CLA-2 CO:R:C:M 955113 RFA
Ms. Judith L. Haggin
Geo. S. Bush & Co., Inc.
P.O. Box 8829
Portland, Oregon 97208
RE: Unfinished greenhouse; steel structure; agricultural or
horticultural equipment; essential character; GRI 2(a);
EN 73.08; Heading 9406; HQs 083930, 086883, 087076,
089936, 954785; NY 830527
Dear Ms. Haggin:
In a letter dated July 22, 1993, to the Regional
Commissioner of Customs in New York, on behalf of Prins
Greenhouses (USA) Inc., you inquired as to the tariff
classification of unfinished greenhouses under the Harmonized
Tariff Schedule of the United States (HTSUS). Your letter was
referred to this office for a response.
FACTS:
The merchandise is unfinished greenhouses, constructed of
walls made of steel glazing bars in which glass is fitted, and
covered with PVC profiles to secure the glass panes. All of the
above mentioned material (except for the glass panes), along with
the roof, the ventilation system and the structural aluminum
tubes will be imported unassembled from Holland. The glass will
be obtained in the United States.
ISSUE:
Do unfinished greenhouses qualify for duty-free entry as
agricultural or horticultural equipment, under Chapter 98, HTSUS?
LAW AND ANALYSIS:
Classification of merchandise under the HTSUS is in
accordance with the General Rules of Interpretation (GRI's),
taken in order. GRI 1 provides that classification shall be
determined according to the terms of the headings and any
relative section or chapter notes.
You refer to NY 830527, dated November 30, 1990, in which
Customs held that complete prefabricated greenhouses are provided
for under heading 9406, HTSUS. You state that unfinished
greenhouses have the essential character of a complete greenhouse
according to GRI 2(a). GRI 2(a) states in part:
[a]ny reference in a heading to an article shall be
taken to include a reference to that article incomplete
or unfinished, provided that, as presented, the
incomplete or unfinished article has the essential
character of the complete or finished article. . . .
The Harmonized Commodity Description and Coding System
Explanatory Notes (EN) constitute the Customs Cooperation
Council's official interpretation of the HTSUS. While not
legally binding, the ENs provide a commentary on the scope of
each heading of the HTSUS and are generally indicative of the
proper interpretation of these headings. EN VIII to GRI 3
provides the following guidance in determining essential
character:
The 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 a constituent material in relation to the
use of the goods.
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. See HQ 954785 (September 22, 1993).
The issue to be determined here is whether the unassembled
greenhouse as imported without the glass panes, has the essential
character of the completed, assembled greenhouse. We are of the
opinion that the essential character of the greenhouse is
provided by the glass panes. The glass panes are the components
which create the controlled environment and protect the plants
being cultivated and, therefore, are the components which mark or
serve to distinguish a completed greenhouse. As the subject
merchandise without the glass panes does not have the essential
character of a completed greenhouse, it cannot be classified as
an unfinished greenhouse under heading 9406, HTSUS.
It is well settled that classification is based upon the
condition of an article at the time of importation. United States
v. Citroen, 223 U.S. 407 (1911). Therefore, classification of
the subject merchandise is based on the steel structure's
condition as imported. Pursuant to GRI 2(a), the unassembled
steel structure is classified as an assembled steel structure.
EN 73.08, page 1020, states as follows: "heading [7308] also
includes products such as. . . frameworks for greenhouses and
forcing frames. . . ." We find that the steel structure of the
greenhouse is classifiable under subheading 7308.90.90, HTSUS,
which provides for: "Structures . . .and parts of structures. . .
of iron or steel . . .: [o]ther: [o]ther. . . ."
Moreover, heading 9817.00.50, HTSUS, grants duty-free
treatment for "[m]achinery, equipment and implements to be used
for agricultural or horticultural purposes. . .". This is an
actual use provision. See HQ 083930 (May 19, 1989). To fall
within this special classification provision, a three-part test
must be met. First, the subject merchandise must not be excluded
from the heading under Section XXII, Chapter 98, Subchapter XVII,
U.S. Note 2, HTSUS. Secondly, the terms of the heading must be
met in accordance with GRI 1. Thirdly, the article must comply
with the actual use provision required under section 10.131
through 10.139, Customs Regulations [19 CFR 10.131 through
10.139]. See HQ 086883 (May 1, 1990); HQ 087076 (June 14, 1990);
HQ 089936 (November 15, 1991).
The first part of the test is to determine whether
unfinished greenhouses are excluded from heading 9817.00.50,
HTSUS. To do this we must first determine under which heading or
subheading it is classified. As stated, the unfinished
greenhouse is provided for under subheading 7308.90.90, HTSUS.
This subheading is not excluded from classification in heading
9817.00.50, HTSUS, by operation of Section XXII, Chapter 98,
Subchapter XVII, U.S. Note 2(ij).
The second part of the test calls for the greenhouse to be
included within the terms of heading 9817.00.50, HTSUS, as
required by GRI 1. The greenhouse must be "machinery",
"equipment" or "implements" used for "agricultural or
horticultural purposes". For this part of the test, the initial
determination to be made is what agricultural or horticultural
pursuit is in question. It is your position that the greenhouse
assists in cultivating plants in a controlled environment. This
is clearly an agricultural pursuit.
The next determination to be made is whether the subject
merchandise is "machinery", "equipment" or "implement".
Webster's II New Riverside University Dictionary (1988) defines
machinery, equipment, and implement as follows:
Machinery: machines or machine parts in general. . . the
working parts of a machine. . . a system of
related elements that operates in a definable
way. . . .
Equipment: the act of equipping or state of being
equipped . . . something with which one is
equipped. . . .
Implement: a tool, utensil, or instrument for doing a
task . . . an article used to outfit or equip
. . . .
Based on the submitted information, we find that the steel
structure meets the definition of equipment to be used for
agricultural purposes. After importation the steel structure
will be assembled with glass panes which will create a controlled
environment for the cultivation of plants. Therefore, we find
that the merchandise meets the second part of the test for
classifying an item in heading 9817.00.50, HTSUS.
The third part of the test is that importers meet the actual
use requirements of section 10.131 through 10.139, Customs
Regulations [19 CFR 10.131 through 10.139]. If these
requirements are satisfied, the third part of the test will be
met and the subject merchandise will qualify for duty-free entry
as agricultural or horticultural equipment, under Chapter 98,
HTSUS.
HOLDING:
Under the authority of GRI 1, the submitted merchandise is
provided for in heading 7308. It is classifiable in subheading
7308.90.90, HTSUS, which provides for: "Structures. . . and parts
of structures. . .of iron or steel. . .: [o]ther: [o]ther. . . ."
The column 1, general rate of duty is 5.7 percent ad valorem.
Additionally, the unfinished greenhouses are eligible for duty-
free treatment under heading 9817.00.50, HTSUS, provided the
actual use requirements of section 10.131-10.139, Customs
Regulations [19 CFR 10.131-10.139], are satisfied.
Sincerely,
John Durant, Director
Commercial Rulings Division