CLA-2 RR:TC:TE 957770 NLP
Port Director
U.S. Customs Service
2nd and Chestnut Streets
Philadelphia, PA 19106
RE: Protest and Application for Further Review No.1101-94-100612; Virola; Baboen; subheadings 4412.11 and 4412.12;
Subheading Explanatory Notes to Chapter 44; Annex to the
Explanatory Notes to Chapter 44; New York Ruling Letters 877078
and 875804
Dear Sir:
This is a decision on application for further review of
protest no. 1101-94-100612, filed on October 20, 1994, by
Sandler, Travis & Rosenberg, on behalf of their client, Russell
Stadelman & Co., against the former District Director's decision
concerning the classification of plywood under the Harmonized
Tariff Schedule of the United States (HTSUS).
Counsel has provided us with three submissions dated
November 23, 1994, October 9, 1995, and January 4, 1996. Counsel
also met with Headquarters personnel on September 22, 1995, to
discuss the issues in this case.
FACTS:
The product at issue is plywood imported from Brazil and is
described by the importer as "virola, sumauma, faviera, mangue,
amesclao, breu, or any other species."
According to the submitted commercial invoices, the entries
subject to protest were comprised of the following two types of
wood: faviera (Parkia spp.) and sumauma (Ceiba Pentandra).
Upon liquidation, the subject plywood was classified by
Customs in subheading 4412.12.2060, HTSUS, which provides for the
following:
Plywood, veneered panels and similar laminated wood:
Plywood consisting solely of sheets of wood, each
ply not exceeding 6 mm in thickness:
Other, with at least one outer ply of
nonconiferous wood:
Not surface covered, or surface covered
with a clear or transparent material
which does not obscure the grain, texture or
markings of the face ply:
Other:
Other:
Other:
Not surface covered.
Plywood classifiable in this subheading is subject to a rate of
duty of 8% ad valorem.
It is counsel for the importer's position that all plywood
which is commonly and commercially known as "Virola" in the U.S.
and Brazil should be classified as virola under subheading
4412.11.2060, HTSUS. This includes all plywood imported by
Stadelman from Brazil, including that invoiced as virola,
sumauma, faviera, mangue, amesclao, breu or any other species.
Subheading 4412.11.2060, HTSUS, provides for the following:
Plywood, veneered panels and similar laminated wood:
Plywood consisting solely of sheets of wood, each
ply not exceeding 6 mm in thickness:
With at least one outer ply of the following
tropical woods: Dark Red Meranti, Light Red
Meranti White Lauan, Sipo, Limba, Okume, Obeche,
Acajou d' Afrique, Sapelli, Baboen, Mahogany (Swietenia spp.), Palissandre du Bresil or Bois de Rose
femelle:
Not surface covered, or surface covered with
a clear or transparent materials which does not
obscure the grain, texture or markings the face
ply:
Other:
Other:
Other:
Not surface covered.
Articles from Brazil classified in this subheading are eligible
for duty free treatment under the Generalized System of
Preferences.
ISSUE:
Whether plywood that is claimed to be commonly and
commercially known as virola is classifiable in subheading
4412.11.2060, HTSUS, as plywood with at least one outer ply of
Baboen?
LAW AND ANALYSIS:
The classification of goods under the HTSUS is governed by
the General Rules of Interpretation (GRI's), taken in order. GRI
1 provides that classification shall be determined according to
the terms of the headings 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 GRI's may be applied, taken in
order.
Heading 4412, HTSUS, covers plywood, veneered panels and
similar laminated wood. Subheading 4412.11, HTSUS, provides for
the following:
Plywood, veneered panels and similar laminated wood:
Plywood consisting solely of sheets of wood, each ply
not exceeding 6 mm in thickness:
With at least one outer ply of the following
tropical woods: Dark Red Meranti, Light Red
Marantic White Lauan, Sipo, Limba, Okume,
Obeche, Acajou d' Afrique, Sapelli, Baboen, Mahogany (Swietenia spp.), Palissandre du Bresil or Bois de Rose
femelle:
Therefore, for plywood to be classifiable under subheading
4412.11, HTSUS, it has to have at least one outer ply of one of
the listed wood species, in this case, Baboen, as claimed by
counsel. There is no other legal text applicable in this case.
