CLA-2 RR:CR:GC 963027/960816 PH
Port Director of Customs
18011K Cross Beam Drive
Charlotte, NC 28217
RE: Protest 1512-97-100177; Automatic Gusset Line Closer; Schadok Lifting and Handling Device; Loader
Dear Port Director:
This is our decision on protest 1512-97-100177, against your classification under the Harmonized Tariff Schedule of the United States (HTSUS) of machines used to make up automatic gusset line closer machines. In preparation of this ruling, consideration was given to counsel’s supplemental submission of July 29, 1999.
FACTS:
The merchandise is invoiced as "ONE PICK UP AND ORIENTATION SET WITH CONTROL KEY BOARD" and "ONE TURRET UNIT WITH CONTROL CABINET AND ACCESSORIES AS MACHINE AUTOMATIC GUSSET". The importer states that these articles are two of the four machines which make up an "Automatic Gusset Line Closer" (AGLC) machine used to make pantyhose. The first article, also called a "Schadok Lifting and Handling Device", lifts fabric blanks from the supply reservoir of tubular fabric blanks, orients the blanks, and transports them to the second article (also called a "Loader"). The Loader positions the blanks and removes creases and pleats from them, after which the other two machines in the AGLC perform sewing functions.
In the July 29, 1999, supplemental submission, additional information was provided about the crease and pleat removal component of the Loader. According to a sworn statement by a person described as "one of the inventors of the AGLC machine", the pleat removal feature was not included on the prototype loaders but evolved on imported machines to handle garments which contain a lot of spandex and/or rubber. The pleat remover consists of a set of fingers that run inside the frames in a circular motion to balance out the stretch in the garment, thereby removing any pleats. It is an attachment to the loader that can be turned on or off, depending on the style of the garments being processed. It is estimated that 25% of the styles processed by the importer require use of the feature. The cost of the pleat remover is approximately 2% of the loader and the cost breakdown between the Schadok Lifting and Handling Device and the Loader is: Schadok device 65%, Loader 35%.
The merchandise was entered in 14 entries between April and December, 1993, as other sewing machines, automatic units, in subheading 8452.21.90, HTSUS. The entries were liquidated on January 31, 1997, with classification as other machines and mechanical appliances having individual functions, not specified or include elsewhere, in subheading 8479.89.90, HTSUS.
The importer’s counsel filed this protest with Customs on April 30, 1997, against the classification of the merchandise. Citing Harmonized Commodity Description and Coding System Explanatory Note (EN) 84.79, the protestant contends that the machines are precluded from classification under heading 8479, HTSUS, because they can be properly classified in another more specific heading of Chapter 84, HTSUS, namely heading 8428 or 8452, HTSUS. The protestant also contends that the machines are used exclusively as components for the AGLC’s and that their principal functions are the lifting, handling, and loading functions specifically provided for in subheading 8428, HTSUS.
Alternatively, the protestant argues that the machines, when combined with the other two machines making up the AGLC’S, contribute together to the clearly defined function performed by sewing machines, and that the four machines are interdependent on one another. Therefore, under Note 4, Section XVI, HTSUS, the machines should be classified as sewing machines in heading 8452, HTSUS. In this alternative argument, the protestant contends that the machines would be classified as parts of sewing machines in subheading 8452.90.00, HTSUS.
ISSUE:
Whether the Schadok Lifting and Handling Devices and the Loaders, two of the four machines making up Automatic Gusset Line Closer machines, are classifiable as other lifting, handling, loading or unloading machinery in subheading 8428.90.00, HTSUS, other sewing machines in subheading 8452.21.90, HTSUS, other parts of sewing machines in subheading 8452.90.00, HTSUS, or other machines and mechanical appliances in subheading 8479.89.90, HTSUS.
LAW AND ANALYSIS:
Initially, we note that the protest was timely filed (i.e., within 90 days after but not before the notice of liquidation; see 19 U.S.C. 1514(c)(3)(A)) and the matter protested is protestable (see 19 U.S.C. 1514(a)(2) and (5)).
