HQ H219598
CLA-2 OT:RR:CTF:TCM HQ H219598 TSM
Port Director, Los Angeles/Long Beach Seaport
U.S. Customs and Border Protection
301 E. Ocean Blvd.
Suite 1400
Long beach, CA 90802-4828
Attn: Pinky Khan, Senior Import Specialist
Re: Protest and Application for Further Review No: 2704-11-102716; Classification of anti-insect insulating greenhouse nets
Dear Port Director:
The following is our decision regarding Protest and Application for Further Review No. 2704-11-102716, timely filed on November 21, 2011, on behalf of Poly-Ag Corporation (“Poly-Ag” or “Protestant” regarding the tariff classification of anti-insect insulating greenhouse nets under the Harmonized Tariff Schedule of the United States (HTSUS).
FACTS:
The subject merchandise consists of anti-insect insulating greenhouse nets. The nets at issue are comprised of polyethylene woven fabric of synthetic monofilament yarns with cross-sectional threads not exceeding 1 mm, not bleached or dyed, or glued or thermal bonded at the threaded intersections. The subject nets are imported in rolls between 3m x 500m and 5m x 500m and cut to length before they are sold to customers. The nets are used either for incorporation into agriculture structures or for making those structures (i.e., shade houses, greenhouses, etc.) themselves. The nets also contain ultra-violet light stabilizers that provide five-year resistance against sunlight, and other additives, such as calcium carbonate and titanium dioxide, that contribute to specific transparency and light diffusion characteristics critical to the agricultural uses to which they are put. The subject nets prevent insects, such as white flies and thripes, from entering greenhouses and similar man – made growing environments, therefore enabling enhanced production of flower and food crops. The subject nets are manufactured on specially designed machinery using a weaving technology which enables them to be woven with custom sized holes to address the varying insect populations.
The subject merchandise was originally entered between July 14, 2010 and July 29, 2010, under subheading 5407.30.10, HTSUS, as “Woven fabrics of synthetic filament yarn, including woven fabrics obtained from materials of heading 5404: Fabrics specified in note 9 to section XI: Over 60 percent by weight of plastics.” The merchandise was subsequently liquidated and reclassified under subheading 5407.71.00, HTSUS, as “Woven fabrics of synthetic filament yarn, including woven fabrics obtained from materials of heading 5404: Other woven fabrics, containing 85 percent or more by weight of synthetic filaments: Unbleached or bleached.” Protestant claims that the correct classification is in subheading 8436.99.00, HTSUS, as “Other agricultural, horticultural, forestry, poultry-keeping or bee-keeping machinery, including germination plant fitted with mechanical or thermal equipment; poultry incubators and brooders; parts thereof: Parts: Other.” Additionally, Protestant also claimed that the subject merchandise is eligible for duty-free treatment under subheading 9817.00.60, HTSUS, which provides for “Parts to be used in articles provided for in headings 8432, 8433, 8434 and 8436, whether or not such parts are principally used as parts of such articles and whether or not covered by a specific provision within the meaning of additional U.S. rule of interpretation 1(c).”
ISSUE:
What is the proper tariff classification of the anti-insect insulating greenhouse nets under consideration?
LAW AND ANALYSIS:
Initially, we note that the decision on classification is protestable under 19 U.S.C. §1514(a) (2) as a decision on classification. The protest was timely filed, within 180 days of liquidation of the first entry. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, § 2103(2) (B) (ii), (iii) (codified as amended at 19 U.S.C. § 1514(c) (3) (2006)).
Further Review of Protest No. 2704-11-102716 is properly accorded to Protestant pursuant to 19 C.F.R. § 174.24 (a) because Protestant alleges that the decision against which the protest was filed is inconsistent with Headquarters Ruling Letter (HQ) W968283, dated May 9, 2007, and New York Ruling Letter (NY) J87840, dated August 13, 2003.
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods 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 GRIs 2 through 6 may then be applied in order.
