CLA-2 RR:TC:MM 958753 RFA

Port Director of Customs
200 St. Paul Place
Baltimore, MD 21202

RE: Protest 1303-95-100314; Farm Drainage Equipment; Trenchers; Excavators; Tractors; Agricultural or Horticultural Purposes; Actual Use; 19 CFR 10.131 through 10.139; HQs 953859, 951865, 083930, 086883, 087076, 089936, 073916, 070939

Dear Port Director:

The following is our decision regarding Protest 1303-95-100314, which concerns the classification of farm drainage equipment under the Harmonized Tariff Schedule of the United States (HTSUS).

FACTS:

The subject merchandise is an agricultural farm drainage machine, model Inter-Drain 2030GP. The base unit of the drainage machine is a self-propelled caterpillar frame unit with a self-contained drainage plow. The machine is used to install farm drainage tubing for agricultural purposes. The tubing removes excess water by lowering the water table to promote better crop growth which thereby increases yields. The machine uses its plow to excavate the soil and create a 3 foot trench into which the tubing is installed. As the tubing is installed, the soil that is "picked up" by the plow is literally dropped back into the exact same place it was picked up. The tubing is placed inside a "plow boot" and is fed through the boot and comes out through the bottom opening.

The merchandise was entered under subheading 8701.30.00, HTSUS, as track-laying tractors suitable for agricultural use. The entry was liquidated on June 16, 1995, under subheading 8430.50.50, HTSUS, as other self-propelled excavating machinery. The protest was timely filed on July 11, 1995.

The subheadings under consideration are as follows:

8429.59.50: Self-propelled bulldozers, angledozers, graders, levelers, scrapers, mechanical shovels, excavators, shovel loaders, tamping machines and road rollers: [m]echanical shovels, excavators and shovel loaders: [o]ther: [o]ther. . . .

Goods classifiable under this provision have a general, column one rate of duty of 2 percent ad valorem.

8430.50.50: Other moving, grading, leveling, scraping, excavating, tamping, compacting, extracting or boring machinery, for earth, minerals or ores; pile-drivers and pile-extractors; snowplows and snowblowers: [o]ther machinery, self-propelled: [o]ther. . . .

Goods classifiable under this provision have a general, column one rate of duty of 2 percent ad valorem.

8701.30.10: Tractors (other than tractors of heading 8709): [t]rack-laying tractors: [s]uitable for agricultural use. . . .

Goods classifiable under this provision have a general, column one rate of duty of free.

9817.00.50: Machinery, equipment and implements to be used for agricultural or horticultural purposes. . . .

Goods classifiable under this provision have a general, column one rate of duty of free.

ISSUE:

Whether the farm drainage machine is classifiable as a tractor under heading 8701, HTSUS, or as an excavator under heading 8429, HTSUS, as other self-propelled excavating machinery under heading 8430, HTSUS? Whether the subject merchandise is eligible for duty-free treatment as agricultural or horticultural machinery under heading 9817.00.50, HTSUS?

LAW AND ANALYSIS:

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

Protestant states that the drainage/trenching machine is properly classifiable under heading 8701, HTSUS, as tractors, but provides no supporting evidence for this position. However, we note that Customs has previously determined that self-propelled trenching machines are classifiable under subheading 8429.59.50, HTSUS. See HQ 951865, dated June 19, 1992. Therefore, we find that based upon HQ 951865, the model Inter-Drain 2030GP drainage/trenching machine is classifiable under subheading 8429.59.50, HTSUS.

We further note that Protestant claims that the merchandise is used for agricultural purposes. Heading 9817.00.50, HTSUS, grants duty free treatment for "[m]achinery, equipment and implements to be used for agricultural or horticultural purposes. . .". This is an actual use provision. See HQ 083930 (May 19, 1989). To fall within this special classification, a three part test must be met. First, the subject merchandise must not be excluded from the heading under Section XXII, Chapter 98, Subchapter XVII, U.S. Note 2, HTSUS. Secondly, the terms of the headings must be met in accordance with GRI 1, which provides that classification is determined according to the terms of the headings and any relative section or chapter notes. Thirdly, the article must comply with the actual use regulations under section 10.131 through 10.139, Customs Regulations (19 CFR 10.131 through 10.139). See HQ 086883 (May 1, 1990); HQ 087076 (June 14, 1990); HQ 089936 (November 15, 1991).

