it might
affect the outcome of the suit under the governing law. See id.
Accordingly, the Court may not decide or try factual issues upon a
1
The United States Customs Service was renamed the Bureau
of Customs and Border Protection of the Department of Homeland
Security, effective March 1, 2003. See Homeland Security Act of
2002, Pub. L. No. 107-296, § 1502, 116 Stat. 2135 (2002);
Reorganization Plan for the Department of Homeland Security, H.R.
Doc. No. 108-32 (2003).
Court No. 00-00332 Page 3
motion for summary judgment. See Phone-Mate, Inc. v. United
States, 12 CIT 575, 577, 690 F. Supp. 1048, 1050 (1988). When
genuine issues of material fact are not in dispute, summary
judgment is appropriate if a moving party is entitled to judgment
as a matter of law. See USCIT R. 56; see also Celotex Corp. v.
Catrett, 477 U.S. 317, 322-23 (1986).
DISCUSSION
I. Factual Background
This dispute is ripe for summary judgment and the relevant
facts are outlined below. Simon entered the merchandise subject to
this action in October 1998. See Mem. P. & A. Supp. Pls.’ R. 56.
Mot. Summ. J. (“Simon’s Mem.”) at 2; Def.’s Mem. Opp’n Pls.’ Mot.
Summ. J. Supp. Def.’s Cross-Mot. Summ. J. (“Customs’ Mem.”) at 2.
The subject merchandise is one of three promotional articles known
as the “Pop Topper,” which was sold at McDonald’s in conjunction
with the release of the movie “A Bug’s Life.”2 See Customs’ Mem.
at 2; Pls.’ Am. Statement Material Facts Not Dispute (“Simon’s
Facts”) ¶¶ 11 & 15. The Pop Topper was sold separately from the
Happy Meals program and could be purchased for $1.99. See Simon’s
Facts ¶ 15. The Pop Topper measures two and a half inches by two
2
Both parties acknowledge that only the “Pop Topper” is
subject to this action and that the three articles together
comprised the “Clip-Tock Watch Collection” promotion. See Customs’
Mem. at 2; Simon’s Facts ¶ 11.
Court No. 00-00332 Page 4
and a fourth inches and is shaped to represent an old-fashioned
soda bottle cap. See Simon’s Facts ¶ 13; Customs’ Mem. at 2-3. A
dark red cap is latched and hinged to an inner green main body
piece, which fits securely under the cap. See Simon’s Facts ¶ 13;
Customs’ Mem. at 2-3. The inside face of the green body piece
depicts two one-dimensional characters thematically tied to “A
Bug’s Life” around a quarter-inch by half-inch opto-electronic
digital display that tells the date or the time. See Simon’s Facts
¶ 13; Customs’ Mem. at 2-3. The Pop Topper also has a split ring
and chain allowing it to be attached to other articles, such as
backpacks or belt loops. See Simon’s Mem. at 5; Customs’ Mem. at
2-3.
Customs classified the merchandise under HTSUS subheading
9102.91.20, as “other watches, electronically operated, with opto-
electronic display only” with a duty rate of 3.9 percent ad valorem
on the watch and 5.3 percent ad valorem on the battery. See
Customs’ Mem. at 3-4. On November 3, 1998, Customs issued
Headquarters Ruling Letter NY D84205 (“NY D84205”) holding that the
subject merchandise was classifiable under subheading 9102.91.20.
See Customs’ Mem. Ex. B. In reaching its decision, Customs stated
that while the watch case is “thematically tied to a movie and
could be said to have a toy-like motif, the items themselves do not
evoke the same response as a toy.” Id. Customs further stated
Court No. 00-00332 Page 5
that “[w]ithin the watch industry, humorous motifs are a common
occurrence.” Id.
Simon filed a timely protest and application for further
review challenging Customs’ classification and sought reliquidation
of the merchandise under subheading 9503.90.00 as “other toys.”
See Compl. ¶ 25; see also Headquarters Ruling Letter 963793 (“HQ
963793”) (May 18, 2000) at Customs’ Mem. Ex. C. Both Simon’s
protest and application for further review were denied because
Simon incorrectly completed the protest form indicating that it had
not received an adverse administration decision from Customs when
in fact NY D84205 had already been issued. See Customs’ Mem. Ex.
C. Simon then commenced this action on January 31, 2002. See
Compl. Parties then filed their respective motions for summary
judgment. On May 20, 2005, the Court heard oral arguments from the
parties.