The HTSUS provisions under consideration are as follows:
5407 Woven fabrics of synthetic filament yarn, including woven fabrics obtained from materials of heading 5404:
5407.30 Fabrics specified in note 9 to section XI:
5407.30.10 Over 60 percent by weight of plastics
* * *
Other woven fabrics, containing 85 percent or more by weight of synthetic filaments:
5407.71.00 Unbleached or bleached
* * *
8436 Other agricultural, horticultural, forestry, poultry-keeping or bee-keeping machinery, including germination plant fitted with mechanical or thermal equipment; poultry incubators and brooders; parts thereof:
Parts:
8436.99.00 Other
* * *
9817.00.60 Parts to be used in articles provided for in headings 8432, 8433, 8434 and 8436, whether or not such parts are principally used as parts of such articles and whether or not covered by a specific provision within the meaning of additional U.S. rule of interpretation 1(c)
Additional U.S. rule of interpretation 1(c) provides that “[i]n the absence of special language or context which otherwise requires, 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.”
In accordance with the additional U.S. rule of interpretation 1(c), if the subject merchandise is prima facie classifiable in heading 5407, HTSUS, as entered, then it should be classified in that heading. Protestant alleges that the subject merchandise is not classified in heading 5407, HTSUS, because it has been advanced from fabrics of heading 5407, HTSUS, and that its specialized nature requires classification under heading 8436, HTSUS, as “Other agricultural … machinery…; parts thereof.” Protestant bases this allegation on U.S. Court of International Trade ("CIT") case Ludvig Svensson, Inc. v. United States, 62 F. Supp. 2d 1171 (C.I.T. 1999), in which the court found that greenhouse screens imported in an advanced state of manufacture in rolls several hundred feet long were parts of agricultural machinery. Protestant argues that the subject merchandise is the same or substantially similar to the merchandise in issue in Ludvig Svensson in its construction and characteristics, complexity of production and design, as well as in use. Protestant further argues that the subject merchandise is identical to the merchandise at issue in NY J87840, dated August 13, 2003, which, applying the court’s decision in Ludvig Svensson, CBP classified in heading 8436, HTSUS.
In Ludvig Svensson, the court examined three types of greenhouse screens imported in rolls: (1) environmental screens, which were parts of greenhouse shade and heat retention systems used to control the environment within greenhouses; (2) insect screens, which were not parts of shade and heat retention systems, only used to control the insect population within greenhouses; and (3) plastic laminated screens used as greenhouse roofs, which were parts of greenhouse shade and heat retention systems. All three types of screens were imported in several hundred feet long rolls, cut to length to meet customers’ specifications upon importation. See Ludvig Svensson, 62 F. Supp. 2d 1171, 1173 (C.I.T. 1999).
Specifically, the Ludvig Svensson court found the greenhouse screens to be in an advanced state of manufacture, since they were complex products of high technology, design and planning, and incorporated several different types of materials. Moreover, the screens were manufactured and could only be used for the specific purpose of controlling the various aspects of a greenhouse environment, which was clearly identifiable upon importation. See Ludvig Svensson, 62 F. Supp. 2d 1171, 1179 (C.I.T. 1999). Similarly, evidence presented by the Protestant shows that the subject merchandise is comprised of high density polyethylene with UV stabilized yarns, includes additives that impact the greenhouse environment such as light diffusion, and is manufactured on specially designed machinery using a weaving technology which enables it to be woven with customs sized holes to address different insect populations. With these characteristics, these anti-insect greenhouse nets, are even more specialized than those in Ludvig Svensen, as the UV light stabilizers provide resistance to sunlight, and the additives impact the greenhouse environment, all with respect to more than just against insects. Moreover, evidence also shows that the subject merchandise is dedicated solely for use with greenhouses or shade houses, which is clearly identifiable upon importation. Accordingly, we find that like the greenhouse screens at issue in Ludvig Svensson, the subject merchandise is also in an advanced state of manufacture and therefore is no longer prima facie classifiable in heading 5407, HTSUS.
The courts have considered the nature of “parts” under the HTSUS and two distinct though not inconsistent tests have resulted. See Bauerhin Techs. Ltd. P’ship. v. United States (“Bauerhin”), 110 F. 3d 774 (Fed. Cir. 1997). The first, articulated in United States v. Willoughby Camera Stores, Inc. (“Willoughby”), 21 C.C.P.A. 322, 324 (1933), requires a determination of whether the imported item is an “integral, constituent, or component part, without which the article to which it is to be joined, could not function as such article.” Bauerhin, 110 F.3d at 778 (quoting Willoughby, 21 C.C.P.A. 322 at 324). The second, set forth in United States v. Pompeo (“Pompeo”), 43 C.C.P.A. 9, 14 (1955), states that an “imported item dedicated solely for use with another article is a ‘part’ of that article within the meaning of the HTSUS.” Id. at 779 (citing Pompeo, 43 C.C.P.A. 9 at 13). Under either line cases, an imported item is not a part if it is “a separate and distinct commercial entity.” Bauherin, 110 F. 3d at 779.
