CLA-2 CO:R:C:M 952440 DWS
District Director
U.S. Customs Service
701 San Jacinto, P.O. Box 52790
Houston, TX 77052
RE: Protests 5301-9-000340, 000359 - 000366; Gear Boxes; Parts
of Gear Boxes; Agricultural Use Provisions; Actual Use;
Declaration of Intent; Rotary Mowers; Irrigation
Systems; Post Hole diggers; 19 CFR 10.133, 10.134,
10.138, 177.9(d)(2), (d)(3); 9817.00.50
Dear Madam:
The following is our decision regarding the Protests and
Requests for Further Review 5301-9-000340, dated June 12, 1989,
and 000359 - 000366, dated June 19, 1989, regarding the duty free
eligibility of certain gear boxes imported by Omni U.S.A., Inc.
FACTS:
The articles in question are gear boxes and their parts to
be incorporated into rotary mowers, post hole diggers and farm
irrigation systems. The importer originally contended that the
gear boxes and their parts were classifiable under heading 8432,
Harmonized Tariff Schedule of the United States (HTSUS), as
"[a]gricultural, horticultural or forestry machinery for soil
preparation or cultivation; lawn or sports ground rollers; parts
thereof."
Two New York ruling letters have been issued on these
articles. Both NY 839662, dated May 4, 1989, to Omni, and
NY 850854, dated April 25, 1990, to counsel on behalf of Omni,
classified the gear boxes in subheading 8483.40.50, HTSUS.
The gear boxes were ultimately liquidated under subheading
8483.40.50, HTSUS, which provides for:
[g]earboxes and other speed changers: [f]ixed ratio speed
changers, multiple and variable ratio speed changers each
ratio of which is selected by manual manipulation: [o]ther.
The parts of the gear boxes were entered and liquidated
under subheading 8483.90.50, HTSUS, which provides for:
[p]arts of gearing, gear boxes and other speed changers.
These protests arise from your refusal to apply subheadings
9817.00.50 or 9817.00.60, HTSUS, to the subject entries. These
headings provide duty free treatment to certain agricultural
articles. Your report states that the importer has not fulfilled
the actual use requirements in order to receive the duty free
treatment. To support his case, the importer has submitted
descriptive literature, invoices, and affidavits which indicate
that the gear boxes in question are to be used solely for
agricultural purposes.
ISSUE:
Whether the gear boxes and parts in question are entitled to
duty free treatment under the actual use subheadings 9817.00.50
or 9817.00.60, HTSUS, as agricultural articles?
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 is determined
according to the terms of the headings and any relative section
or chapter notes.
The importer claims that the gear boxes are entitled to duty
free entry under subheadings 9817.00.50 or 9817.00.60, HTSUS, as
agricultural articles. Subheadings 9817.00.50 and 9817.00.60,
HTSUS, are actual use provisions. To resolve this issue both
classification principles within the HTSUS and the Customs
Regulations must be utilized.
Subheadings 9817.00.50 and 9817.00.60, HTSUS, provide duty
free treatment to certain articles if the articles are used for
agricultural or horticultural purposes. Subheading 9817.00.50,
HTSUS, describes "[m]achinery, equipment and implements to be
used for agricultural or horticultural purposes." Subheading
9817.00.60, HTSUS, describes the following:
[p]arts 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).
Headings 8432, 8433, 8434 and 8436, HTSUS, refer to specific
types of agricultural and horticultural machinery.
To fall within either special classification, a three-part
test must be met. First, the articles must not be among the long
list of exclusions to subheadings 9817.00.50 and 9817.00.60,
HTSUS, under section XXII, chapter 98, subchapter XVII, U.S.
note 2, HTSUS. Secondly, the terms of the headings must be met
in accordance with GRI 1. Thirdly, the merchandise must meet the
conditions required under section 10.133, Customs Regulations (19
CFR 10.133). See HQ 086883, dated May 1, 1990, and HQ 087076,
dated June 14, 1990.
Subheading 9817.00.50, HTSUS
Subheading 9817.00.50, HTSUS, describes "[m]achinery,
equipment and implements to be used for agricultural or
horticultural purposes." This determination focuses upon the
specific agricultural or horticultural pursuit in question and
what machine, equipment or implement fulfills this pursuit.
The first part of the test is to determine whether the gear
boxes are excluded from subheading 9817.00 50, HTSUS. The gear
boxes and parts are classified within subheadings 8483.40.50 and
8483.90.50, HTSUS. Section XXII, chapter 98, subchapter XVII,
U.S. note 2, HTSUS, lists the exclusions to subheading
9817.00.50, HTSUS, from chapter 84, HTSUS. Subheadings
8483.40.50 and 8483.90.50, HTSUS, are not excluded by subchapter
XVII, U.S. note 2, HTSUS. The first prerequisite is met.
