CLA-2 RR:CR:TE 962237 jb
Area Director
U.S. Customs Service
9901 Pacific Highway
Blaine, WA 98230
RE: Decision on Application for Further Review of Protest No. 3004-98-100105; Used Railroad Ties
Dear Sir:
This is a decision on an application for further review of a protest timely filed by the Law Office of George R. Tuttle, on behalf of Anderson Wholesale Lumber Co., against your decision regarding the proper classification under the Harmonized Tariff Schedule of the United States (HTSUS) for used railroad ties. The entry at issue was liquidated on May 1, 1998.
FACTS:
The Protestant imports used railroad ties from Canada for subsequent resale to garden suppliers and lumber wholesalers, who in turn sell the used railroad ties to consumers for use as landscaping and retaining wall material. The Protestant emphasizes that when the railroad ties were originally manufactured and sold for use on railroad track, they conformed to the American Railroad Engineering Association Standards for Track Structure and were used solely for relay purposes, that is, to upgrade or rehabilitate existing railroad trackage or were utilized in the building of new trackage.
The subject railroad ties, which are graded as “relays” or “one”, “two” or “three”, measure 6" X 8" X 8', and 7" X 9" X 9'; switch ties measure 8 to 9 feet in length. The ties are creosote impregnated and have a number of holes at each end where the rail spikes and joiners are removed; in some cases, the ties have damaged or split ends. Because of the condition of these railroad ties at the time of importation, the only acknowledged use for this merchandise is in landscaping or as retaining wall materials.
The Protestant objects to Customs classification of this merchandise in heading 4407, HTSUS, which under the specific terms of the United States-Canada Softwood Lumber Agreement, merchandise classified within one of four enumerated subheadings (4407.10.00, 4409.1010, 4409.1020, 4409.1090, HTSUS) is subject to export permit requirements and fees.
The Protestant makes reference to T.D. 97-9 and 19 CFR 12.140, which state that only softwood lumber classifiable under the specified subheadings at the time it was first manufactured into such a product is subject to the Canadian export permit and fee requirements. The Protestant concludes that as the subject merchandise, at the time of first manufacture, was classifiable as railroad ties in heading 4406, HTSUS, they are not now subject to the permit and fee requirements of the Canadian Softwood Lumber Agreement. Furthermore, the Protestant adamantly believes that as the Canadian government does not charge in any manner for the issuance of an export permit for this merchandise, no such requirement should be obligated by United States Customs.
ISSUE:
What is the proper classification for the subject merchandise?
LAW AND ANALYSIS:
Classification of merchandise under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA) is in accordance with the General Rules of Interpretation (GRI). GRI 1 provides that classification shall be determined according to the terms of the headings and any relative section or chapter notes, taken in order. Merchandise that cannot be classified in accordance with GRI 1 is to be classified in accordance with subsequent GRI.
There are two headings which merit consideration with respect to the classification of this merchandise. As in all cases, it is the explicit terms of the headings and the accompanying Explanatory Notes to the Harmonized Commodity Description and Coding System (EN) which will control the appropriate classification determination.
Heading 4407, HTSUS, provides for, among other things, wood sawn or chipped lengthwise, sliced or peeled, whether or not planed, sanded or finger-jointed, of a thickness exceeding 6mm. The Explanatory Notes to the Harmonized Commodity Description and Coding System (EN) to heading 4407, HTSUS, state in relevant part:
The products of this heading may be planed (whether or not the angle formed by two adjacent sides is slightly rounded during the planing process), sanded, or end-jointed, e.g. finger-jointed (see the General Explanatory Note to this Chapter).
Heading 4406, HTSUSA, covers railway or tramway sleepers (cross ties) of
wood. This heading covers railroad ties imported into the United States for use as railroad ties. The EN to heading 4406, HTSUS, state:
This heading covers unplaned wood in pieces of more or less rectangular section of the kind commonly used to support railway or tramway track. The heading also includes switch ties, which are no longer than sleepers, and bridge ties, which are wider and thicker and usually longer than sleepers.
The edges of these products may be roughly chamfered and they may be provided with holes or seating for fixing the rails or chairs. They may also sometimes be strengthened at the ends by means of staples, nails, bolts or steel strips to prevent their splitting.
The products of this heading may be surface treated with insecticides or fungicides for the purpose of protection. For long-term preservation they are often impregnated with creosote or other substances.
19 CFR Section 12.140(a), Entry of softwood lumber from Canada, states, in relevant part:
Encumbrance regarding export permit and export fee. In the case of softwood lumber first manufactured into a product classifiable in subheading 4407.10.00, 4409.10.10, 4409.10.20, or 4409.10.90, Harmonized Tariff Schedule of the United States (HTSUS), in the Province of Ontario, Quebec, British Columbia , or Alberta, the requirement that the Government of Canada issue an export permit and collect the appropriate export fees under the Softwood Lumber Agreement attaches to and encumbers the product when it is imported into the United States...
The issue presented in this protest is whether the subject railroad ties, which, in their condition as imported, are not fit for use as railroad ties and are instead used as landscaping timbers, are classifiable under the heading for railroad ties. The Protestant contends that a railroad tie is a railroad tie, classified in heading 4406, HTSUS, and not softwood lumber first manufactured into a product classifiable, in this case, in heading 4407.10.00, HTSUSA. Accordingly, as the subject merchandise, at the time of first manufacture, was not classified in heading 4407, HTSUS, it cannot now be so classified, regardless of how it is used after importation.