More recently, the Court of International Trade applied the Willoughby and Pompeo tests when it addressed the issue of whether two vase-shaped glass structures were classifiable as glassware in heading 7013, HTSUS, or as parts of lamps in heading 9405, HTSUS. Pomeroy Collection, Ltd., v. United States, 783 F. Supp. 2d 1257, No. 11-78 (Ct. Int’l Trade 2011). In applying Willoughby to the first article, the court ruled that “[w]hen imported, the claimed article is dedicated solely for use in such article, and, when applied to that use, the claimed part meets the Willoughby test.” Ibid, at 1261-1262. In Pomeroy, the court found that first article satisfied the Willoughby test because the hurricane lamp “clearly could not function without the first article in question” since the lamp relied upon the glass structure to hang upon. Id. at 1262. The court found that the second glass structure satisfied Pompeo because the evidence showed that the glass structure contained the flame and enabled the candles to remain lit and to prevent open flames. Thus, the court also found that the second article at issue also satisfied the Willoughby precedent because “when applied to that use” the lamp could not function without the glass structures. Id. In other words, to satisfy the Pompeo test, two prongs must be satisfied: (1) the article must be solely dedicated for use with the product it claimed to be a part of and, (2) when applied to that use, the article cannot function without the article at issue.
In HQ W968283, dated May 9, 2007, at issue was imported in rolls greenhouse film. CBP concluded that the film was classified under subheading 8436.99.00, HTSUS, as parts of agricultural machinery, since it was specially manufactured to control the environment in a greenhouse and featured UV-stabilization, thermicity barriers, infrared fillers, anti-drip additives, and energy saving pigments, preventing it from being commercially interchangeable with film used to wrap foods or with other film, such as construction film.
In NY J87840, dated August 13, 2003, CBP concluded that insect screens imported in rolls of approximately 500 yards, cut to shape and size upon importation, and used solely as part of a pest control system in greenhouses, were classified in subheading 8436.99.00, HTSUS, as parts of agricultural machinery.
Protestant presented evidence that the subject merchandise, imported in rolls of fabric, is dedicated solely for use with greenhouses or shade houses and incorporated directly into greenhouse or shade house walls. Without walls, greenhouses could not perform their essential functions of protecting the plants inside from excess amounts of light and from insects. With regard to the light controlling function, Protestant provided evidence that the subject merchandise is comprised of high density polyethylene with UV stabilized yarns that provide five-year resistance against sunlight. Protestant also provided evidence that the subject merchandise contains other additives, such as calcium carbonate and titanium dioxide, which optimize transparency and light diffusion characteristics of the subject merchandise. With regard to the insect protecting function, Protestant provided evidence that the subject merchandise is manufactured on specially designed machinery using a weaving technology which enables it to be woven with custom sized holes to address the varying insect populations.
Based on this evidence, we conclude that the subject merchandise, dedicated solely for use with greenhouses or shade houses, is an integral component without which greenhouses or shade houses could not function. Therefore, we find that the subject merchandise is sufficiently advanced so as to be considered parts of agricultural equipment classified in heading 8436, HTSUS. Specifically, the subject merchandise is classified in subheading 8436.99.00, HTSUS, which provides for “Other agricultural, horticultural, forestry, poultry-keeping or bee-keeping machinery, including germination plant fitted with mechanical or thermal equipment; poultry incubators and brooders; parts thereof: Parts: Other.”
Protestant also argued that the subject merchandise is eligible for duty-free treatment under subheading 9817.00.60, HTSUS. We note that because subheading 8436.99.00, HTSUS, is a duty-free provision, this argument need not be addressed.
HOLDING:
By application of GRI 1, the subject anti-insect insulating greenhouse nets are classified in heading 8436, HTSUS. They are specifically covered by subheading 8436.99.00, HTSUS, which provides for “Other agricultural, horticultural, forestry, poultry-keeping or bee-keeping machinery, including germination plant fitted with mechanical or thermal equipment; poultry incubators and brooders; parts thereof: Parts: Other.”
You are instructed to ALLOW the protest.
In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the Protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision.
Sixty days from the date of the decision, the Office International Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public on the CBP website 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