CLA-2 CO:R:C:M 087557 DWS

Mr. Gerald B. Horn
Soller, Shayne & Horn
46 Trinity Place
New York, NY 10006

RE: Paper Calendering Machines, On-Line and Off-Line; Reconsideration of NY 843361; NY 065477; NY 833074

Dear Mr. Horn:

As requested by your letter of February 12, 1990, to Ms. Jean F. McGuire, Area Director of the New York Seaport, we have reconsidered NY 843361, dated July 27, 1989, concerning the classification of on-line and off-line paper calendering machines under the Harmonized Tariff Schedule of the United States (HTSUS).

FACTS:

The subject merchandise consists of both on-line and off- line calendering machines, used in the paper making process. Calenders finish paper products and give them the ability to absorb ink better. They also can give the paper product a glossy or textured look. The on-line calendering machines are connected to paper making machines so that, to be finished, the paper product moves directly from the previous section of the paper making machine into the calender. Off-line calendering machines stand away from the paper making machine. The paper product must be wound onto a roll at the end of the paper making machine and then moved to the off-line calendering machine. The paper product must be unwound and run through the calendering machine, then rewound into a roll off the machine. There are several reasons why an off-line calendering machine would be preferred, such as available floor space, efficiency of the paper machine, preference of an individual paper maker, and technical suitability.

ISSUE:

What is the proper classification of the subject on-line and off-line calendering machines under the HTSUS?

LAW AND ANALYSIS:

Classification of merchandise under the HTSUS is in accordance with the General Rules of Interpretation (GRI's), taken in order. GRI 1 provides that classification is determined according to the terms of the headings and any relative section or chapter notes.

NY 843361 held the on-line calendering machines to be classifiable under subheading 8420.10.20, HTSUS, which provides for: "[c]alendering or similar rolling machines for making paper pulp, paper or paperboard." However, the off-line calendering machines were held to be classifiable under subheading 8420.10.90, HTSUS, which provides for: "[c]alendering or other rolling machines: [o]ther: [o]ther." You claim that the on-line and off-line machines are, for practical purposes, the same machine and, therefore, both should be classifiable under subheading 8420.10.20, HTSUS. We do not agree.

Under the Tariff Schedules of the United States (TSUS), on- line and off-line calendering machines were classified under different provisions because on-line calendering machines were determined to be a direct part of the paper making process. Off- line calendering machines were considered to be part of the paper finishing process. See NY 065477, dated January 13, 1982. Your argument is that, due to the application of modern technology, there is no reason for the two machines to be classified separately.

We do not doubt your claims that all calendering machines have things in common. Indeed, at the six-digit international level under the HTSUS, there is no distinction made between different types of calendering machines. However, it is our position that, although on-line and off-line machines operate and finish paper similarly, there are still differences that preclude their classification under one tariff provision.

Off-line calendering machines require components for unwinding and rewinding paper rolls that on-line calendering machines do not. With an on-line machine, as noted, the paper product moves directly from the previous section of the paper making machine into the calender to be finished. With an off- line calendering machine, the paper product must be wound onto a spool at the end of the paper making machine and then moved to the calender. It is a wholly separate operation. Also, an off- line machine cannot be interchanged with an on-line machine within a paper making machine.

It is true that, as you claim, the basic components of off- line and on-line machines are the same. However, it is also true that off-line machines can be configured to meet an individual manufacturer's specifications. Factors involved in these specifications could include those already noted: available floor space, efficiency of the paper machine, preference of an individual paper maker, and technical suitability. Therefore, it is not true that off-line machines are identical to on-line machines.

Under the HTSUS, on-line and off-line paper coating machines have been similarly distinguished for tariff classification purposes. In NY 833074, dated November 17, 1988, it was ruled that on-line paper coating machines are classifiable under subheading 8439.99.10, HTSUS, which provides for: "[p]arts: [o]ther: [o]f machinery for making paper or paperboard." Independent, off-line paper coating machines are classifiable under subheading 8439.30.00, HTSUS, which provides for: "[m]achinery for finishing paper or paperboard." It is our position that this distinction for on-line and off-line paper coating machines under the HTSUS equally applies to on-line and off-line paper calendering machines.

HOLDING:

The subject on-line paper calendering machines are classifiable under subheading 8420.10.20, HTSUS, which provides for: "[c]alendering or similar rolling machines for making paper pulp, paper or paperboard." The subject off-line calendering machines are classifiable under subheading 8420.10.90, HTSUS, which provides for: "[c]alendering or other rolling machines: [o]ther: [o]ther." NY 843361 is affirmed in full.

Sincerely,

John Durant, Director
Commercial Rulings Division