As is discussed below, the species are listed by their pilot-names and the Annex to the Explanatory Notes of Chapter 44 makes
it clear which wood species are encompassed by each pilot-name.
The Explanatory Notes (ENs) to the Harmonized Commodity
Description and Coding System constitute the official
interpretation of the international Harmonized System (HS), which
forms the structure of the HTSUS through the six-digit level.
The ENs "provide a commentary on the scope of each heading of the
Harmonized System", as intended by the drafters of the HS, and
"are thus useful in ascertaining the classification of
merchandise under the system." While they are not legally
binding, "they should be consulted for guidance" on the
classification of merchandise. (See Treasury Decision 89-80,
quoting from a report of the Joint Committee on the Omnibus Trade
and Competitiveness Act of 1988, 23 Cust. Bull. 379 (1989), 54
Fed. Reg. 35, 127 (August 23, 1989) In T.D. 89-80, Customs
stated that the ENs should always be consulted when classifying
merchandise.
The Subheading Explanatory Note to Chapter 44 provides the
following on page 623:
Names of certain tropical woods
For the purposes of classification in subheadings of
headings 44.03, 44.07, 44.08 and 44.12, certain tropical woods
are designated according to the pilot-name recommended by
the International Technical Association for Tropical Timber
(l'Association Technique Internationale des Bois Tropicaux)
(ATIBT). The pilot-name is based on the popular name employed in
the principal country of production or of consumption.
The relevant pilot-names, together with corresponding
scientific names and local names, are listed in the Annex to
the Explanatory Notes to this Chapter.
The drafters of the HS created in the ENs for Chapter 44 an
Annex to clearly indicate what each pilot-name means and to list
the universe of scientific and common names that are within the
scope of each pilot-name. The ATIBT nomenclature on which this
Annex is based draws its pilot-name from the common name in the
principal country of production; however, that common name has a
foundation and scope in particular scientific species. The
pilot-name is tied to specific wood species as the above EN uses
the word corresponding. In the instant case, the Annex to the
ENs at page 643 lists the pilot-name Baboen and a corresponding
list of scientific names of the species covered under this pilot-name and local names. Based on the above EN, it appears that
Surinam was the principal country of production on which this
pilot-name was based. As the Annex reads, virola was used as a
common name for Baboen in Colombia. All the wood species listed
belong to the genus Virola and the pilot-name Baboen clearly
correlates directly to woods of this genus. Therefore, plywood
with at least one outer ply of Baboen means plywood with at least
one outer wood veneer of the genus Virola as specified in the
scientific column in the Annex. As listed on the commercial
invoice, the plywood at issue is faviera (Parkia spp.) and
sumauma (Ceiba Pentandra). Thus, as it is not disputed that the
plywood in question is not of the genus Virola, it is not
classifiable in subheading 4412.11.2060, HTSUS.
This interpretation of the subject HTS provision is not
novel. The following two rulings demonstrate that wood of
heading 4412, HTSUS, is defined by its botanical nature and for
it to be classifiable as having one outer ply of "Baboen" in
subheading 4412.11.2060, HTSUS, it must be of the genus Virola.
In New York Ruling Letter (NYRL) 875804, dated July 16, 1992,
Customs dealt with the classification of hardwood plywood
composed of various hardwoods indigenous to northern Brazil such
as assacu, esponja, sucuriuba, sumauma and muiratinga. The
plywood was classified in subheading 4412.12.2060, HTSUS. This
ruling indicates that woods such as sumauma and muiratinga are
dutiable and are not considered to be classifiable as "Baboen",
or any other named tropical wood, in subheading 4412.11.2060,
HTSUS. Moreover, in NYRL 877078, dated September 2, 1992,
Baboen plywood from Brazil was classified in subheading
4412.11.2060, HTSUS. In that case, the wood was described as
"red virola/baboen plywood"
and the botanical name of the species of wood of the outer plies
was Virola surinamensis. The ruling stated the following: "The
above classification and rate of duty will apply only if at the
time of importation the merchandise is in fact plywood with at
least one outer ply of Virola surinamensis. The invoice filed
with the entry should state the actual species of wood by
botanical name for both outer plies." Thus, classification in
subheading 4412.11.2060, HTSUS, was determined by the botanical
name of the wood, not its common and commercial meaning.
