CLA-2 OT:RR:CTF:TCM H090861 AM
Port Director
U.S. Customs and Border Protection
Savannah Service Port
1 East Bay Street Savannah, GA 31401
RE: Tariff classification of Plastic Sheeting for Greenhouses;
Protest Number 1703-09-100369
Dear Port Director:
This letter is in reply to protest and application for further review (AFR), number 1709-09-100369, dated September 17, 2009, filed on behalf of Lumite Inc. (Lumite), against U.S. Customs and Border Protection’s (CBP) reclassification and subsequent liquidation of one entry of engineered tri-layered polyethylene greenhouse sheeting under the Harmonized Tariff Schedule of the United States (HTSUS).
FACTS:
This protest pertains one entry for engineered tri-layered polyethylene greenhouse sheeting to be used for agricultural purposes. The entry took place on July 6, 2008. The Lumite product is described in the commercial invoice as “Type UV2924.” The sheeting is imported in continuous rolls of material lengths, and cut to specification before sale. It is of a type generally used to cover the framework of Quonset hut style greenhouses and similar greenhouses, forming the wall and roof area. Its principal use is in non-mechanical operations. The sheeting is said to include additives that impart specific properties to the plastic to control light, heat, and moisture in the greenhouse, and to control the effect of light on the plastic itself.
The subject merchandise was entered under heading 8436 of the HTSUS, which provides for: “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”. At liquidation, dated May 22, 2009, the merchandise was classified under heading 3920, HTSUS, which provides for: “Other plates, sheets, film, foil and strip, of plastics, noncellular and not reinforced, laminated, supported or similarly combined with other materials”. The instant protest and AFR was filed on September 17, 2009. It was approved on December 24, 2009.
ISSUE:
I. Whether the subject polyethylene greenhouse film is classified under heading 3920.10.0000, HTSUS, as a sheet of plastic, noncellular and not reinforced, laminated, supported or similarly combined with other materials, or under heading 8436.99.0090, HTSUS, as parts of other agricultural machinery?
II. Whether it qualifies for duty free treatment under 9817.00.50 00, HTSUS, as implements to be used for agricultural or horticultural purposes?
LAW AND ANALYSIS:
Initially we note that the matter is protestable under 19 U.S.C. §1514(a)(2) as a decision on classification and the rate and amount of duties chargeable. The protest was timely filed on September 17, 2009, within 180 days of liquidation, pursuant to 19 U.S.C. §1514(c)(3).
Further review of Protest 1703-2009-100369 was properly accorded to protestant pursuant to 19 C.F.R. §174.24. Specifically, in accordance with Section 174.24(a), the protestant alleges the decision against which the protest was filed is alleged to be inconsistent with ruling HQ W968283, dated May 9, 2007.
Merchandise imported into the United States is classified under the HTSUS. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (GRIs) and, in the absence of special language or context which requires otherwise, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law for all purposes.
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 2008 HTSUS provisions under consideration 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:
3920.10.00 Of polymers of ethylene
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:
Parts:
8436.99.00 Other
9817.00.50 Machinery, equipment and implements to be used for agricultural or horticultural purposes
Note 10 of Chapter 39, HTSUS, states the following: “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).”
Note 5 of Section XVI, HTSUS, which covers heading 8436, HTSUS, states the following: “For the purposes of these notes, the expression ‘machine’ means any machine, machinery, plant, equipment, apparatus or appliance cited in the headings of chapter 84 or 85.”
Lumite alleges that classification of the merchandise at issue under 3920 HTSUS is inconsistent with Headquarters Ruling HQ W968283, issued on May 9, 2007, which classified greenhouse film principally used in mechanized systems under heading 8436 HTSUS. In particular, protestant references a meeting on May 6, 2009, between Lumite, counsel for Lumite, and CBP officials. During that meeting, Lumite advised CBP that “there is no difference between the greenhouse film used in mechanical systems and greenhouse film not used in mechanical systems”, and “for both Lumite and Lumite’s competitor’s, the principal use of greenhouse film is in non-mechanical applications.” See Letter in Support of Lumite’s Application for Further Review, dated September 14, 2009, p. 3. The letter also alleges that “both Lumite’s and KPPM’s greenhouse film is used with mechanical shading systems or with non-mechanical applications, depending on the type of greenhouse.” Id., p. 4.