The HTSUS sections relevant to the Court’s discussion are set
forth below:
9101 Wrist watches, pocket watches and other watches,
including stop watches with case of precious metal
or of metal clad with precious metal
. . .
9102 Wrist watches, pocket watches and other watches,
including stop watches, other than those of heading
9101:
. . .
Court No. 00-00332 Page 6
Other:
9102.91 Electronically operated:
9102.91.20 With opto-electronic display only . . .
3.9% on the movement and case + 5.3% on
the battery
9503 Other toys; reduced-size (“scale”) models and
similar recreational models, working or not;
puzzles of all kinds; parts and accessories
thereof:
. . .
9503.90.00 Other . . . Free
II. Contentions of the Parties
A. Simon’s Contentions
Simon argues that Customs wrongly liquidated the Pop Topper
as “other watches” under HTSUS subheading 9102.91.20 rather than
its appropriate classification as “other toys” under subheading
9503.90.00. See Simon’s Mem. at 6. Simon contends that based on
Rule 1 of the General Rules of Interpretation (“GRI”), the
Additional United States Rules of Interpretation (“ARI”), and the
Harmonized Commodity Description and Coding System, Explanatory
Notes, (2nd ed. 1996) (“Explanatory Notes”), the Pop Topper should
be classified under heading 9503 because it was designed
specifically for amusement and therefore within the common meaning
of term “toys.” See id. at 6-19. Simon argues that the Pop
Topper’s principal use is that of amusement rather than utility.
See id. at 10 & 12-17; Pls.’ Mem. P. & A. Opp’n Def.’s Cross-Mot.
Court No. 00-00332 Page 7
Summ. J. Reply Def.’s Opp’n Pl.’s Mot. Summ. J. (“Simon’s Reply”)
at 9. Thus, the Pop Topper should have been classified as a “toy”
even though it has the capacity to measure time. See Simon’s Mem.
at 12-17. Simon emphasizes the effort spent in producing the
amusement value of the Pop Topper because it “stimulate[s] the
imagination and [has] manipulation features that entice children
into active play.” Simon’s Mem at 13. Simon notes that the
battery is permanently sealed inside the Pop Topper, thereby
limiting its ability to function as a watch for a finite period of
time. See Simon’s Mem. at 13-14; Simon’s Reply at 9-13. Moreover,
the cost of a replacement battery is more than the price of the
article indicating that “the timekeeping function was unimportant.”
See Simon’s Mem. at 14; see also Simon’s Reply at 25-26 (“[I]t is
not economically practical to use the Pop Topper as a watch beyond
the relatively short life span of its battery.”). Since the Pop
Topper’s utilitarian value is incidental to its amusement value, it
should have been classified under heading 9503. See Simon’s Mem.
at 12-14.
Relying on the Explanatory Notes to Chapters 91 and 95 of the
HTSUS, Simon argues that the Pop Topper falls within the type of
articles considered “toy watches” under heading 9503. See id. at
17-19. Simon asserts that the Explanatory Notes to Chapter 91
exclude watches without movement but do not “exhaust the universe
Court No. 00-00332 Page 8
of excludable toy watches.” Id. at 18. Therefore, an article
capable of measuring time but designed principally for another
purpose is excluded from classification under Chapter 91. See
Simon’s Reply at 5. Since the Pop Topper was designed mainly for
amusement and not utility, it is a type of “toy watch” supported by
the Explanatory Notes for classification under Chapter 95. See id.
at 5-6.
Simon argues, in the alternative, that if the Pop Topper is
prima facie classifiable under both headings 9503 and 9102, then
GRI 33 requires classification under heading 9503 as the most
specific provision. See Simon’s Mem. at 21-28. Finally, Simon
asserts that Customs ruling NY D84205 warrants no deference by the
Court. See id. at 29-30. NY D84205 warrants no deference because
it was not adopted after a public notice and comment period and is
inconsistent with Customs’ previous classifications of similar
articles. See id.
B. Customs’ Contentions
Customs replies that its classification decisions, NY D84205,
and HQ 963793, are entitled to respect pursuant to Skidmore v.
3
GRI 3 states 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:
(a) The heading which provides the most specific description shall
be preferred to headings providing a more general description . .
. .”
