CLA-2: OT:RR:CTF:TCM H050560 KSH
Gregory S. McCue, Esq.
Laura R. Ardito, Esq.
Steptoe and Johnson LLP
1330 Connecticut Avenue N.W.
Washington, DC 20036-1795
RE: Classification of greenhouse tunnels.
Dear Mr. McCue and Ms. Ardito: This is in reply to your correspondence on behalf of your client, Haygrove Inc., dated July 29, 2008, in which you have requested a binding ruling concerning Visqueen polythene greenhouse tunnels under the Harmonized Tariff Schedule of the United States (HTSUS). Samples of the Visqueen polythene coverings have been provided for review.
FACTS:
The merchandise at issue is the Smart Series tunnel, the Solo Series tunnel and the Greenhouse Series tunnel. You state you intend to import the tunnels for growing fruit, vegetables and flowers. The tunnels will be imported in unassembled kits supplied with all tunnel components. You state users of the tunnels are farms and nurseries in the United States.
The Smart Series tunnel is constructed to increase tunnel strength, provide long season extension and reduce labor costs associated with high value horticulture. The tunnel can fit into any existing Haygrove tunnel to enhance its strength and can be moved from field to field. Features include:
-New Haygrove SMART® End featuring rapid assembly
and significantly enhanced strength
- Options for new SMART® semi-automated roll-up doors
- Options for gutters®
- Wire bracing using top, leg and star wire systems
- Bay width from 5.5m (18ft) up to 8.5m (28ft)
- Tunnels supplied complete with Visqueen polythene
- Built on 1.5m (5ft), 2m (6.5ft) or 2.5m (8ft) legs
creating a height up to 4.5m (15ft) in the centre
- Frame constructed using 40mm steel – options
available for 25% extra strong (XS) grade steel
- Options for steel top gantry rail to increase strength
and to enable the use of pallet carrying trolleys and
harvesting trolleys
The Solo Series tunnel is designed to combine the benefits of small well-sealed single bay tunnels with the air volume and accessibility of larger multi-bay tunnels. Features include:
-Bay widths: Anywhere from 6.5m to 8.5m wide
-Tunnel height: Built to a minimum height of 3m at the apex for full field
scale tractor access
-Tunnel length: As long as practically required. Many growers build
tunnels up to 500m long
-Steel frame: Built with a 40mm x 2mm steel frame using the highest
grade steel that is possible to bend with the Haygrove mobile bending
machine
-Doors (optional): Options for roller doors using 300-micron polythene for
an excellent seal with full tractor access. Simple curtain doors are also
available.
-Single or Multi Bay (optional): The tunnels can either be built in single
bays or linked together using a double prong anchor. The double prong
anchor is manufactured with a footplate to enable personnel to walk
between the tunnels for easier venting.
-Top bracing (optional): Options are available for steel top gantry rail. The
gantry rail not only adds significant strength to the tunnel, but is also
designed to carry trolleys or spray booms within the tunnel itself.
-Venting system: The Solo Series can be fully vented using specially
designed venting clips.
The Greenhouse Series is designed for flowers, tree crops (such as cherries, peaches, plums), table-top and substrate production, cane crops (raspberries, blackberries etc) and also for use in warm climates where a large moderating air volume and ability to have fully vented houses is critical. Features include:
-Built with SMART® or standard end kits
-Frame constructed using pre-galvanised steel
-Bay widths up to 8.5m (28ft)
-Built to any centre height from 3m (10ft) to 5.5m (18ft)
-High volume gutter system®
-Options for overhead steel top gantry rail systems
-Options for SMART® semi-automated roll-up doors
-Structure supplied complete with Visqueen polythene
ISSUE:
Whether the greenhouse tunnels are classified in heading 3920, HTSUS, or heading 8436, HTSUS.
Whether the greenhouse tunnels are eligible for duty-free treatment into the United States under subheading 9817.00.50, HTSUS.
LAW AND ANALYSIS:
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule 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 GRIs 2 through 6 may then be applied in order.