Under the Additional U.S. Rules of Interpretation, Rule 1(a), a tariff classification controlled by use (other than actual use) is determined in accordance with the use to which goods of a given class or kind are put at, or immediately prior to, the date of their importation. The controlling factor for the interpretation for “use” in this case is the principle use. As was correctly stated in Headquarters Ruling Letter (HQ) 954924, dated December 3, 1993:
...the provision for railroad ties is a use provision. A piece of lumber imported into the United States that meets the specifications for railroad ties and thus is of a class or kind principally used as railroad ties will be classified as a railroad tie whether or not that particular piece of lumber is actually used as a railroad tie. Conversely, if a piece of lumber does not meet the specifications for railroad ties, it is not of a class or kind principally used as railroad ties. Hence, it is not classifiable under the railroad tie provision. (Note that the American Railway Engineering Association has issued specifications for railroad ties (referred to as "timber cross ties"). These specify the characteristics that are required for a piece of lumber to be accepted and used as a railroad tie, from the kinds of wood used to make ties to physical characteristics and dimensions. For obvious safety reasons, the quality of railroad ties is controlled.)
Customs does not dispute the fact that railroad ties are “lumber” within the parameters of heading 4407, HTSUS, that is, wood sawn lengthwise. The linchpin of this issue is the understanding that historically Congress has sought to distinguish railroad ties from other lumber by way of a specific eo nomine provision for railroad ties (i.e., heading 4406, HTSUS), and that to qualify for such classification that merchandise must meet certain stringent size and physical requirements required of railroad ties. Once those requirements are met, that merchandise, for classification purposes, is no longer considered general lumber and is classifiable in a more specific provision, that is, heading 4406, HTSUS. The converse is also true, that is, as in this case, when the merchandise in its imported condition, no longer meets the physical requirements required of that heading, that merchandise is for classification purposes, lumber of heading 4407, HTSUS.
As Protestant accurately notes, an eo nomine description “includes those products subjected to a variety of processing steps so long as their identity as the named article has not been destroyed and they have not been converted into another product.” The specifications established for railroad ties by the American Railway Engineering Association are used to distinguish railroad ties from other lumber. Such criteria help to define the size and physical requirements of the wood and include information on wood species, quality (e.g., freedom from decay, specifications for knots), resistance to wear (e.g., tolerances in wanes in the wood), and load bearing (e.g., tolerances in size and in length). As we have already stated, once lumber of heading 4407, HTSUS, meets that requisite criteria, it is no longer just “lumber.” In that situation, that merchandise, for tariff purposes, becomes a product of heading 4406, HTSUS. The converse is also true, that is, once a product which was at the time of its original importation, and in Protestant’ words, “first manufacture”, classified as a railroad tie of heading 4406, HTSUS, is imported into the United States commerce and no longer meets the specifications required of that provision, the merchandise is no longer a product of heading 4406, HTSUS, but a product of heading 4407, HTSUS. For classification purposes, the fact that it was first manufactured as a product of heading 4406, HTSUS, does not control its present classification in the condition as imported. In the latter situation, the merchandise is no longer provided for eo nomine in heading 4406, HTSUS, because the identity of the named article (railroad tie) has been destroyed through the course of wear and tear and can no longer be used as such. The railroad tie has in essence been converted into another product, that is, lumber of heading 4407.
In the case of the subject merchandise, the used railroad ties do not meet the specifications for railroad ties of heading 4406, HTSUS. The subject merchandise is no longer free from defects or possessive of the requisite strength, durability, and safety standards which define those products of heading 4406, HTSUS. As such, the subject merchandise is not of the class or kind of lumber used principally as railroad ties classified in heading 4406, HTSUS, and, cannot be so classified.
We make one final comment regarding the Protestant’s claim that as the Canadian government does not charge in any manner for the issuance of an export permit for this merchandise, no such requirement should be obligated by Customs. It is a basic tenet of Customs law that goods are classified under the HTSUS in their condition as imported (United States v. Citroen, 223 U.S. 407 (1911)). As we have already outlined above, as the subject merchandise no longer meets the specifications required of heading 4406, HTSUS, the merchandise is precluded from classification in that provision and is classified instead, in heading 4407, HTSUS. The United States Canada Softwood Lumber Agreement states that merchandise classified within one of four enumerated subheadings (4407.10.00, 4409.1010, 4409.1020, 4409.1090, HTSUS) is subject to export permit requirements and fees. As the subject merchandise, in its condition as imported, falls within one of those specified provision, that is, heading 4407, HTSUS, the United States is bound by that Agreement to require such
permits on the merchandise. The fact that Canada does not wish to bind Canadian exporters to that permit requirement and that the quantities shipped are not counted against the quota in the Softwood Lumber Agreement is neither within the jurisdiction of U.S. Customs nor its control. U.S. Customs however, can control and ensure that the classification of merchandise as per the terms of the HTSUS, within its borders is proper and consistent.
Accordingly, the subject merchandise was correctly classified in heading 4407, HTSUS.
HOLDING:
The protest should be denied. In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries 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 make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.ustreas.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
John Durant, Director
Commercial Rulings Division