Secondly, the gear boxes and parts must be included within
the terms of the heading. The gear boxes must be "machinery,"
"equipment" or "implements" used for an "agricultural or
horticultural purpose." For this step in the test, the initial
determination to be made is what agricultural or horticultural
pursuit is in question. The gear boxes are incorporated into
rotary mowers, post hole diggers and irrigation equipment.
Therefore, the agricultural or horticultural pursuits in question
are mowing, digging and irrigation.
The next determination to be made in order to decide if the
terms of the heading are met is what "machinery", "equipment" or
"implement" performs the mowing, digging or irrigation. The gear
boxes are used in rotary mowers, post hole diggers and
irrigation equipment. These larger items are the machines,
equipment or implements that mow, dig or irrigate. The gear
boxes, although necessary components of the machines, equipment
or implements that perform the pursuits, do not themselves
fulfill the tasks. The gear boxes by themselves do not
accomplish the pursuits of mowing, digging and irrigating, but
are merely parts of the machines, equipment, or implements which
do so. Therefore, the gear boxes do not meet the terms of
subheading 9817.00.50, HTSUS. Whether or not the gear boxes and
parts are actually used in an agricultural pursuit does not
become an issue since the terms of the heading are not met.
Regarding the question of whether the gear box is a part,
counsel for the importer argues in its July 9, 1991, submission
concerning the gear box for the irrigation system, that "[t]he
gear boxes retain their own identity as propulsion machinery
because an irrigation system could still work without any
motion." Also, in an affidavit submitted by counsel, Craig
Daniels, Vice President Gear Products Division, Omni USA, Inc.,
states that "[i]rrigation systems will still irrigate without the
gear boxes, just not effectively." Basically, counsel is arguing
that the gear box is not a part because without the gear box, the
irrigation system would still propel water, but just in one
direction. However, this is not what the irrigation system is
designed to do. It is designed to propel water in multiple
directions. Also, merchandise is generally marketed as being as
"effective" as it can be. The gear box is a part of the
irrigation system, an "effective" system that is marketed by the
importer.
The conclusive factor in this interpretation is the intent
of Congress. When Congress enacted the HTSUS and the two
provisions that grant special treatment to articles used for
agricultural and horticultural purposes, only subheading
9817.00.60, HTSUS, specifically provided for parts. This
specificity of parts within subheading 9817.00.60, HTSUS,
establishes that Congress considered the issue of parts of
machinery. Since subheading 9817.00.50, HTSUS, has no reference
to parts it is evident that Congress did not intend that all
items used as a part of agricultural or horticultural equipment
should receive duty free treatment. See HQ 086883 and HQ 087076.
Subheading 9817.00.60, HTSUS
Subheading 9817.00.60, HTSUS, provides duty free treatment
to parts of articles of heading 8432, 8433, 8434 and 8436, HTSUS.
These headings describe the following:
8432 [a]gricultural, horticultural or forestry
machinery for soil preparation or
cultivation; lawn or sports ground rollers;
parts thereof.
* * * * * * * * * * * * *
8433 [h]arvesting or threshing machinery,
including straw or fodder bales; grass or hay
mowers; machines for cleaning, sorting
or grading eggs, fruit or other
agricultural produce, other than
machinery of heading 8437; parts thereof.
* * * * * * * * * * * * *
8434 Milking machines and dairy machinery, and parts
thereof.
* * * * * * * * * * * * *
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.
The gear boxes and parts in question are not excluded from
subheading 9817.00.60, HTSUS by section XXII, chapter 98,
subchapter XVII, U.S. note 2, HTSUS. If the importer can
establish that the rotary mowers, post hole diggers and
irrigation systems which incorporate the gear boxes and parts are
classified in one of the four mentioned headings of subheading
9817.00.60, HTSUS, then the terms of the heading are met.
Of the three articles, the importer has satisfied this
office that only the rotary mowers are possibly classified in one
of the four necessary headings. Rotary mowers for the mowing of
grass or hay are classified in heading 8433, HTSUS. From the
information submitted by the protestant, it is evident that the
rotary mowers are used for the cutting of grass or hay.
Therefore, the rotary mowers are classified in heading 8433,
HTSUS, and the gear boxes and parts of gear boxes to be
incorporated into rotary mowers meet the terms of subheading
9817.00.60, HTSUS. Parts of the gear boxes are also included
since a part of a part is a part of the whole. Flex Track
Equipment, Ltd. and Border Brokerage Co., Inc. v. United States,
C.D. 4063 (1970).
However, the gear boxes used with irrigation systems and
post hole diggers are not included in subheading 9817.00.60,
HTSUS. Irrigation systems are classified in heading 8424, HTSUS,
as "[m]echanical appliances...for projecting, dispersing or
spraying liquids..." See Explanatory Note 84.24(E), Vol. 3
Harmonized Commodity Description and Coding System (HCDCS), p.