The 2009 HTSUS provisions at issue are as follows:
3920 Other plates, sheets, film, foil and strip, of plastics, noncellular and not reinforced, laminated, supported or similarly combined with other materials
7308 Structures (excluding prefabricated buildings of heading 9406) and parts of structures (for example, bridges and bridge sections, lock gates, towers, lattice masts, roofs, roofing frameworks, doors and windows and their frames and thresholds for doors, shutters, balustrades, pillars and columns) of iron or steel; plates, rods, angles, shapes, sections, tubes and the like, prepared for use in structures, of iron or steel:
8436 Other agricultural, horticultural, forestry, poultry-keeping or bee-keeping machinery, including germination plant fitted with mechanical or thermal equipment; poultry incubators and brooders; parts thereof
9817.00.5000 Machinery, equipment and implements to be used for
agricultural or horticultural purposes
Note 10 to Chapter 39, HTSUS, provides:
In headings 3920 and 3921, the expression “plates, sheets, film, foil and strip” applies only to plates, sheets, film, foil and strip (other than those of chapter 54) and to blocks of regular geometric shape, whether or not printed or otherwise surface-worked, uncut or cut into rectangles (including squares) but not further worked (even if when so cut they become articles ready for use).
The term "sheets” is not defined in the text of the HTSUS or the Explanatory Notes. When terms are not so defined, they are construed in accordance with their common and commercial meaning. Nippon Kogasku (USA), Inc. v. United States, 69 CCPA 89, 673 F.2d 380 (1982). Common and commercial meaning may be determined by consulting dictionaries, lexicons, scientific authorities and other reliable sources. C.J. Tower & Sons v. United States, 69 CCPA 128, 673 F.2d 1268 (1982).
Webster’s Third New International Dictionary (Webster’s) (1986) defines "sheeting," in relevant part, as "1: material in the form of sheets or suitable for forming into sheets: as . . . b: material (as a plastic) in the form of a continuous film . . . ." Id. at 2092. Webster’s defines "sheet," in relevant part, as "3 a: a broad stretch or surface of something that is usu. thin in comparison to its length and breadth . . . ." Id. at 2091. The Oxford English Dictionary (2d Ed. 1989) defines "sheet" as "9. a. A relatively thin piece of considerable breadth of a malleable, ductile, or pliable substance." Id. at 224.
The Court of International Trade has also examined the term sheet in various cases. In 3G Mermet Fabric Corp. v. United States, 135 F. Supp. 2d 151 (2001), the Court defined "sheet" as a "material in the form of a continuous stem [sic] covering or coating."
In Sarne Handbags Corp. v. United States, 100 F. Supp. 2d 1126 (2000),
the Court defined the term "sheeting" as follows: [T]he common meaning of "sheeting" is material in the form of or suitable for forming into a broad surface of something that is unusually thin, or is a material in the form of a continuous thin covering or coating.
The Visqueen polythene which is imported in continuous rolls meets the terms of Note 10 to Chapter 39, HTSUS and the definitions of sheet or sheeting as set forth in 3M Mermet Fabric Corp. and Sarne Handbags Corp., supra.
In the U.S. Court of International Trade ("CIT") case Ludvig Svensson, Inc. v. United States, ("Ludvig Svensson") 62 F. Supp 2d 1171 (C.I.T. 1999), the court found that specialized plastic laminated screens used as greenhouse roofs and imported in rolls several hundred feet long were parts of agricultural machinery. The court had to consider whether these goods in their condition as imported were sufficiently advanced so as to be considered parts of agricultural equipment. In particular, the court noted that the imported goods used as greenhouse roofs were incorporated into shade and heat retention systems, which consisted of screens, drive motors, cables, aluminum and steel supports, brackets, pulleys, fasteners, and support wires. The court noted further, shade and heat retention systems are installed inside almost all commercial greenhouses. Greenhouse manufacturers either produce greenhouses with the shade and heat retention system installed as original equipment or build greenhouses with enough space in the roof area to accommodate such a system. Id. at 1174. The court found "no question that greenhouses are used in agriculture and that the shade and heat retention systems, which incorporate some of the imported screens ... are used to regulate and control the environment within a greenhouse." Id. at 1177-78.
As noted in HQ W968283, dated May 9, 2007, the Ludvig Svensson decision is not applicable to all types of greenhouse film. In Ludvig Svensson, the court was provided with evidence that the screens used as greenhouse roofs were incorporated into shade and heat retention systems, i.e., "systems consist[ing] of the screens along with drive motors, cables, aluminum and steel supports, brackets, pulleys, fasteners, and support wires." Ludvig Svensson at 1174. Based on this evidence the court classified the screens in heading 8436, HTSUS, as parts of agricultural machinery. Consequently, CBP will only classify greenhouse film in heading 8436, HTSUS, if it is presented with evidence that greenhouse film is incorporated into agricultural machinery. Cf. NY J84551, dated June 3, 2003, in which polypropylene fabric used as ground cover was precluded from classification in heading 8436, HTSUS, partly because it was not attached to machinery, did not form part of a heat retention system and was not used for any similar purpose. See also NY N036721, dated September 10, 2008.