As stated, the merchandise is classifiable under subheading 8429.59.50, HTSUS. This subheading is not excluded from classification in heading 9817.00.50, HTSUS, by operation of Section XXII, chapter 98, Subchapter XVII, U.S. Note 2, HTSUS. The second part of the test calls for the drainage machine to be included within the terms of heading 9817.00.50, HTSUS, as required by GRI 1. The drainage machine must be "machinery", "equipment" or "implements" used for "agricultural or horticultural purposes". There is no question that the subject merchandise is "machinery". The next determination to be made is what agricultural or horticultural pursuit is in question. Webster's II New Riverside University Dictionary (1988), defines agriculture and horticulture as follows:

Agriculture: The science, art, and business of cultivating the soil, producing crops, and raising livestock.

Horticulture: The science, art, and business of cultivating fruits, vegetables, flowers, and plants.

For this part of the test, the initial determination to be made is what agricultural or horticultural pursuit is in question. Under the Tariff Schedules of the United States (TSUS), the precursor to the HTSUS, Customs held that the drainage of lands for agricultural or horticultural purposes was considered an agricultural pursuit. See HQ 073916, dated October 29, 1984, and HQ 070939, dated October 4, 1983. Congress has indicated that earlier rulings must not be disregarded in applying the Harmonized Code. The conference report to the Omnibus Trade Bill states that on a case by case basis prior decisions should be considered instructive in interpreting the HTSUS, particularly where the nomenclature previously interpreted in those decisions remains unchanged and no dissimilar interpretation is required by the text of the HTSUS. H.Rep No. 100-576, 100th Cong., 2D Sess. 548 (1988) at 550.

The subject merchandise is used to install farm drainage tubing for agricultural purposes. The tubing removes excess water by lowering the water table to promote better crop growth which thereby increases yields. The tubing is installed approximately 3 feet below the surface and the soil that is "picked up" by the plow is literally dropped back into the exact same place it was picked up. Based upon HQ 073916 and HQ 070939, we find that the subject merchandise fulfills the requirement of an agricultural pursuit.

The protestant must also meet the third requirement of the actual use provisions required under 19 CFR 10.131 through 10.139. Three conditions must be met to receive duty preferences for actual use. The three conditions required by 19 CFR 10.133 are:

(a) Such use is intended at the time of importation; (b) The article is so used; and (c) Proof of use is furnished within 3 years after the date the article is entered or withdrawn from warehouse for consumption.

"A showing of intent by the importer as to the actual use of imported merchandise shall be made by filing with the entry for consumption or. . . by entering the proper subheading of an actual use provision of the . . . HTSUS". 19 CFR 10.134. At the time of entry, the subject merchandise was entered for consumption under subheading 8701.30.10, HTSUS, as tractors suitable for agricultural use. Even though the subject merchandise is precluded from classification under that heading, we find that the importer had the intent of entering the merchandise for the use of agriculture. See HQ 953859, dated February 25, 1994. However, the protestant has not submitted further documentation to meet the other requirements of the Customs Regulations. If the protestant complies with all of the actual use requirements of sections 10.131 through and including 10.139, Customs Regulations, then the drainage machine will be eligible for free entry under heading 9817.00.50, HTSUS.

HOLDING:

The agricultural farm drainage machine, model Inter-Drain 2030GP is classifiable under subheading 8429.59.50, HTSUS, which provides for: "[s]elf-propelled bulldozers, angledozers, graders, levelers, scrapers, mechanical shovels, excavators, shovel loaders, tamping machines and road rollers: [m]echanical shovels, excavators and shovel loaders: [o]ther: [o]ther. . . . "

However, this merchandise may be eligible for free entry under heading 9817.00.50, HTSUS, upon compliance with the actual use requirements of sections 10.131 through and including 10.139, Customs Regulations. Because reclassification of the merchandise as indicated above will result in the same rate of duty as the liquidated rate, you should deny the protest in full unless the protestant meets the actual use requirements stated above. In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision, together with the Customs Form 19, should be mailed 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
Tariff Classification Appeals
Division