CLA-2 OT:RR:CTF:TCM H017185 KSH
Area Port Director
United States Customs and Border Protection
C/O Protest and Control
1100 Raymond Blvd, Suite 402
Newark, NJ 07102
RE: Internal Advice Request No. 07/018; Classification of warp knit baling wrap. Dear Area Director: This ruling is in response to a request for Internal Advice initiated by Simons & Wiskin, on behalf of its client, Fabro Oriented Polymers, Inc. At issue is the classification of warp knit baling wrap under the Harmonized Tariff Schedule of the United States (HTSUS). The request for internal advice is sought based upon a proposed rate change in which the warp knit baling wrap is proposed to be reclassified in heading 6005, HTSUS, from heading 5806, HTSUS, as entered.
FACTS: The merchandise at issue is identified as “Bale Netwrap.” It is a warp knit fabric composed of 100% polyethylene strip. The strips that form the netwrap are between 1 and 2 millimeters in apparent width. The strips are manufactured in different colors and will be imported in 60, 123, 125 and 130 centimeter widths. Descriptive literature submitted with the Internal Advice request indicates that the netwrap will be sold in 2000, 2500 and 3000 meter rolls. The netwrap is used to wrap bales of hay, straw, forage and corn. Counsel for Fabro states that the netwrap is made exclusively for use with hay balers of specific manufacturers and is made to fit precisely into the netting compartment of the hay balers. Counsel also states that there is no processing done after importation.
In reaching our decision herein, consideration has been given to counsel’s additional submissions dated October 4, 2007, February 22, 2008, February 25, 2008, March 12, 2008, March 19, 2008, and a telephone conference held with members of my staff on March 11, 2008.
ISSUE:
Whether the bale netwrap is classified in heading 8433, HTSUS, as a part of harvesting or threshing machinery, heading 5806 as a made up net, HTSUS, or heading 6005, HTSUS, as warp knit fabric.
LAW AND ANALYSIS:
Classification of goods under the HTSUS is governed by the General Rules of Interpretation (GRI). GRI 1 provides that classification shall be determined 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 GRI may then be applied.
The Harmonized Commodity Description and Coding System Explanatory Notes (EN), constitute the official interpretation at the international level. While neither legally binding nor dispositive, the EN provide a commentary on the scope of each heading of the HTSUSA and are generally indicative of the proper interpretation of the headings. It is Customs and Border Protection’s (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).
Counsel for Fabro maintains that the bale netwrap is classified under heading 8433, HTSUS, which provides for “Harvesting or threshing machinery; including straw or fodder balers; grass or hay mowers; machines for cleaning, sorting or grading eggs, fruit or other agricultural produce, other than machinery of heading 8437; parts therof.” Counsel maintains Note 2(b) to Section XVI, HTSUS, is controlling. Note 2(b) to Section XVI, HTSUS, states in part, “other parts, if suitable for use solely or principally with a particular kind of machine … are to be classified with the machines of that kind….” Inasmuch as the bale netwrap is used solely with a good of heading 8433, HTSUS, counsel argues that Note 2(b) to Section XVI, HTSUS, requires it to be classified in heading 8433, HTSUS, irrespective of whether it also classifiable in another provision. To the extent that Additional U.S. Rule of Interpretation (AUSR) 1(c), HTSUS, conflicts with Note 2(b) to Section XVI, HTSUS, counsel states it must be disregarded. AUSR 1(c) states:
A provision for parts of an article covers products solely or principally used as a part of such articles but a provision for “parts” or “parts and accessories” shall not prevail over a specific provision for such part or accessory[.]