Court No. 00-00332 Page 9
Swift & Co., 323 U.S. 134 (1944). See Customs’ Mem. at 6-10.
Moreover, Customs asserts that its classification of the Pop Topper
is consistent with its prior treatment of similar merchandise. See
id. Customs argues that based on GRI 1, ARI 1 and the Explanatory
Notes, the Pop Topper is prima facie classifiable under heading
9102 because it falls within the meaning and scope of the term
“watch” and not “toy.” See id. at 12-25. Customs concludes that
because the Pop Topper is a battery powered, clip-on watch with an
opto-electronic display designed to tell time, it “is a watch
within the statutory meaning of that term and within the ordinary
and common meaning of” the term “watch” as it is used in the United
States. Id. at 13-14. Thus, the Pop Topper is appropriately
classified under subheading 9102.91.20 because it is a fully
functioning digital watch. See id. Customs further states that
Simon’s assertion that the Pop Topper is classifiable under heading
9503 is wrong. See Customs’ Mem. at 15. Heading 9503 has been
found to be a principle use provision by the court, thus governed
by ARI 1(a). See id. at 16. Customs argues that the Pop Topper is
principally used as a watch and not a toy because it was designed,
marketed, and sold as a watch. See id. at 18. Simon made specific
decisions during the design and advertising process, such as
choosing a digital over analog timepiece and designating the Pop
Topper as a part of the “Clip-Tock Watch Collection.” See id. at
18-19.
Court No. 00-00332 Page 10
Customs also refutes Simon’s contention that the Explanatory
Notes to Chapters 91 and 95 support classifying the Pop Topper as
a toy. See Customs’ Mem. at 25-26. Specifically, the Explanatory
Notes to Chapter 91 exclude toy watches, “such as those without
clock or watch movements (heading 95.03 or 95.05).” Id. at 25.
Customs argues that the “toy watches” excluded from Chapter 91 are
articles without watch movements, meaning they do not tell time but
merely look like watches. See id. Since the watch aspect of the
Pop Topper has watch movement rather than merely being the
semblance of a watch, it is properly classified under heading 9102.
See id. at 25-26.
Finally, Customs argues that even if the Pop Topper was prima
facie classifiable under both headings 9102 and 9503, Customs’
classification is still correct pursuant to GRI 3(a). See id. at
27-29. Customs argues that the term “watches” is a more specific
description of the Pop Topper than the term “toys” because the
latter term can encompass “potentially [ ] anything for the
amusement of children or adults.” Id. at 28. Customs also states
that the Pop Topper is neither a “mixture, composite good, made up
of different components, nor a good put up in sets for retail
sale.” Id. at 29. Accordingly, classification pursuant to GRI
3(b) is unnecessary. See id.
Court No. 00-00332 Page 11
III. Analysis
A. Motion for Summary Judgment
Determining whether imported merchandise was classified under
the appropriate tariff provision entails a two-step process. See
Sabritas, S.A. de C.V. v. United States, 22 CIT 59, 61, 998 F.
Supp. 1123, 1126 (1998). First, the proper meaning of specific
terms in the tariff provision must be ascertained. Second, whether
the imported merchandise falls within the scope of such term, as
properly construed, must be determined. See Sports Graphics, Inc.
v. United States, 24 F.3d 1390, 1391 (Fed. Cir. 1994). The first
step is a question of law and the second is a question of fact.
See id.; see also Universal Elecs., Inc. v. United States, 112 F.3d
488, 491 (Fed. Cir. 1997). Pursuant to 28 U.S.C. § 2639(a)(1)
(1994), Customs’ classification is presumed correct and the party
challenging the classification bears the burden of proving
otherwise. See Universal Elecs., 112 F.3d at 491. This
presumption, however, applies only to Customs’ factual findings,
such as whether the subject merchandise falls within the scope of
the tariff provision, and not to questions of law, such as Customs’
interpretation of a particular tariff provision. See Sabritas, 22
CIT at 61, 998 F. Supp. at 1126; see also Universal Elecs., 112
F.3d at 491; Goodman Mfg., L.P. v. United States, 69 F.3d 505, 508
(Fed. Cir. 1995). When there are no material issues of fact in
dispute, as is admitted by both parties in the present case, the
Court No. 00-00332 Page 12
statutory presumption of correctness is irrelevant. Goodman Mfg.,
69 F.3d at 508.
The ultimate question in every tariff classification is one of
law; “whether the merchandise is properly classified under one or
another classification heading.” Bausch & Lomb, Inc. v. United
States, 148 F.3d 1363, 1365 (Fed. Cir. 1998). Where, as in the
instant case, there is no disputed material issue of facts to be
resolved by trial, disposition by summary judgment is appropriate.