Background on the Annex to Chapter 44
The EN Annex to chapter 44 was drafted to assist users of
the nomenclature in Chapter 44 to decipher the scope of tropical
wood pilot-names used in the six-digit international
nomenclature. As alluded to above, the Annex is completely
derived from the nomenclature of the International Technical
Association for Tropical Timber (l'Association Technique
Internationale des Bois Tropicaux). The ATIBT nomenclature
enjoys international acceptance by the United Nations Conference
on Trade and Development (UNCTAD) and the Harmonized System
Committee (HSC) of the Customs Co-operation Council (CCC), among
others.
In 1977, UNCTAD submitted a study on chapter 44 to the
CCC's Technical Team drafting the HS, in which it recommended a
structured nomenclature which identified tropical woods most
important to exporting countries. The Technical Team decided to
draft subheadings so that similar species were grouped together.
Second, it noted that many of the wood species concerned were
designated in numerous ways in commerce and, in some cases, the
same species may have many different names according to local
dialect. Doc. 23.769, HSC, Dec. 1977. As a result, the UNCTAD
suggested the use of the ATIBT pilot-names.
The Technical Team took the advice of UNCTAD and designated
scientific species by their pilot-names, names selected by the
ATIBT. The HSC ratified this approach in October 1978. Doc.
24.590/Annex III, Report of HSC16. The pilot-name is that used
for a given species in the principal country of production or of
consumption, or the most commonly known name. The ATIBT selects
a pilot-name from the only existing international nomenclature on
tropical timber, established by agreement between producers of,
or traders in, tropical timber and scientific bodies. Annex at
5, Doc. 24.153, HSC15, April 1978.
The usefulness of the ATIBT nomenclature is demonstrated in
the following situation.
When the ATIBT's nomenclature was developed, there was a problem
in distinguishing the Swietenia of South America, known as
Mahogany in the United Kingdom, from African Khaya. In France,
the word Acajou was used to cover both Swietenia and Khaya. For
the purposes of the ATIBT nomenclature, it was decided that the
pilot-name Mahogany should be reserved for Swietenia (i.e. the
American species), and this name is now used both in France and
in the United Kingdom. The pilot-name Acajou d'Afrique was
reserved for Khaya. This is probably why the HSC decided
subsequently to clarify the term Mahogany, in the nomenclature in
heading 4412 and elsewhere, with the scientific name Swietenia
spp. Annex to Doc. 24.153, HSC15, April 1978.
Finally, in April 1981, the HSC directed the Technical Team
at the CCC to clarify the pilot name references in chapter 44 by
preparing a General EN to the chapter, which later became the
above discussed Annex, setting forth the Latin names (scientific
names) and corresponding local names for each pilot name. Doc.
26.902, HSC 25, April 1981.
Counsel's arguments in favor of classifying the imported plywood
as "baboen" in subheading 4412.11, HTSUS
Counsel for the importer argues that as the pilot-name for
tropical woods listed in the Annex is based on a popular name,
there is no requirement that wood be classified based on its
scientific genus. If there is no requirement that wood be
classified based on its scientific genus, then it is classified
based on its common and commercial designation. Therefore, if
the wood is commonly and commercially known as virola, and virola
is listed in the Annex as a local name for Baboen, even if it is
not scientifically Virola, it should be classified as Baboen in
subheading 4412.11.2060, HTSUS. Counsel cites various case law
to support their arguments. Moreover, counsel states that the
plywood they are importing is commonly and commercially known as
virola and as such it should be classified in subheading
4412.11.2060, HTSUS. Counsel provides various statements to
support their position.
