HQ 955023
DECEMBER 6 1993
CLA-2:CO:R:C:M 955023 JAS
8439.99.50
Ms. Ann P. Sheffield
The Myers Group (U.S.), Inc.
2831 Talleyrand Avenue, Suite 200
Jacksonville, FL 32206-0997
RE: Supercalenders Used in Papermaking; Paper Making,
Paper Finishing, On-Machine Calenders, Off-Machine
Calenders; Cylinders for Calendering Machines, Parts of
Machines for Making Paper; Sulzer Escher Wyss, Inc. v.
United States, Slip Op.93-113; Paper Coating Machines
and Parts; NY 833073 and NY 833074 Modified
Dear Ms. Sheffield:
Your letter of August 9, 1993, to the Area Director of
Customs, New York Seaport, has been referred to this office for
reply. The inquiry concerns the current status of two rulings
issued to your client, Valmet-Appleton, Inc., on supercalenders
and cylinders therefor, and on coating machines and their parts,
in light of a recent decision by the United States Court of
International Trade in Slip Op. 93-113.
In Sulzer Escher Wyss, Inc. v. United States, Slip Op. 93-
113, dated June 22, 1993, the court held that supercalenders,
consisting of a calender stack used to increase the density,
smoothness and gloss of paper, were classifiable free of duty in
subheading 8420.10.20, HTSUS, as calendering machines for making
paper pulp, paper or paperboard. The court reasoned that these
machines performed a finishing operation considered by the paper
industry to be integral to the process of "making" paper. The
court reached this conclusion despite the fact the machines were
off-line, that is, physically separate from the papermaking
machine. Customs had traditionally regarded only machine
calenders which are on-line as being integral to the process of
making paper.
- 2 -
SUPERCALENDERS AND PARTS
In NY 833073, dated November 17, 1988, the Area Director
held, in part, that supercalenders for papermaking machines were
classifiable in subheading 8420.10.90, Harmonized Tariff Schedule
of the United States (HTSUS), as other calendering or similar
rolling machines; that cylinders for supercalenders were
classifiable in subheading 8420.91.90, HTSUS, as other cylinders;
and, that other parts solely or principally used with
supercalenders were classifiable in subheading 8420.99.90, HTSUS,
as other parts. The descriptions of the merchandise and the
other contents of NY 833073 are incorporated by reference in this
decision.
Because of the court's decision in Slip Op. 93-113, and its
express rejection of any tariff distinction based on use on-line
or off-line, supercalenders the subject of NY 833073 will now be
classified in subheading 8420.10.20, HTSUS, as calendering
machines for making paper pulp, paper or paperboard. Cylinders
that are parts used solely or principally with supercalenders
will now be classified in subheading 8420.91.20, HTSUS, as
cylinders for calendering or other rolling machines for machines
for making paper pulp, paper or paperboard. Parts used solely or
principally with cylinders or with supercalenders will now be
classified in subheading 8420.99.20, HTSUS, as parts of machines
for making paper pulp, paper or paperboard. The rate of duty
under these provisions is free.
PAPER COATING MACHINES AND PARTS
In NY 833074, dated November 17, 1988, the Area Director of
Customs addressed the tariff status of surface blade coating
machines and two-stream coating machines, both of which are used
to apply and evenly smooth out coatings on one or both sides of
paper or paperboard. The decision held that those machines used
on-line were classifiable free of duty in subheading 8439.99.10,
HTSUS, as parts of machinery for making paper or paperboard.
Those machines used off-line were held to be classifiable in
subheading 8439.30.00, HTSUS, as machinery for finishing paper or
paperboard. The rate of duty is 2 percent ad valorem. The
description of the merchandise and other contents of NY 833074
are incorporated by reference in this decision.
The Harmonized Commodity Description And Coding System
Explanatory Notes (ENs) constitute the Customs Cooperation
Council's official interpretation of the Harmonized System.
While not legally binding on the contracting parties, and
therefore not dispositive, the ENs provide a commentary on the
scope of each heading of the Harmonized System and are thus
useful in ascertaining the classification of merchandise under
the System. Customs believes the notes should always be
consulted. See T.D. 89-80. Relevant heading 84.39 ENs on page - 3 -
1229, under (III)(B), list machines (other than calenders) for
applying various kinds of surface coatings, size, gum, varnish,
enamel, metal powder, wax, etc., as being machinery for finishing
paper or paperboard. The notes recognize no distinction between
coating machines used on-line and those used off-line. As
previously noted, Slip Op. 93-113 eliminates any tariff
distinction between machines in the paper industry based on their
use on-line or off-line so long as the process is one of "making"
paper.
Accordingly, surface blade coating machines and two stream
coating machines will be classifiable in subheading 8439.30.00,
HTSUS, as machinery for finishing paper or paperboard. The rate
of duty is 2 percent ad valorem. Parts used solely or
principally with these machines that are not goods of any heading
of chapter 84 or 85 will be classifiable in subheading
8439.99.50, HTSUS, as other parts of machinery for finishing
paper or paperboard. The rate of duty is 3 percent ad valorem.
EFFECT ON OTHER RULINGS:
Under the authority of 177.9(d)(1), Customs Regulations, (19
CFR 177.9(d)(1)), NY 833073 and NY 833074, both dated November
17, 1988, are modified in accordance with this decision.
The modification of NY 833074 will not be applied
retroactively in accordance with section 177.9(d)(2), Customs
Regulations (19 CFR 177.9(d)(2)), and, therefore, will not affect
past transactions for the importation of the merchandise they
cover. However, for the purposes of future transactions
involving merchandise of this type, NY 833074 will not be valid
precedent.
We recognize that pending transactions may be adversely
affected by this revocation, in that current contracts for
importations arriving within the Customs territory subsequent to
this decision will be classified in accordance with it. If such
a situation arises, you may notify this office at your discretion
and apply for relief from the binding effects of this decision as
the circumstances may warrant.
Sincerely,
John Durant, Director
Commercial Rulings Division