Pursuant to 28 U.S.C. § 2640(a) (1994), Customs’ classification
decisions are subject to de novo review based upon the record
before the Court. Accordingly, the Court must determine “whether
the government’s classification is correct, both independently and
in comparison with the importer’s alternative.” Jarvis Clark Co.
v. United States, 733 F.2d 873, 878 (Fed. Cir. 1984).
B. Skidmore Respect
As a preliminary matter, the Court finds that Customs’
decisions in NY D84205 and HQ 963793 are not entitled to Skidmore
respect. In Skidmore, 323 U.S. at 140, the Supreme Court set forth
the factors a reviewing court is to consider in determining how
much weight an agency’s decision is to be afforded. The amount of
respect an agency’s decision is afforded by a court “will depend
upon the thoroughness evident in its consideration, the validity of
its reasoning, its consistency with earlier and later
Court No. 00-00332 Page 13
pronouncements, and all those factors which give it the power to
persuade, if lacking power to control.” Id. The power to persuade
of each Customs’ classification ruling may vary depending on the
Skidmore factors articulated in United States v. Mead, 533 U.S. 218
(2001). See Structural Indus., Inc. v. United States, 356 F.3d
1366, 1370 (Fed. Cir. 2004). The Court recognizes that Customs
classification rulings are entitled to “a respect proportional to
[their] ‘power to persuade’,” Mead, 533 U.S. at 235 (quoting
Skidmore, 323 U.S. at 140), but the Court has an “independent
responsibility to decide the legal issue regarding the proper
meaning and scope of the HTSUS terms.” Mead Corp. v. United
States, 283 F.3d 1342, 1346 (Fed. Cir. 2002) (citing Rocknel
Fastener, Inc. v. United States, 267 F.3d 1354, 1358 (Fed Cir.
2001)).
NY D84205 merely states as its reasoning that “[a]lthough the
cases for the watches are thematically tied to a movie and could be
said to have a toy-like motif, the items themselves do not evoke
the same response as a toy. Within the watch industry, humorous
motifs are a common occurrence.” Customs’ Mem. Ex. B. The Court
finds that Customs’ explanation is cursory and without meaningful
explanation. Therefore, NY D84205 is not entitled to Skidmmore
respect. Similarly, HQ 963793 is also not entitled to Skidmore
respect. Customs’ reasoning for denying Simon’s request for
Court No. 00-00332 Page 14
further review was based upon the fact that Simon had checked a
“no” box in answer to the question of whether an adverse
administrative decision regarding the subject merchandise existed.
See Customs’ Mem. Ex. C. Customs’ denial of Simon’s request was
not a substantive examination of the issues and therefore is not
persuasive regarding the issue presently before the Court. Both of
Customs’ classification ruling letters failed to exhibit a thorough
and valid reasoning giving them the “power to persuade”. See Mead,
533 U.S. at 235 (quoting Skidmore, 323 U.S. at 140).
C. Classification Under GRI 1
The proper classification of merchandise entering the United
States is directed by the GRIs and the ARIs of the HTSUS. See
Orlando Food Corp. v. United States, 140 F.3d 1437, 1439 (Fed.
Cir. 1998). The Court begins its analysis with GRI 1. See N. Am.
Processing Co. v. United States, 236 F.3d 695, 698 (Fed. Cir.
2001). GRI 1 states that “classification shall be determined
according to the terms of the headings and any relative section or
chapter notes . . . .” GRI 1; see also Sabritas, 22 CIT at 62, 998
F. Supp. at 1126-27 (noting that the definition and scope of the
terms of a particular provision is to be determined by the wording
of the statute and any relevant section or chapter notes). Only
after comparing headings, if a question persists, may the Court
look to the subheadings for the correct classification. See
Court No. 00-00332 Page 15
Orlando Food, 140 F.3d at 1440. If the proper classification
cannot be determined by reference to GRI 1, then it becomes
necessary to refer to the succeeding GRIs in numerical order. See
N. Am. Processing, 236 F.3d at 698. Additionally, the Explanatory
Notes are not legally binding on the United States, yet they
“generally indicate the ‘proper interpretation’ of provisions
within the HTSUS . . . [and] are persuasive authority for the Court
when they specifically include or exclude an item from a tariff
heading.” Sabritas, 22 CIT at 62, 998 F. Supp at 1127; see also
Mita Copystar Am. v. United States, 21 F.3d 1079, 1082 (Fed. Cir.