Counsel contends that a tariff term is to be construed
according to its common and commercial meaning. As the term
"Baboen" is not defined in either the HTSUS or its legislative
history, for tariff purposes, the correct meaning for virola is
its common and commercial meaning. Counsel argues that the
classification of this merchandise based on its scientific
denomination was rejected 171 years ago by the Supreme Court in
Two Hundred Chests of Tea, 22 U.S. 430 (1824), wherein tea that
was commonly known as bohea, but was, from a scientific
standpoint, actually a mix of bohea, souchong, Congo and other
teas, was classified as bohea tea. The issue was "whether, in a
commercial sense, the tea in question is known, and bought, and
sold, and used under the denomination of bohea tea." The
evidence established that the bohea tea of commerce was not
usually a distinct and simple substance, but was a compound made
up in China of various kinds of the lowest priced black teas. The
Court stated that "Congress must be understood to use the word in
its known commercial sense." Counsel argues that these
principles are applicable to the instant case.
First, we note that Customs has not stated that as a matter
of course under U.S. tariff laws, merchandise is classified
according to its scientific basis. What we are stating is that
where there is an express intent to describe an article in such
terms, we will follow that intent. In the instant case, the ENs
provide Customs with an aid in determining the scope of the
subject provision. The intent they provide is to classify the
articles based on their scientific appellations and we are
following that intent. In Two Hundred Chests of Tea, there were
no Explanatory
Notes to aid in defining the scope of tariff terms. It is when
a tariff term is not clearly defined in
the HTSUS or the ENs that its correct meaning is generally
resolved by ascertaining its common and commercial meaning. See,
Medline Industries, Inc. V. United States, Slip-Op. 94-94, June
7, 1994, 18 CIT___. Congress was well aware of the ENs and the
language used to establish the classification of imported
products. The status of the EN to the HS is specifically
addressed in the report of the Joint Committee on the Omnibus
Trade and Competitiveness Act of 1988. It is there stated: The
Explanatory Notes constitute the Customs Cooperation Council's
official interpretation of the Harmonized System." See T.D. 89-80. Therefore, Congress has taken cognizance of the ENs as
useful in classifying merchandise under the HS and as generally
indicative of the proper interpretation of the HS. House Conf.
Rep. No. 100-576, 100th Cong., 2d. Sess. 549 (1988)
In their submission, counsel discusses that certain woods in
Chapter 44 are described in scientific terms and others are
described in popular terms. They reason that the tariff
provisions for woods described scientifically may be interpreted
from a scientific standpoint and those woods described by a
common name should be interpreted according to their common
meaning. Specifically, counsel states that in the list of woods
in subheading 4412.11, HTSUS, the wood described after Baboen is
Mahogany (Swietenia spp.). Parenthetically, in describing
Mahogany as Swietenia spp., Congress used a scientific name. For
the term Baboen, the Surinam common name was used and, therefore,
according to counsel, the provision for Baboen should encompass
all woods commonly known as virola.
We note that in the relevant six-digit subheading of 4412.11
HTSUS, Mahogany is the only wood that has the scientific
designation following it. As discussed above on page 5, there
appears to be a specific rationale behind the designation of
Mahogany scientifically in the 6-digit subheading. Other woods
may not have had the same vocabulary problem as Mahogany.
Therefore, this designation should not be read as precluding the
other wood species listed from being defined in scientific terms.
Furthermore, as more support for counsel's position that the
scientific denomination of tariff terms has been rejected, they
cite Alexandria International, Inc. v. United States, 13 CIT 689
(1989). In this case, the Court of International Trade (CIT) had
to determine whether fish which were, scientifically, anchovies,
but were labeled, imported, marketed, bought and sold as
"sardines", were classified under the tariff provision for
sardines or the tariff provision for anchovies. According to
the CIT, the Government provided ample and convincing evidence of
a common and commercial meaning of "sardines" that included not
only "true" sardines within the scientific meaning of that term,
but also other, closely related and similar packaged fishes,
including the merchandise at issue here.
In addition, counsel states that the Justice Department, in
their brief for the Alexandria case, correctly dismissed a
phylogenetic table noting "[t]his scientific terminology has
negligible value for Customs purposes." Similarly, counsel
argues that the phylogenetic table prepared by Customs officials
in the instant case has negligible value for Customs purposes.
