CLA-2 RR:TC:MM 958753 RFA
Port Director of Customs
200 St. Paul Place
Baltimore, MD 21202
RE: Protest 1303-95-100314; Farm Drainage Equipment; Trenchers;
Excavators; Tractors; Agricultural or Horticultural
Purposes; Actual Use; 19 CFR 10.131 through 10.139; HQs
953859, 951865, 083930, 086883, 087076, 089936, 073916,
070939
Dear Port Director:
The following is our decision regarding Protest 1303-95-100314, which concerns the classification of farm drainage
equipment under the Harmonized Tariff Schedule of the United
States (HTSUS).
FACTS:
The subject merchandise is an agricultural farm drainage
machine, model Inter-Drain 2030GP. The base unit of the drainage
machine is a self-propelled caterpillar frame unit with a self-contained drainage plow. The machine is used to install farm
drainage tubing for agricultural purposes. The tubing removes
excess water by lowering the water table to promote better crop
growth which thereby increases yields. The machine uses its
plow to excavate the soil and create a 3 foot trench into which
the tubing is installed. As the tubing is installed, the soil
that is "picked up" by the plow is literally dropped back into
the exact same place it was picked up. The tubing is placed
inside a "plow boot" and is fed through the boot and comes out
through the bottom opening.
The merchandise was entered under subheading 8701.30.00,
HTSUS, as track-laying tractors suitable for agricultural use.
The entry was liquidated on June 16, 1995, under subheading
8430.50.50, HTSUS, as other self-propelled excavating machinery.
The protest was timely filed on July 11, 1995.
The subheadings under consideration are as follows:
8429.59.50: Self-propelled bulldozers, angledozers,
graders, levelers, scrapers, mechanical
shovels, excavators, shovel loaders, tamping
machines and road rollers: [m]echanical
shovels, excavators and shovel loaders:
[o]ther: [o]ther. . . .
Goods classifiable under this provision have a general,
column one rate of duty of 2 percent ad valorem.
8430.50.50: Other moving, grading, leveling, scraping,
excavating, tamping, compacting, extracting
or boring machinery, for earth, minerals or ores; pile-drivers and pile-extractors;
snowplows and snowblowers: [o]ther machinery,
self-propelled: [o]ther. . . .
Goods classifiable under this provision have a general,
column one rate of duty of 2 percent ad valorem.
8701.30.10: Tractors (other than tractors of heading
8709): [t]rack-laying tractors: [s]uitable
for agricultural use. . . .
Goods classifiable under this provision have a general,
column one rate of duty of free.
9817.00.50: Machinery, equipment and implements to be
used for agricultural or horticultural
purposes. . . .
Goods classifiable under this provision have a general,
column one rate of duty of free.
ISSUE:
Whether the farm drainage machine is classifiable as a
tractor under heading 8701, HTSUS, or as an excavator under
heading 8429, HTSUS, as other self-propelled excavating machinery
under heading 8430, HTSUS? Whether the subject merchandise is
eligible for duty-free treatment as agricultural or horticultural
machinery under heading 9817.00.50, HTSUS?
LAW AND ANALYSIS:
Classification of merchandise under the HTSUS is in
accordance with the General Rules of Interpretation (GRI's). GRI
1 provides that classification shall be determined according to
the terms of the headings and any relative section or chapter
notes.
Protestant states that the drainage/trenching machine is
properly classifiable under heading 8701, HTSUS, as tractors, but
provides no supporting evidence for this position. However, we
note that Customs has previously determined that self-propelled
trenching machines are classifiable under subheading 8429.59.50,
HTSUS. See HQ 951865, dated June 19, 1992. Therefore, we find
that based upon HQ 951865, the model Inter-Drain 2030GP
drainage/trenching machine is classifiable under subheading
8429.59.50, HTSUS.
We further note that Protestant claims that the merchandise
is used for agricultural purposes. Heading 9817.00.50, HTSUS,
grants duty free treatment for "[m]achinery, equipment and
implements to be used for agricultural or horticultural purposes.
. .". This is an actual use provision. See HQ 083930 (May 19,
1989). To fall within this special classification, a three part
test must be met. First, the subject merchandise must not be
excluded from the heading 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, which provides
that classification is determined according to the terms of the
headings and any relative section or chapter notes. Thirdly, the
article must comply with the actual use regulations under section
10.131 through 10.139, Customs Regulations (19 CFR 10.131 through
10.139). See HQ 086883 (May 1, 1990); HQ 087076 (June 14, 1990);
HQ 089936 (November 15, 1991).