Classification of merchandise under the HTSUS is in accordance with the General Rules of Interpretation (GRIs), taken in order. GRI 1 states in part that, for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes, and provided the headings or notes do not require otherwise, according to GRIs 2 through 6. GRI 3(c) provides that when goods are prima facie classifiable under two or more headings, goods which cannot be classified by reference to GRI 3(a) (by reference to the heading which provides the most specific description) or GRI 3(b) (classification of mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale as if they consisted of the material or component which gives them their essential character) shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the 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. Customs believes the ENs should always be consulted. See T.D. 89 80, published in the Federal Register August 23, 1989 (54 F.R. 35127, 35128).
The 1993 HTSUS headings under consideration are as follows:
8428 Other lifting, handling, loading or unloading machinery (for example, elevators, escalators, conveyors, teleferics)
8452 Sewing machines, other than book-sewing machines of heading 8440; furniture, bases and covers specially designed for sewing machines; sewing machine needles; parts thereof
8479 Machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof
Note 4, Section XVI, HTSUS, provides that:
Where a machine (including a combination of machines) consists of individual components (whether separate or interconnected by piping, by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defined function covered by one of the headings in chapter 84 or chapter 85, then the whole falls to be classified in the heading appropriate to that function.
The protestant contends that the machines are parts of sewing machines made up of the two machines imported in the protested entries and two other machines which perform the sewing function, so that the individual components combine to contribute together to a clearly defined function covered by heading 8452, HTSUS, and the whole should be classified in that heading, pursuant to Note 4, Section XVI, HTSUS. In applying Note 4, Section XVI, HTSUS, Customs has repeatedly noted that there are no Legal Notes or ENs that provide for "unfinished functional units" or "parts of functional units". The fact that several machines, if imported together, would be classified under a single heading as a "functional unit" does not mean that the same would hold true if they are imported separately. (See, e.g., Headquarters Rulings (HQs) 087077 dated March 27, 1991; 950218 dated April 17, 1992; 957326 dated July 17, 1995; 961003 dated June 10, 1998; and 962105 dated April 22, 1999.) This is particularly true when, as in this case, the machines imported in the protested entry do not include the machines which give the complete or finished article its essential character (i.e., that of a sewing machine) (see GRI 2(a)). When imported separately, the machines must be individually classified and classification in subheading 8452.21.90 or 8452.90.00, HTSUS, by virtue of Note 4, Schedule XVI, HTSUS, is precluded.
The functions of the Schadok Lifting and Handling Device are to remove fabric blanks from a supply reservoir, orient the blanks in a predetermined manner, and convey them to the Loader. Each of these functions is encompassed within the language of heading 8428, HTSUS (see also EN 84.28, according to which "... this heading covers a wide range of machinery for the mechanical handling of materials, goods, etc. (lifting, conveying, loading, unloading, etc.) [and] [t]hey remain here even if specialised for a particular industry, for agriculture, metallurgy, etc."). The Schadok Lifting and Handling Device is classified as other lifting, handling, loading or unloading machinery in subheading 8428.90.00, HTSUS.
The functions of the Loader are to orient the fabric blanks received from the Schadok Lifting and Handling Device, remove creases and pleats from the fabric blanks (by stretching them, according to materials provided by the protestant), and position a pair of them on another machine for slitting and sewing. Two of these functions are basically the same as the functions of the Schadok Lifting and Handling Device (orienting the fabric blanks and positioning them). These functions are encompassed within the language of heading 8428, HTSUS (see above). The third function, removing creases and pleats by stretching, is not encompassed within the language of heading 8428, HTSUS, nor is it specified or included elsewhere in Chapter 84, HTSUS, other than in the "basket" provision in heading 8479, HTSUS.