1994).
Both Simon and Customs argue that the Pop Topper is prima
facie classifiable under GRI 1. See Simon’s Mem. at 8; Customs’
Mem. at 12. The dispute essentially lies with whether the
utilitarian aspect of the Pop Topper, i.e. the watch, is incidental
to its amusement value or whether its amusement value is incidental
to its utilitarian purpose. Simon argues that the Pop Topper is
classifiable as a toy under heading 9503 because it was designed
for and used principally for amusement and thus within the common
meaning of “other toys.” See Simon’s Mem. at 9-12. Simon asserts
that the Pop Topper’s ability to tell time is merely incidental to
its amusement value. See id. at 12. Customs, however, maintains
that the Pop Topper is a watch under heading 9102 because it falls
Court No. 00-00332 Page 16
within the meaning and scope of the term “watch.” See Customs’
Mem. at 11-25. Customs further argues that the Pop Topper falls
within the “class or kind” of articles known as watches because it
was designed, marketed, and sold as a watch. See id. at 18-25.
For the reasons set forth below, the Court finds that the Pop
Topper is principally used as a watch and any amusement derived
from it is incidental.
The Pop Topper is a fully functioning digital watch designed
to simulate a bottle cap with an inside graphical face. It is well
settled 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 the
utilitarian purpose is incidental to amusement.”4 Ero Indus., Inc.
v. United States, 24 CIT 1175, 1181, 118 F. Supp. 2d 1356, 1361
(2000) (citations omitted). In classification cases “the
4
Parties cite a long string of cases where the Court has
examined the utility versus amusement use of an article only to
show that the analysis is often fact-specific to the particular
article in question. See e.g., Ero Indus., 24 CIT 1175, 118 F.
Supp. 2d 1356 (holding that amusement value of a tent was the
primary use of the article); Minnetonka Brands, Inc. v. United
States, 24 CIT 645, 110 F. Supp. 2d 1020 (2000) (holding that
bubble bath containers were “toys” rather than “plastic bottles”);
W. Stamping Corp. v. United States, 61 Cust. Ct. 152, 289 F. Supp.
1016 (1968) aff’d 57 C.C.P.A. 6, 417 F.2d 316 (1969) (holding that
cheaply constructed typewriters had utility as “typewriters” rather
than “toys”); N.Y. Merch. Co., Inc. v. United States, 62 Cust. Ct.
38, 294 F. Supp. 971 (1969) (holding that vinyl baseball gloves
were “baseball equipment” rather than “toys”).
Court No. 00-00332 Page 17
merchandise itself is often a potent witness.” Simod Am. Corp. v.
United States, 872 F.2d 1572, 1578 (Fed. Cir. 1989) (citations
omitted). For the Pop Topper to be appropriately classified as a
toy, its principal and not incidental use must be that of
amusement. While the Pop Topper has eye-catching caricatures and
minimal manipulability, the Court finds that it is not principally
used for amusement. Rather, based on its shape, design, and
minimal interactive value, the Pop Topper is an article that
closely resembles a pocket watch that can tell time. See Simon’s
samples.5 Without the watch aspect, the Pop Topper would be a
plastic article with two one-dimensional inanimate characters from
“A Bug’s Life” printed on it. Simon has failed to meet its burden
of showing that such an article would be principally used for
amusement purposes. Thus, the Pop Topper was properly classified
under heading 9102.
The Explanatory Notes to the HTSUS also indicate that the Pop
Topper was properly classified under heading 9102 rather than
heading 9503. The Explanatory Notes to Chapter 91 state that “this
Chapter excludes . . . c) toy clocks and watches . . . such as
those without clock or watch movements6 (heading 95.03 or 95.05).”
5
Simon submitted a Pop Topper sample to the Court as part
of its submissions (“Simon’s samples”).
6
Watch movements is defined as “devices regulated by a
balance-wheel and hairspring, quartz crystal or any other system
Court No. 00-00332 Page 18
Explanatory Notes, 91 at 1663 (emphasis retained). The Explanatory
Notes to heading 95.03 states that “[m]any of the toys of this
heading are mechanically or electrically operated [including] . .