In the condition as imported you state that the tunnels are unassembled kits supplied with all the tunnel components. GRI 2(a), HTSUS, states:
Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled.
In accordance with GRI 2(a), the unassembled tunnel kits will be classified as complete assembled tunnels.
In this case, there is no evidence that the complete tunnels at issue are used in mechanized agricultural systems similar to that described in Ludvig Svensson. As such, they are not classifiable in heading 8436, HTSUS.
The greenhouse tunnels are prima facie classifiable in two headings, each of which describes part only of the good. Under GRI 3(a), each heading is deemed to be equally specific. Under GRI 3(b), the greenhouse tunnels are composite goods made up of different materials and/or components which are to be classified as if consisting only of that material or component which imparts the essential character to the whole. The Visqueen polythene covering is classified in heading 3920, HTSUS and the steel frame in heading 7308, HTSUS.
In essential character determinations, CBP may consider the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the good. Other factors may be considered relevant, depending on the particular merchandise. In this case, the steel frame predominates by weight. In addition, the steel provides strength and support to the greenhouse tunnels and gives form and shape to them. However, the nature of the Visqueen polythene covering and its role in relation to the use of the greenhouse tunnels are equally compelling factors. Considering bulk or size, the covering clearly predominates over the steel frame. More importantly, however, the greenhouse tunnels are designed to provide low cost protection for crops. This is how it is marketed and why users purchase it. The Visqueen polythene covering is the component that affords crops protection from inclement weather. For these reasons, we conclude that in this case it is the Visqueen polythene covering whose role is critical and which imparts the essential character to the greenhouse tunnels. Accordingly, the greenhouse tunnels are classified in heading 3920, HTSUS.
The tariff provision for machinery, equipment and implements to be used for agricultural or horticultural purposes, subheading 9817.00.50, HTSUS, is an actual use provision. See HQ 083930, dated May 19, 1989. In order for this machinery to fall within the special provisions of Chapter 98, HTSUSA, the following three-part test must be met: (1) The article in question must not be excluded from the heading under
Section XXII, Chapter 98, Subchapter XVII, U.S. Note 2, HTSUSA. (2) The terms of the headings must be met in accordance with GRI 1,
HTSUSA, which provides that classification is determined according to the
terms of the headings and any relative section or chapter notes. (3) The article must comply with the actual use provision requirements of sections 10.131-10.139, Customs Regulations (19 CFR 10.131-10.139).
As stated, the greenhouse tunnels are provided for under heading 3920, HTSUS. This heading is not excluded from classification in heading 9817.00.50, HTSUS, by operation of Section XXII, Chapter 98, Subchapter XVII, U.S. Note 2.
The second part of the test requires the greenhouse tunnels to be "machinery", "equipment" or "implements" used for "agricultural or horticultural purposes". As such, the initial determination to be made is what agricultural or horticultural pursuit is in question. The greenhouse tunnels assist in cultivating
fruits, vegetables and flowers in a controlled environment. This is an agricultural pursuit. The third part of the test is that importers meet the actual use requirements of section 10.131 through 10.139, CBP Regulations [19 CFR 10.131 through 10.139]. If these requirements are satisfied, the third part of the test will be met and the subject merchandise will qualify for duty-free entry as agricultural or horticultural equipment, under Chapter 98, HTSUS.
HOLDING:
By application of GRI 1, the Smart Series, Solo Series and Greenhouse Series Haygrove Tunnel systems are classified in heading 3920, HTSUS. They are specifically provided for in subheading 3920.10.00, HTSUS, which provides for “Other plates, sheets, film, foil and strip, of plastics, noncellular and not reinforced, laminated, supported or similarly combined with other material, of polymers of ethylene.” The column one, general rate of duty is 4.2% ad valorem. The greenhouse tunnels are eligible for duty- free treatment under heading 9817.00.50, HTSUS, provided the actual use requirements of section 10.131-10.139, CBP Regulations [19 CFR 10.131-10.139], are satisfied.
Each ruling letter setting forth the proper classification of an article under the provisions of the HTSUS will be applied only with respect to transactions involving articles identical to the samples submitted with the ruling request or to articles whose description is identical to the description set forth in the ruling letter. See 19 CFR 177.9(b)(2).
Sincerely,
Gail A. Hamill, Chief
Tariff Classification and Marking Branch