CLA-2 CO:R:C:G 085970 KWM
Mr. W.H. Berry
Brown & Williamson Tobacco Corp.
1500 Brown & Williamson Tower
P.O. Box 35090
Louisville, Kentucky 40232
RE: Scrap or refuse tobacco; leaf tobacco
Dear Mr. Berry:
This letter is in response to your inquiry dated November 6,
1989, requesting reconsideration of the tariff classification of
scrap tobacco. After review of your submission, and
consideration of the issues raised, we decline to revoke or
modify our ruling HQ 084808, classifying the tobacco at issue in
subheading 2401.20.80, HTSUSA.
FACTS:
Your letter describes the merchandise at issue here as "a
tobacco by-product of dust and fines." Your request for
reconsideration, as well as your original request, claims that
this product should be classified as tobacco refuse under
subheading 2401.30.90, HTSUSA. Our ruling letter, HQ 084808,
dated September 12, 1989, classified the goods in subheading
2401.20.80, HTSUSA, as unmanufactured tobacco, partly or wholly
stemmed, threshed or similarly processed. You now question that
classification and ask us to reconsider.
ISSUE:
Is the "tobacco by-product" at issue here considered "refuse
tobacco" within the purview of subheading 2491.30, HTSUSA?
LAW AND ANALYSIS:
Classification under the Harmonized Tariff Schedule of the
United States Annotated (HTSUSA) is made in accordance with the
General Rules of Interpretation (GRI's). 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 relevant
Section or Chapter Notes. Then, if GRI 1 fails to classify the
goods, and if the headings and legal notes do not otherwise
require, the remaining GRIs may be applied, taken in order.
Under the HTSUSA, two tariff provisions are eligible for
classification of these goods:
2401 Unmanufactured tobacco (whether or not threshed or
similarly processed); tobacco refuse:
2401.20 Tobacco, partly or wholly stemmed/stripped:
2401.20.80 Other...................................
or, alternatively:
2401.30 Tobacco refuse:
2401.30.90 Other...................................
The issue in this case centers around the determination of
whether the goods at issue fall within the scope of "tobacco
refuse" of 2401.30.90, HTSUSA. It is well settled in Customs law
that the scope of a tariff term is a legal question, while the
determination of whether a good falls within that scope is a
question of fact. The Section and Chapter Notes, which are
legally binding, do not define the term "refuse" or "leaf". The
Explanatory Notes, which are not binding but represent the
official interpretation of the tariff schedule at the
international level, provide as follows:
This heading covers:
(1) Unmanufactured tobacco in the form of whole plants or
leaves in the natural state or as cured or fermented
leaves, whole or stemmed/stripped, trimmed or
untrimmed, broken or cut . . .
(2) Tobacco refuse, e.g., waste resulting from the
manipulation of tobacco leaves, or from the manufacture
of tobacco products (stalks, stems, midribs,
trimmings, dust, etc.)
(Emphasis in the original). It is our opinion that "refuse
tobacco" does not encompass goods such as these, and that our
prior classification was correct as issued.
In HQ 084808, we cited Kuehne & Nagel, Inc. v. United
States, (Slip Op. 86-138, Ct. Int'l. Trade, December 22, 1986)
for the proposition that all unmanufactured tobacco is either
"leaf tobacco", "stems" or "by-product". Under the HTSUSA, TSUS
court decisions are not binding but are helpful in interpreting
tariff terms, particularly where the HTSUSA follows or parallels
the TSUS. In this case, the terms and structure of the HTSUSA
differ from those of TSUS; however, we believe that the Kuehne &
Nagel decision is helpful in interpreting the new nomenclature.
The Kuehne & Nagel court was concerned with the definition
of "scrap" (as opposed to "leaf") tobacco under the Tariff
Schedules of the United States (TSUS). In seeking a definition
of scrap, the court went to great lengths to explain that scrap
tobacco was a "fluid concept" in both the tobacco processing
industry, and in Customs practice. The holding of the case was,
essentially, that the tariff schedule classified either leaf
tobacco (unmanufactured) or scrap ("stems" and "by-product").
Further, the court implied that scrap tobacco is precisely that:
the waste or unusable portions (such as sweepings) remaining
after handling, trimming, processing, etc. Simple excess or the
rejected portion of processed (trimmed) leaf tobacco did not
automatically become "scrap", especially if it was made
increasingly recoverable or usable by the technology in the
tobacco industry.
Under the HTSUSA, unmanufactured tobacco is classified not
as "leaf" or "scrap", but as "leaf" or "refuse". While we do not
decide here that the terms "scrap" and "refuse" are
interchangeable, we believe that the concepts are similar. Since
the Kuehne & Nagel decision, it has been Customs' position, as
stated in HQ 084808, that:
The definition of stemmed cigarette leaf includes the
product of the threshing [or other] process, and the fact
that it has been greatly reduced in size does not change its
identity as stemmed leaf.
See, HQ 084808, September 12, 1989. Since our original letter to
you was issued, we have not changed our position. Contrary to
your assertion, our classification of this merchandise is not
based "on particle size alone", but is size independent.
Regardless of the reductions in size or physical shape of the
tobacco leaf made during processing, these "small particles of
tobacco" retain their identity as leaf tobacco. In addition, the
fact that this material may be reconstituted or homogenized into
a usable tobacco product makes its "removal" from processing,
before they become refuse, all the more important. Because the
concept of refuse (like scrap) is "fluid", the recoverable, non-
refuse portion of processed tobacco as a percentage of the whole
leaf increases with technology. Hence, the merchandise which may
be classified as "refuse" lessens; more and more tobacco may be
identified as "leaf."
HOLDING:
Headquarters ruling letter HQ 084808 is affirmed. The
merchandise referred to by you as "by-product" of tobacco,
removed during processing of the leaf, is classified in
subheading 2401.20.80, HTSUSA, as tobacco, partly or wholly
stemmed, threshed or similarly processed. The rate of duty on
these goods is 44.1 cents per kilogram.
Sincerely,
John A. Durant
Director
Commercial Rulings Division