. (16) Toy clocks and watches.” Explanatory Notes, 95 at 1712.
Simon argues that when the Explanatory Notes to Chapters 91 and 95
are read together, the Pop Topper is encompassed in heading 9503
and excluded from heading 9102. The “such as” language in the
Explanatory Notes to Chapter 91 “requires that all ‘toy watches’ be
excluded from Chapter 91 regardless of whether they possess watch
movement.” See Simon’s Reply at 7. Customs argues, however, that
when the two Explanatory Notes are read together, the types of “toy
watches” excluded from heading 9102 are those articles that do not
have watch movements. See Customs’ Mem. at 25-26. The Court finds
that Customs properly read these Explanatory Notes together.
“Toy watches” are articles that resemble watches and can be
manipulated to exhibit time, but do not keep or tell time on their
own. Simon argues that the Explanatory Notes to Chapter 91 “make
clear that not all devices capable of measuring time are to be
classified under Chapter 91.” Simon’s Reply at 6. Simon argues
that the list of exclusions to Chapter 91 encompasses toy clocks
capable of determining intervals of time, with a display or a
system to which a mechanical display can be incorporated.”
Explanatory Notes, 91 at 1663. The fact that the Pop Topper has
watch movement is not disputed by the parties. See Simon’s Mem. at
5; Customs’ Mem. at 3.
Court No. 00-00332 Page 19
such as those without clock or watch movements. See id. at 6-7.
Simon asserts that because the list of exclusions is not
exhaustive, then articles with clock and watch movements may be
excluded from classification under Chapter 91. See id. While
Simon is correct that the exclusions named in the Explanatory Notes
to Chapter 91 is not an exhaustive list, the article at issue must
fall within the scope of the demonstrative examples presented. The
exclusions listed may apply to merchandise with watch movements
where the watch component is entirely incidental to its principal
use. The Pop Topper’s principal use, however, is that of a watch.
The Court holds that the Pop Topper is not the type of merchandise
encompassed by the term “toy watch” in the Explanatory Notes to
Chapters 91 and 95. Consequently, the Pop Topper may not be
excluded from classification under Chapter 91.
Although the Pop Topper is not a “toy watch” under Chapters 91
and 95, the issue remains whether it has sufficient amusement value
to be correctly classified as “other toys” under heading 9503.
Heading 9503 is a “principle use” provision and thus governed by
ARI 1(a). See Minnetonka, 24 CIT at 651, 110 F. Supp. 2d at 1026.
ARI 1(a) states that
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 of kind to
which the imported goods belong, and the controlling use
is the principal use.
Court No. 00-00332 Page 20
(emphasis added). “Principle use” is defined as the use “which
exceeds any other single use of the article.” Minnetonka, 24 CIT
at 651, 110 F. Supp. 2d at 1027 (citations omitted). Further, it
is the ordinary use of the “class or kind” of merchandise to which
the subject merchandise belongs “even though particular imported
goods may be put to some atypical use.” Primal Lite, Inc. v. United
States, 182 F.3d 1362, 1364 (Fed. Cir. 1999). The “class or kind”
of articles considered “toys” under heading 9503 are articles whose
principle use is “amusement, diversion or play, rather than
practicality.” Minnetonka, 24 CIT at 651, 110 F. Supp. 2d at 1027.
The court has adopted certain factors to determine whether an
article falls within a particular “class or kind” of merchandise
(“Carborundum factors”). See United States v. Carborundum Co., 63
C.C.P.A. 98, 536 F.2d 373 (1976). The Carborundum factors include:
(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 sale; (5) usage, if any, in the same manner as
merchandise which defines the class; (6) the economic practicality
of so using the import; and (7) the recognition in the trade of the
use. See Minnetonka, 24 CIT at 651-52, 110 F. Supp. 2d at 1027.
Here, the Pop Topper must belong to the “class or kind” of
merchandise whose principle use is “amusement, diversion or play,
rather than practicality” to be classified as a “toy.” See
Court No. 00-00332 Page 21
Minnetonka, 24 CIT at 651, 110 F. Supp. 2d at 1026.