However, we note that, in the Alexandria case, the table that
was consulted was not part of the ENs. In the instant case, the
table that we are consulting is discussed in the Subheading EN to
Chapter 44 and is laid out in the Annex to the ENs for Chapter
44. As stated before the ENs constitute the CCC's official
interpretation of the HS and should be consulted for guidance on
the classification of merchandise.
In Alexandria, the defendant U.S. successfully persuaded the
CIT that, absent a contrary intent by Congress in using a tariff
term, where a tariff and commercial meaning are identical,
classification will be in agreement with the commercial meaning,
overriding a contrary scientific meaning that is not widely known
or followed. In the instant case, we have a tariff term to
interpret that has various, not identical, common meanings. We
have an EN Annex that provides guidance that should not be
ignored and which sets forth the HS drafters intention to define
the scope of a legal term with corresponding scientific and
common meanings. We do not have any agreed upon tariff and
common and commercial meaning for virola, nor are we overriding a
contrary scientific meaning. We have clear EN guidance with
which to define the scope of the tariff term "Baboen". The
subheading EN to Chapter 44, HTSUS, and the EN Annex to Chapter
44 are sufficient evidence that the scientific genus of tropical
woods form the basis for the pilot names used as tariff terms.
Counsel states that the plywood imported by Stadelman from
Brazil is commonly and commercially known in the U.S. as virola.
Counsel believes that the Government has provided ample and
convincing evidence that the common and commercial meaning of
virola includes not only true virola, but it also includes other
closely related Amazonian woods that are virtually
indistinguishable in veneer form from true virola. These
statements are said to support classification of the subject wood
as Baboen in subheading 4412.11.2060, HTSUS.
We note that some of the statements referred to in counsel's
submission were made in a case involving whether wood was
classified as softwood vs. hardwood, not whether wood was
classified as having an outer ply of "Baboen". They are not
germane to the determination of the proper scope of subheading
4412.11, HTSUS. Moreover, while Customs does not dispute the
fact that plywood comprised of mixed Brazilian hardwoods may move
in the trade as "virola", it is the use of the word "baboen" and
the finding that the wood is of the genus "Virola" that triggers
classification in subheading 4412.11.2060, HTSUS. The term
"baboen" is clearly defined in the EN and it includes only wood
species of the genus Virola. Therefore, plywood imported by
Stadelman from Brazil must have at least one outer ply of a wood
species specifically named
under subheading 4412.11, HTSUS, in this case Baboen. If it does
not it cannot be classified in this subheading. In any case, as
we have stated, we do not have to resort to determining whether
the subject plywood is commonly and commercially known as virola
as we determine the classification based on the scientific genus
of the wood in question.
Moreover, counsel enclosed an affidavit from Frank Sheridan,
president of the International Hardwood Products Association
(IHPA). He states the term "virola" during the last 15 years has
become a generic grouping of various similar species. As of 8
years ago many of these similar species were imported and
marketed as virola. However, Mr. Sheridan also states that
channels of distribution at both the wholesale and retail level
would be familiar with the identification of "virola" rather than
species such as amesclao, breu, or faviera.
We note that in Mr. Sheridan's affidavit he states that he
is expressing a personal opinion. Therefore, this letter cannot
be said to represent a trade position. Counsel has also stated
that one reason near species are commercialized as virola is
because not even trained scientists can distinguish between
"true" virola and other closely allied species. The above letter
does seem to counter counsel's statement.
Counsel states that the Brazilian plywood industry's letter
to the IHPA objecting to redesignating virola as "mixed Brazilian
hardwood" and the IHPA's letter back to the Brazilian plywood
industry confirming their rejection of the proposal also show
that the trade clearly rejected the notion that the common and
commercial meaning of virola should be defined according to the
scientific designation. First, there is nothing in either letter
that discusses the distinction between the scientific definition
and the common and commercial meaning of the term baboen or
virola. Second, though this group may be a part of the trade, it
cannot be said that this letter is an indication that "the trade"
clearly rejects the redesignation. In fact, if there was a
redesignation, their products would possibly be affected, so this
is somewhat self-serving.