In HQ W968283, CBP considered the classification of a polyethylene greenhouse film alleged to be exclusively used as greenhouse roofs and as sides of greenhouse walls for retractable greenhouse systems. In order to determine whether the product at issue was, in fact, a part for agricultural machinery and subject to classification under 8436 HTSUS, CBP applied the two-part test announced in Ludvig Svensson v. United States, (Ludvig Svensson) 62 F.Supp.2d 1171, 1178 (CIT 1999).
In the U.S. Court of International Trade (CIT) case Ludvig Svensson, 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.
In considering whether the specialized plastic laminated goods were “parts”, the Ludvig Svensson court had to determine: first, whether the imported item was “an integral, constituent, or component part, without which the article to which it is to be joined, could not function as such article” (quoting United States v. Willoughby Camera Stores, 21 C.C.P.A. 322, 324 (1933); and second, whether the imported item was dedicated solely for use with the article in question (following United States v. Pompeo, 43 C.C.P.A 9 (1955)). Applying this as a two-part test, the court found that “without the screens, the walls in commercial greenhouses would be bare, adorned only by the skeleton of shade and heat retention systems, i.e. drive motors, cables, aluminum and steel supports, brackets, pulleys, fasteners, and support wires; there would be no control of temperature and humidity and no shade and heat retention system”. Ludvig Svensson, at 1178. The court also found that the screens were in an advanced state of manufacture, and had no other commercial use. The court took into consideration the fact that the screens were “products of high technology, design and planning”, that is, they were complex screens incorporating several different types of materials, manufactured for the specific goal of controlling various aspects of a greenhouse environment. Id., at 1179. Moreover, each type of screen could only have been used for the purpose for which it was manufactured, and the function and purpose of each screen was clearly identifiable upon importation.
As noted in HQ W968283, 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.
In HQ W968283, CBP had evidence that the merchandise at issue was used in mechanized agricultural systems similar to that described in Ludvig Svensson, and that both prongs of the test had been met.
In the instant matter, Lumite states that the principal use of the Lumite product is in non-mechanical applications. See Letter in Support of Lumite’s Application for Further Review, dated September 14, 2009, pp. 4-5. A greenhouse without a mechanical shade and heat retention system cannot be considered agricultural machinery. Simply lashing plastic sheeting to a metal frame does not make something a machine. According to Note 5 of Section XVI, “machine” means any machine, machinery, plant, equipment, apparatus or appliance cited in the headings of chapter 84 or 85. Because the Lumite product is not dedicated solely for use in agricultural machinery, it is distinguishable from the merchandise at issue in both Ludvig Svensson and HQ W968283, and cannot be classified as a ‘part for an agricultural machine’ under 8436 HTSUS.
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 engineered tri-layered polyethylene greenhouse sheeting 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. The Lumite product is properly classified under heading 3920 HTSUS, as a sheet of plastic, noncellular and not reinforced, laminated, supported or similarly combined with other materials.
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. For the Lumite product 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 Lumite product is 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 films to be "machinery", "equipment" or "implements" used for "agricultural or horticultural purposes". Use in a greenhouse would clearly qualify as an agricultural or horticultural use. The Lumite products in issue certainly fit into the category of equipment of implements. Therefore, the second part of the test is satisfied.
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, Lumite, Inc.’s engineered tri-layered polyethylene greenhouse sheeting UV 2984 is classified in heading 3920, HTSUS, specifically under 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 materials: Of polymers of ethylene”. The general column one rate of duty at the time of entry was 4.2% ad valorem. You are instructed to DENY the protest.
The Lumite product is 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.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division