1189. Post hole diggers are classified in heading 8430, HTSUS,
as "[o]ther moving, grading, leveling, scraping, excavating,
tamping, compacting, extracting, or boring machinery..." See
Explanatory Note 84.30(III)(G), Vol. 3, HCDCS, p. 1206, and
Explanatory Note 84.36(c), Vol. 3, HCDCS, p. 1218. Headings 8424
and 8430, HTSUS, are not listed in the language of subheading
9817.00.60, HTSUS. Therefore, the gear boxes to be used with
irrigation systems and post hole diggers are not entitled to duty
free entry.
The gear boxes which are used with rotary mowers have met
the first two requirements. First, these specific gear boxes are
not excluded from subheading 9817.00.60, HTSUS. Secondly, the
gear boxes used with rotary mowers meet the terms of subheading
9817.00.60, HTSUS. Thus, to gain duty free entry these gear
boxes must meet the last requirement, that the merchandise must
meet the conditions of 19 CFR 10.133.
Sections 10.131 - 10.139, Customs Regulations (19 CFR 10.131
- 10.139), provide the requirements which must be met when the
rate of duty is dependent upon the actual use of the article
being imported. Three conditions which must be met to receive
duty preferences for actual use are set forth in 19 CFR 10.133.
The three conditions are:
(1) Such use is intended at the time of
importation;
(2) The article is so used; and
(3) Proof of use is furnished within 3
years after the date the article is
entered or withdrawn from warehouse for
consumption.
The intention of use at the time of importation must be
evidenced by a declaration of intent that is filed with the entry
for consumption or for warehouse, or by entering the proper
actual use subheading of the HTSUS on the entry form. Section
10.134, Customs Regulations (19 CFR 10.134). We are satisfied
with counsel's proof that all of the entries in question evidence
the required declaration of intent at the time of importation.
Therefore, the importer has complied with the first requirement
under 19 CFR 10.133.
We are also convinced that counsel has satisfied the second
and third requirements. 19 CFR 10.138 states that:
Within 3 years from the date of entry or withdrawal from
warehouse for consumption, the importer shall submit in
duplicate in support of his claim for free entry or for a
reduced rate of duty a certificate executed by (1) the
superintendent or manager of the manufacturing plant, or (2)
the individual end-user or other person having knowledge of
the actual use of the imported article. The certificate
shall include a description of the processing in sufficient
detail to show that the use contemplated by the law has
actually taken place. A blanket certificate covering all
purchases of a given type of merchandise from a particular
importer during a given period, or all such purchases with
specified exceptions, may be accepted for this purpose,
provided the importer shall furnish a statement showing in
detail, in such a manner as to be readily identified with
each entry, the merchandise which he sold to such
manufacturer or end-user during such period.
Based upon new information which has come to our attention
through your office, we are satisfied that the importer has
complied with this requirement. The importer has supplied an
array of affidavits by many manufacturers who have purchased the
subject gear boxes from the importer. In the affidavits, the
manufacturer lists the number and type of gear boxes purchased.
In this instance, these affidavits are sufficient in proving
actual use.
Therefore, the gear boxes and parts for gear boxes for use
in rotary mowers are classifible under subheading 9817.00.60,
HTSUS. The gear boxes for use in the irrigation systems and post
hole diggers are classifiable under subheading 8483.40.50, HTSUS,
and the parts for these gear boxes are classifiable under
subheading 8483.90.50, HTSUS.
HOLDING:
The gear boxes and parts for gear boxes for use in rotary
mowers are classifible under subheading 9817.00.60, HTSUS, which
provides for: "[p]arts 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)."
The gear boxes for use in the irrigation systems and post
hole diggers are classifiable under subheading 8483.40.50, HTSUS,
which provides for: "[g]ear boxes and other speed changers:
[f]ixed ratio speed changers, multiple and variable ratio speed
changers each ratio of which is selected by manual manipulation:
[o]ther." The parts for these gear boxes are classifiable under
subheading 8483.90.50, HTSUS, which provides for: "[p]arts of
gearing, gear boxes and other speed changers."
The protests should be denied in part and granted in part.
A copy of this decision should be attached to the Customs Form 19
and provided to the protestant as part of the notice of action on
the protests.
Effect On Other Rulings:
NY 839662 is modified to reflect the reasoning in this
ruling. NY 850854 is affirmed in full.
This response to Protests and Requests for Further Review
5301-9-000340 and 000359 - 000366 constitutes notice to the
applicants of both NY 850854 and NY 839662, since the New York
rulings were requested by the protestant in this ruling and the
protestant's counsel.
Sincerely,
John Durant, Director
Commercial Rulings Division