Simon bears the burden of proving classification under heading
9503. See Universal Elecs., 112 F.3d at 491. Simon argues that
the Pop Topper is designed and mainly used for amusement, see
Simon’s Mem. at 12-17, but provides no compelling evidence to
substantiate its claim. Rather, by Simon’s own admission, heading
9102 covers watches designed principally to measure time, while
heading 9503 covers toys and toy watches “principally used for
amusement, even if capable of measuring time.” See Simon’s Reply
at 3 (emphasis added). While the Pop Topper may provide some
amusement value, it is not inherent that the article is principally
used as a toy. Also, the fact that the Pop Topper was designed for
children does not resolve whether it is principally used as a toy
or a watch.
When examining the Pop Topper under the Carborundum factors,
the Court finds that it is not an article of the “class or kind” of
merchandise whose principle use is amusement, diversion or play.
The Pop Topper has the general physical characteristics of a clip-
on pocket watch with an opto-electronic digital display capable of
telling the date and the time. While the graphics printed on the
inside face of the Pop Topper serve to enhance and promote a user’s
imagination, the practical usage of the article as a time telling
device cannot be dismissed. The size and colorful nature of the
Court No. 00-00332 Page 22
article merely indicates that the Pop Topper was designed for
children. Any amusement value derived from the Pop Topper,
however, is minimal and limited to the fixed one-dimensional
graphics, which themselves do not move or cannot be manipulated in
any way. The watch aspect of the Pop Topper is its dominant
feature and exceeds any other use of the article. See Minnetonka,
24 CIT at 651, 110 F. Supp. 2d at 1027. The Pop Topper was also
marketed and advertised as a watch. See Simon’s samples; Simon’s
Mem. Ex. 2. The box the Pop Topper comes in is labeled “Clip-Tock
Watch Collection.” See Simon’s samples (emphasis added). Included
inside the packaging is a separate printed insert with instructions
on how to set and switch the time and date on the display. See id.
Furthermore, Simon intended the Pop Topper to be a watch because it
chose to design and advertise the Pop Topper as a watch. See
Simon’s samples; Simon’s Mem. Ex. 2, 4, 5. The Court notes that
subject merchandise was not a part of the “Clip-Tock Toy Watch
Collection” or “Clip-Tock Toy Collection.” In fact, Simon did not
refer to the Pop Topper as a “toy” anywhere on the packaging or in
its marketing research materials. See Simon’s samples; Simon’s
Mem. Ex. 2. The reasonable expectations of the purchasers were to
receive a watch.
The Pop Topper was a promotional article for the movie “A
Bug’s Life,” which could only be purchased at McDonald’s, and was
Court No. 00-00332 Page 23
sold separately from the Happy Meals7 program. While the Pop
Topper was $1.99, consumers considered the price a good value and
were purchasing a watch because of an attachment to the promoted
movie. See Simon’s Mem. Ex. 5. Simon’s own marketing research
shows that the price was not unreasonably low for a watch and
followed consumer expectations. See id. Simon’s contention that
replacing the battery is not economically practical is also
unpersuasive because the value to a single consumer cannot be
contemplated. Thus, any amusement value derived from the Pop
Topper is incidental to its utilitarian aspect. The Pop Topper is
of the “class or kind” of articles considered “watches” and not
“toys” because its principal use is to tell time. To classify
every eye-catching, child-friendly article as a toy, simply because
it enhances a child’s imagination, is to unacceptably blur the
HTSUS headings defeating their purpose and leading to absurd
results. Since the Pop Topper is prima facie classifiable under
heading 9102 pursuant to GRI 1, examination under the remaining
GRIs is unnecessary.
7
The Happy Meals program is McDonald’s traditional
disbursement of toys and could arguably be a channel of trade for
toys. See Simon’s Mem. at 5-6.
Court No. 00-00332 Page 24
CONCLUSION
The Court finds that Customs’ decisions in NY D84205 and HQ
963793 are not entitled to Skidmore respect. The Court also holds
that based on its shape, design, and minimal interactive value, the
Pop Topper is principally used as a watch and any amusement derived
therefrom is incidental to its utilitarian aspect. Accordingly,
Customs properly classified the Pop Topper under subheading
9102.91.20. For the foregoing reasons, Simon’s motion for summary
judgment is denied and Customs’ cross-motion for summary judgment
is granted. Judgment will be entered accordingly.
/s/ Nicholas Tsoucalas
NICHOLAS TSOUCALAS
SENIOR JUDGE
Dated: September 1, 2005
New York, New York