Counsel also cites the U.S. Court of International Trade ("CIT") case Ludvig Svensson, Inc. v. United States, ("Ludvig Svensson") 62 F. Supp 2d 1171 (C.I.T. 1999), in which the court found that specialized plastic laminated screens used as shade screens and greenhouse roofs and imported in rolls several hundred feet long were parts of agricultural machinery. The court had to consider whether these goods in their condition as imported were sufficiently advanced so as to be considered parts of agricultural equipment. In particular, the court noted that the imported goods used as greenhouse roofs were incorporated into shade and heat retention systems, which consisted of screens, drive motors, cables, aluminum and steel supports, brackets, pulleys, fasteners, and support wires. The court noted further, shade and heat retention systems are installed inside almost all commercial greenhouses. Greenhouse manufacturers either produce greenhouses with the shade and heat retention system installed as original equipment or build greenhouses with enough space in the roof area to accommodate such a system. Id. at 1174. The court found "no question that greenhouses are used in agriculture and that the shade and heat retention systems, which incorporate some of the imported screens ... are used to regulate and control the environment within a greenhouse." Id. at 1177-78.
In considering whether the specialized plastic laminated goods were
"parts," the Ludvig Svensson court had to determine: first, whether the imported item was "an integral, constituent, or component part, without which the article to which it is to be joined, could not function as such article" (quoting United States v. Willoughby Camera Stores, Inc., ("Willoughby Camera"), 21 C.C.P.A. 322, 324 (1933); and second, whether the imported item was dedicated solely for use with the article in question (following United States v. Pompeo, 43 C.C.P.A. 9 (1955)). Applying this as a two-part test, the court found that "without the screens, the walls in commercial greenhouses would be bare, adorned only by the skeleton of shade and heat retention systems, i.e. drive motors, cables, aluminum and steel supports, brackets, pulleys, fasteners, and support wires; there would be no control of temperature and humidity and no shade and heat retention system". Ludvig Svensson at 1178. The court also found that the screens were in an advanced state of manufacture, and had no other commercial use. The court took into consideration the fact that the screens were "products of high technology, design and planning", that is, they were complex screens incorporating several different types of materials, manufactured for the specific goal of controlling various aspects of a greenhouse environment. Moreover, each type of screen could only have been used for the purpose for which it was manufactured, and the function and purpose of each screen was clearly identifiable upon importation.
In accordance with Ludvig Svensson, counsel argues that the hay baler could not perform its intended function of making and wrapping bales without the netwrap and it is dedicated for use solely with hay balers. Alternatively, counsel maintains the bale netwrap is classified in heading 5608, HTSUS, which provides for “Knotted netting of twine, cordage or rope; made up fishing nets and other made up nets, of textile materials.” Counsel asserts that the bale netwrap is knitted to shape in its condition as imported. Further, counsel argues that the fact that bale netwrap is not knotted or made of net fabric does not preclude its classification in heading 5608, HTSUS.
Counsel correctly asserts that CBP has stated that Section XVI, Note 2, HTSUS, is special language or context which precludes the application of AUSR 1(c). See HQ 967233, dated February 18, 2005. However, it is also the position of CBP that the special language or context only precludes the application of AUSR 1(c), HTSUS, where the competing provisions at issue are both within the same section or Chapter (depending on whether the "special language or context" arises in the context of a section note or chapter note). See Sharp Microelectronics Technology, Inc. v. United States, 122 F.3d 1446, 1453 (Fed. Cir. 1997), (Additional U.S. Rule 1(c), HTSUS, was applied where one competing provision was subject to Section XVI, Note 2, and the other competing provision was in Chapter 90, HTSUS). Cf. Nidec Corp. v. United States, 861 F. Supp. 136, aff’d. 68 F. 3d 1333 (Fed Cir. 1995) (AUSR 1(c), HTSUS, was not applied where both competing provisions were subject to Section XVI, Note 2, HTSUS).
The bale netwrap is potentially classifiable in heading 8433, HTSUS, heading 5608, HTSUS or heading 6005, HTSUS. Only heading 8443, HTSUS, is subject to Note 2 to Section XVI, HTSUS. Thus, AUSR 1(c) is applicable. Heading 6005, HTSUS, which provides for warp knit fabrics, specifically describes the bale netwrap which is warp knit fabric. Thus, heading 6005, HTSUS, is more specific than heading 8433, HTSUS. As such, the bale netwrap cannot be classified in heading 8443, HTSUS.
