HQ 953152
MARCH 15 1993
CLA-2:CO:R:C:M 953152 JAS
District Director of Customs
P.O. Box 619050
Dallas/Ft. Worth, TX 75261
RE: Actual Use Certification; Certification by Distributor/
Reseller; Scales for Weighing Livestock; Agricultural or
Horticultural Machinery; Use of Goods by Veterinarians;
Sections 10.131-10.139, Customs Regulations; I.A. 79/92
Dear Sir:
In a memorandum, dated November 20, 1992 (CLA-2-D:C:D TFD), you request clarification of the actual use requirements of sections 10.131-10.139, Customs Regulations, as they apply to entries of scales used for weighing livestock.
FACTS:
The methodology by which the importer, Tru-Test Inc., proposes to satisfy the actual use requirements for entries made under subheading 9817.00.50, Harmonized Tariff Schedule of the United States (HTSUS), is outlined in a letter to your office, dated November 11, 1992. Three separate issues arise from the facts presented, each of which we will address.
ISSUES:
(1) Whether the weighing of livestock is per se an agricultural or horticultural pursuit, (2) whether subheading 9817.00.50, Harmonized Tariff Schedule of the United States (HTSUS), applies to weighing scales used by veterinarians rather than farmers, and (3) whether the actual use requirements for weighing scales entered under this provision can be satisfied by records of sales to distributors and resellers as well as to individual end users. - 2 -
LAW AND ANALYSIS:
Subheading 9817.00.50, HTSUS, provides for the duty-free entry of machinery, equipment and implements to be used for
agricultural or horticultural purposes. This is a provision based on actual use. A tariff classification controlled by the actual use to which the imported goods are put in the United states is satisfied only if such use is intended at the time of importation, the goods are so used and proof thereof is furnished within 3 years after the date the goods are entered. See Additional U.S. Rule of Interpretation 1(b), HTSUS. The provisions of sections 10.131-10.139, Customs Regulations, apply to entries of goods under subheading 9817.00.50.
As a preliminary matter, weighing machinery of heading 8423 is not precluded from classification in subheading 9817.00.50 by any of the exclusions in chapter 98, subchapter XVII, U.S. note 2, HTSUS.
As to the first issue, in common meaning, the term agriculture relates to the art or science of cultivating the soil, growing crops, or raising animals for food or clothing, while horticulture relates similarly to fruits, vegetables, flowers or shrubs. It should be noted that not all implements, apparatus or equipment used on a farm are necessarily "agricultural or horticultural" within the meaning of these terms. In this case, however, the weighing of farm animals for the purpose of charting growth rates, detecting illnesses, determining sale price, etc. bears a sufficient relationship to the raising of the animals for food or clothing as to qualify as a legitimate agricultural or horticultural pursuit.
As to the second issue, on p. 6 of its November 11 letter, Tru-Test Inc. proposes to include only sales to veterinarians who either own a ranch or farm and use the scales there, or who use the scales on someone else's ranch or farm. They would discount sales of scales to veterinarians who use them in clinics or other veterinary facilities. Entries under subheading 9817.00.50 are not limited to actual use by a farmer on his farm. Actual use in an agricultural or horticultural pursuit is the test, regardless of the user. See HQ 070939, dated October 4, 1983, copy enclosed. Thus, an actual use certification for scales used by a veterinarian on a farm, either his farm or someone else's, for the described purposes, would be acceptable for subheading 9817.00.50 purposes, while a certification for the same scales used by a veterinarian in his personal practice would not.
As to the third issue, the matter of actual use certificates executed by persons other than end users was addressed in our memorandum to you of December 8, 1989 (085308). This memorandum affirms the actual use guidelines set forth in the decision of November 29, 1982 (069623), published as C.S.D. 83-32. More - 3 -
importantly, the memorandum states that to the extent an importer submits a certificate executed by a distributor at the retail level, that importer must know that the distributor knows that all of the products are sold to individuals who are engaged in an agricultural or horticultural pursuit, and that they are using these products in that pursuit. Tru-Test proposes to base its actual use certifications on an internal audit of its sales during the period in question. This audit was based on a "random" sample of sales, with only 25 percent of the end users and distributors, combined, being sampled. For competitive reasons, the distributors would not provide the names of actual end users. They did, however, provide percentages they claim indicate agricultural and non-agricultural end uses, although it is unclear how these percentages were calculated.
Customs recognizes that the burden placed on an importer to certify actual use is often economically and administratively unfeasible and that the enforcement of the actual use provisions must not be so burdensome as to render them ineffective in providing the intended duty-free benefits. However, in the described circumstances, only those end use certifications that are based on the actual number of end users sampled and found to be engaged in a qualifying agricultural or horticultural pursuit should be accepted. Actual use certifications should not be accepted based on records of sales to veterinarians where there is no independent corroborating evidence of how the weighing scales are used.
When actual use certificates are prepared by persons other than end users, the December 8, 1989, memorandum authorizes you to consider the nature of the imported article, level of distribution, value and size of an importation, as well as other factors that the importer can demonstrate as relevant. Thus, you have the latitude to evaluate in a light most favorable to Tru-Test any additional information the company can present that distributors or resellers know or can reasonably be expected to know that a weighing scale sold to a particular veterinarian is being used in a qualifying agricultural or horticultural pursuit. However, in no event should random sampling techniques serve as a basis for accepting actual use certificates for all entries the samples are claimed to represent.
Mr. James Seal of my staff will be available to discuss any further questions you may have. Mr. Seal may be reached at (202) 482-7030.
Sincerely,
John Durant, Director
Commercial Rulings Division
Enclosure