As stated, the merchandise is classifiable under subheading
8429.59.50, HTSUS. This subheading is not excluded from
classification in heading 9817.00.50, HTSUS, by operation of
Section XXII, chapter 98, Subchapter XVII, U.S. Note 2, HTSUS.
The second part of the test calls for the drainage machine to be
included within the terms of heading 9817.00.50, HTSUS, as
required by GRI 1. The drainage machine must be "machinery",
"equipment" or "implements" used for "agricultural or
horticultural purposes". There is no question that the subject
merchandise is "machinery". The next determination to be made is
what agricultural or horticultural pursuit is in question.
Webster's II New Riverside University Dictionary (1988), defines
agriculture and horticulture as follows:
Agriculture: The science, art, and business of cultivating
the soil, producing crops, and raising
livestock.
Horticulture: The science, art, and business of cultivating
fruits, vegetables, flowers, and plants.
For this part of the test, the initial determination to be
made is what agricultural or horticultural pursuit is in
question. Under the Tariff Schedules of the United States
(TSUS), the precursor to the HTSUS, Customs held that the
drainage of lands for agricultural or horticultural purposes was
considered an agricultural pursuit. See HQ 073916, dated October
29, 1984, and HQ 070939, dated October 4, 1983. Congress has
indicated that earlier rulings must not be disregarded in
applying the Harmonized Code. The conference report to the
Omnibus Trade Bill states that on a case by case basis prior
decisions should be considered instructive in interpreting the
HTSUS, particularly where the nomenclature previously interpreted
in those decisions remains unchanged and no dissimilar
interpretation is required by the text of the HTSUS. H.Rep No.
100-576, 100th Cong., 2D Sess. 548 (1988) at 550.
The subject merchandise is used to install farm drainage
tubing for agricultural purposes. The tubing removes excess
water by lowering the water table to promote better crop growth
which thereby increases yields. The tubing is installed
approximately 3 feet below the surface and the soil that is
"picked up" by the plow is literally dropped back into the exact
same place it was picked up. Based upon HQ 073916 and HQ 070939,
we find that the subject merchandise fulfills the requirement of
an agricultural pursuit.
The protestant must also meet the third requirement of the
actual use provisions required under 19 CFR 10.131 through
10.139. Three conditions must be met to receive duty preferences
for actual use. The three conditions required by 19 CFR 10.133
are:
(a) Such use is intended at the time of importation;
(b) The article is so used; and
(c) Proof of use is furnished within 3 years after the date
the article is entered or withdrawn from warehouse for
consumption.
"A showing of intent by the importer as to the actual use of
imported merchandise shall be made by filing with the entry for
consumption or. . . by entering the proper subheading of an
actual use provision of the . . . HTSUS". 19 CFR 10.134. At the
time of entry, the subject merchandise was entered for
consumption under subheading 8701.30.10, HTSUS, as tractors
suitable for agricultural use. Even though the subject
merchandise is precluded from classification under that heading,
we find that the importer had the intent of entering the
merchandise for the use of agriculture. See HQ 953859, dated
February 25, 1994. However, the protestant has not submitted
further documentation to meet the other requirements of the
Customs Regulations. If the protestant complies with all of the
actual use requirements of sections 10.131 through and including
10.139, Customs Regulations, then the drainage machine will be
eligible for free entry under heading 9817.00.50, HTSUS.
HOLDING:
The agricultural farm drainage machine, model Inter-Drain
2030GP is classifiable under subheading 8429.59.50, HTSUS, which
provides for: "[s]elf-propelled bulldozers, angledozers, graders,
levelers, scrapers, mechanical shovels, excavators, shovel
loaders, tamping machines and road rollers: [m]echanical shovels,
excavators and shovel loaders: [o]ther: [o]ther. . . . "
However, this merchandise may be eligible for free entry
under heading 9817.00.50, HTSUS, upon compliance with the actual
use requirements of sections 10.131 through and including 10.139,
Customs Regulations.
Because reclassification of the merchandise as indicated
above will result in the same rate of duty as the liquidated
rate, you should deny the protest in full unless the protestant
meets the actual use requirements stated above. In accordance
with Section 3A(11)(b) of Customs Directive 099 3550-065, dated
August 4, 1993, Subject: Revised Protest Directive, this
decision, together with the Customs Form 19, 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 of 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
ACS and the public via the Diskette Subscription Service, Freedom
of Information Act and other public access channels.
Sincerely,
John Durant, Director
Tariff Classification Appeals
Division