In supplemental submissions counsel cites to Brother Int'l Corp. v. United States, 26 CIT 867, 248 F. Supp. 2d 1224 (2002), in which the Court of International Trade held that printing cartridges were not classifiable as photographic film even though they contained a roll of chemically treated film at the time of importation. Id. at 875-76, 248 F. Supp. 2d at 1232. The court found that unlike photographic film, the printing cartridges were not the material on which a facsimile machine operates, were not the output of the facsimile machine, and once used, had no intrinsic value but were discarded. Id. at 876-77, 248 F. Supp. 2d at 1233. The court concluded that the printing cartridges are instead classified properly as part of a facsimile machine because they are an integral part of the facsimile machines that use them and are designed and constructed exclusively for use in certain facsimile machines. Id. at 873, 248 F. Supp. 2d at 1229-30.
Similarly, counsel cites to the decision of the Court of Appeals for the Federal Circuit in Mita Copystar America v. United States, 160 F.3d 710 (Fed. Cir. 1998) which held that toner cartridges for photocopier machines were properly classified as "parts and accessories of electrostatic photocopying apparatus," under subheading 9009.90.00, Id. at 714, notwithstanding the fact that the toner contained within the cartridges was itself classifiable as "chemical preparations for photographic uses" when imported separately. Id. at 712. The court reasoned that the cartridges were parts of photocopier machines because they "are sold with toner inside; they remain with the toner throughout its use by the photocopier; they are the standard device for providing toner to the photocopier; and they are not designed for reuse." Id. at 712-13.
The fabric at issue is not similar to the printer cartridges at issue in Brother
Int’l Corp or the toner cartridges in Mita Copystar America or the screens in Ludivg Svensson. It is not imported with the machinery in which it will subsequently be used. It has an intrinsic value once used (i.e., to bind hay). By contrast, it is the material on which the machine that uses it operates. It is the output of the machine. See American Express Co. v. United States, 29 C.C.P.A. 87, 95 (1941) (film separators designed for use and used for no purpose other than to separate sensitized films in a film pack, protect them from the light, and remove an exposed film from its exposed position to the back of the film pack were held not to be a part of the camera but the material on which it operates notwithstanding the fact that the camera cannot perform its function in the absence of the merchandise at issue) and HQ 958098, dated December 1, 1995. Indeed, counsel provides extensive evidence touting the benefits of employing the bale netwrap in hay baling machinery such as cost effectiveness and prevention of spoilage.
Heading 5608, HTSUS, provides for “knotted netting of twine, cordage or rope; made up fishing nets and other made up nets, of textile materials.” The EN to heading 5608, HTSUS, states, in pertinent part: (1) Knotted netting of twine, cordage or rope.
These products are simply lengths of netting, i.e., open mesh knotted fabric made either by hand or by machine. They differ from the net fabrics of heading 58.04 in that they are made of the twine, cordage or rope of heading 56.07.
(2) Made up fishing nets and other made up nets, of textile materials.
* * * *
Made up nets are nets, whether or not ready for use, made directly to shape or assembled from pieces of netting. The presence of handles,
rings, weights, floats, cords or other accessories does not affect the classification of the goods of this group.
* * * *
The heading does not cover:
(a) Netting in the piece produced by crochet work (headings 60.02 to 60.06).
* * * *
The EN to heading 6005, HTSUS, reads in relevant part:
* * * *
…These fabrics, made on warp knitting machines (especially Raschel machines), are often similar to net fabrics or lace (but should not be mistaken for the latter: see the Explanatory Note to heading 58.04) and are often used for making curtains….
The bale netwrap is not formed by knots but by knitting. Moreover, it is not made of twine, cordage or rope but strip or the like of heading 5404, HTSUS. Nor is it a made up net. Since the fabric fails to meet the terms of the heading, the bale netwrap cannot be classified in heading 5608, HTSUS. It is warp knit fabric classified in heading 6005, HTSUS.
HOLDING:
The bale netwrap at issue is classified in heading 6005, HTSUS. It is provided for in subheading 6005.90.9000, HTSUS, which provides for “Warp knit fabrics (including those made on galloon knitting machines), other than those of headings 6001 to 6004: Other: Other.”
You are to mail this decision to the internal advice requester no later than sixty days from the date of the decision. At that time, Regulations and Rulings of the Office of International Trade will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at
www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division