Counsel also states that Customs laboratory reports make it
clear why the trade commercializes a number of Amazonian species
similar to scientific virola as virola. Counsel states that even
the Customs Service cannot distinguish between virola, cieba and
other species in veneer form under laboratory conditions and
provides two copies of laboratory reports to support this
statement. First, we note that the laboratory reports submitted
by counsel do not correspond to the entry numbers and dates for
the merchandise in the submitted protest. As these lab reports
do not coincide with the entries at issue, they do not prove that
the laboratory was unable to identify which species the plywood
at issue are made of. The circumstances behind the submitted
lab reports are unknown. Despite this fact, however, we believe
that these lab reports do not support the contentions of counsel.
The first lab report states that the light side of the plywood
has been identified as virola spp. and the dark side as copaifera
spp. The second lab report specifies that the wood is not virola
spp. and it states that a supplemental report will be issued on
identification of the species. It appears clear to us that the
Customs lab can distinguish wood species and neither report
states that the plywood cannot be identified by species of wood.
Finally, counsel in its submission of October 9, 1995,
discusses the issue of commingling and the application of
General Note (GN) 17(c), HTSUS. Counsel claims that commingling
allied "near" species was recognized by the Customs Service
Headquarters in Treasury Decision (T.D.) 54613(2), published in
1958. Counsel states that in this decision, Headquarters
determined that the presence of other species of wood than the
named wood was to be disregarded for tariff purposes if that wood
was visually indistinguishable and would not be segregated.
We do not believe that the commingling argument or the above
ruling have application in this case. The protestant never
claimed at the time of entry that the merchandise was commingled.
According to the National Import Specialist for wood products,
Customs has not found the importer's shipments to be commingled
and this cannot be claimed long after the merchandise is gone.
In any case, commingled merchandise must follow the rules,
regulations,
and requirements as set forth in GN 17, HTSUS. The protestant
has not shown any proof of commingling, any information as to
what species were present and why the highest rate of duty rule
of GN 17 would not apply.
We do note that counsel's own position seems to negate the
commingling argument. Counsel states that the plywood it imports
is virola: it may be comprised of closely allied species that are
not necessarily of the genus Virola, but it is regarded as virola
based on its common and commercially definition. If the tariff
language at issue- Baboen- was interpreted according to counsel's
position and it was determined that the plywood was virola based
on the common and commercial definition, there would be no need
to discuss the issue of commingling. The plywood would be
considered "Baboen" and it would be so classified. However, as
Customs interprets this tariff provision, if the plywood is not
comprised of an outer ply of wood of the genus Virola, then it
cannot be classified in subheading 4412.11.2060, HTSUS, and
resort to the commingling provisions of GN 17 would prove to be
unnecessary. It appears to us that the commingling argument
becomes an issue when the plywood is comprised of wood of the
Virola genus and lesser amounts of wood of dutiable species. As
the commercial invoices reflect that the plywood is not
commingled and it is not comprised of the "named wood", to wit,
Baboen, but other species of wood, there appears to be no need to
enter into a further discussion of commingling and the subject
plywood is to be classified in subheading 4412.12.2060, HTSUS.
HOLDING:
We find that the term "baboen" used in subheading 4412.11,
HTSUS, includes only wood species of the genus Virola.
Therefore, for the plywood imported by Stadelman from Brazil to
qualify for classification in subheading 4412.11.2060, HTSUS, it
must have at least one outer ply of a wood species of the genus
Virola. Based on the evidence in front of Customs, the
protestant
has not proven that the subject wood is comprised of the genus
Virola. As such, the protest is denied in full. A copy of this
ruling should be attached to the Customs Form 19 and provided to
the protestant as part of the notice of action.
In accordance with Section 3A(11)(b) of Customs Directive
099 3550-065, dated August 4, 1993, Subject: Revised Protest
Directive, this decision should be mailed by your office to the
Protestant no later than 60 days from the date of this letter.
Any reliquidation of the entry in accordance with the decision
must be accomplished prior to mailing the decision. Sixty days
from the date of the decision the Office of Regulations and
Rulings will take steps to make the decision available to Customs
personnel via the Customs Rulings Module in the ACS and the
public via the Diskette Subscription Service, Lexis, Freedom of
Information Act and other public access channels.
Sincerely,
John Durant, Director
Tariff Classification Appeals
Division