Note 3, Section XVI, HTSUS, provides, in part:
Unless the context otherwise requires ... machines adapted for the purpose of performing two or more complementary or alternative functions are to be classified ... as being that machine which performs the principal function.
The General EN for Note 3, Section XVI, HTSUS (p. 1226-1227), states, in part:
In general, multi-function machines are classified according to the principal function of the machine. ... Where it is not possible to determine the principal function, and where, as provided in Note 3 to the Section, the context does not otherwise require, it is necessary to apply General Interpretative Rule 3(c) ....
In HQ 960816 dated August 27, 1998, Customs concluded that removing the creases and pleats by stretching was the principal function of the Loaders and, therefore, that the Loaders were classified as other machines and mechanical appliances having individual functions, not specified or included elsewhere in Chapter 84, in subheading 8479.89.90, HTSUS. This determination was based on the facts available to Customs at that time, i.e., "[the crease and pleat removal] function, preparatory to sewing the gusset into the pantyhose, is critical to the successful production of pantyhose [and] [t]he other two functions are subsidiary to, or preparatory for, this function, and are actually continuations of the functions of the Schadok Lifting and Handling Device."
HQ 960816 was, and remains, correct on the facts as described in the ruling and before Customs. However, pursuant to 19 CFR 174.28, Customs may consider alternative claims and additional grounds or arguments submitted in writing by the protestant with respect to any decision which is the subject of a valid protest at any time prior to disposition of the protest (i.e., prior to the mailing of the protest denial (Customs Form 19) to the protestant, San Francisco Newspaper Printing Co. v. United States, 9 CIT 517, 620 F. Supp. 738 (1985)). Customs rulings are issued on the assumption that all of the information upon which they are based is accurate and complete in every material respect (see 19 CFR 177.9(b)(1); see also 19 CFR 177.2(b)(1)).
In this case, before disposition of the protest, the protestant has provided additional grounds in writing with respect to the decision under protest. The additional information is that the crease and pleat removal component is used with approximately 25% of the styles of garments being processed in the importer’s operations and represents a very small part of the cost of the Loader. As noted in HQ 960816, the dictionary definition of "principal" is "first in rank, authority, importance, degree, etc.", (Webster’s new World Dictionary of American English, 3rd Coll. Ed. (1988), at p. 1070). Although we do not believe that the relative cost of the components performing the different functions is necessarily relevant in determining the component which performs the principal function, we note the protestant’s statement that the crease and pleat removal component was added to the Loader after its development and is needed with only about 25% of the styles of garments being processed. On the other hand, we note that the crease and pleat removal component is described as an integral part of the AGLC in the patent for the machine (U.S. Patent No. 5,165,355). Bearing in mind the definition of "principal" (see above), we conclude that the crease and pleat removal function is important, but so are the orienting and positioning functions. We conclude that this is a situation in which it is not possible to determine the principal function. Therefore, in accordance with the General EN for Note 3, Section XVI, HTSUS, quoted above, it is necessary to apply GRI 3(c), which requires classification under the heading which occurs last in numerical order among those which equally merit consideration. As between headings 8428 and 8479, HTSUS, that is, of course, the latter. The Loaders are classified as other machines and mechanical appliances in subheading 8479.89.90, HTSUS. (See HQ 957161 dated April 24, 1995, for a similar analysis and classification.)
HOLDING:
The Schadok Lifting and Handling Devices are classified as other lifting, handling, loading or unloading machinery in subheading 8428.90.00, HTSUS, and the Loaders are classified as other machines and mechanical appliances in subheading 8479.89.90, HTSUS.
EFFECT ON OTHER RULINGS:
HQ 960816 dated August 27, 1998, is DISTINGUISHED.
The protest is GRANTED in part (as to the Schadok Lifting and Handling Devices) and DENIED in part (as to the Loaders). 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 (in this case, both this decision and HQ 960816 should be mailed), with the Customs Form 19, 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,
Commercial Rulings Division