CLA-2 RR:CR:GC 963651 JAS
Port Director of Customs
200 Granby St., Suite 839
Norfork, VA 23510
RE: Protest 1401-00-100001; Machines for Boarding, Folding and Wrapping
Pantyhose
Dear Port Director:
This is our decision on Protest 1401-00-100001, filed against your
classification, under the Harmonized Tariff Schedule of the United States
(HTSUS), of boarding, folding and wrapping or packaging machines. The entry
under protest was liquidated on September 24, 1999, and this protest timely
filed on December 22, 1999. Counsel for the protestant presented additional
factual and legal arguments in a facsimile transmittal, dated August 28, 2000,
and in letters, dated September 7 and 13, 2000.
FACTS:
The articles at issue here are a boarding machine, model 820, a folding
machine, model 720, and a bagging machine, model 750, all made in Italy by
Cortese. These machines are used in preparing and packaging nylon fabric
pantyhose for retail sale. Boarding is a process by which garments are dried
and left in some predetermined shape. The boarding machine draws the hose
over metal forms of the proper shape and size. The drying occurs when the
metal forms are heated by pressurized steam. The folding machine folds the
dried and formed pantyhose around a cardboard insert. Finally, the bagging
machine puts the pantyhose in a plastic envelope, inserts the envelope into a
cardboard package with a small window opening, and seals it. These machines
were imported in the same shipment, and can operate independently or
together when connected by electric cables and motorized conveyor belts.
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The machines were imported under a provision in heading 8422, HTSUS, as other packing or wrapping machinery. The local Customs officer regarded the three machines as a functional unit and liquidated the entry under subheading 8451.80.00, HTSUS, as machinery for drying or pressing fabrics or made up textile articles. The officer now believes, however, that the bagging machine should be separately classified under subheading 8422.40.90, HTSUS, and the boarding and folding machines should be considered a functional unit classifiable under subheading 8451.80.00, HTSUS.
Counsel for the protestant cites Harmonized Commodity Description and Coding System Explanatory Notes for heading 8422 which, he claims, include machines that not only pack or wrap goods but which also, as a secondary function, cut, mold or press previously prepared products. Counsel maintains that when used together the three machines are a functional unit under Section XVI, Note 4, HTSUS, classifiable as packing or wrapping machines in subheading 8422.40.90, HTSUS. In the alternative, counsel notes that the three machines are offered for sale separately at individual prices and, for this reason, claims that the folding and packaging machines should be considered a functional unit, classifiable in subheading 8422.40.90, HTSUS, as other packing or wrapping machinery, and the boarding machine classifiable in subheading 8451.80.00, HTSUS.
The HTSUS provisions under consideration are as follows:
8422 …other packing or wrapping machinery (including heat-shrink wrapping machinery):
8422.40 Other packing or wrapping machinery (including heat-shrink wrapping machinery):
Other
* * * * *
8451 Machinery for drying, ironing, pressing…textile yarns, fabrics or made up textile articles…:
8451.80.00 Other machinery
ISSUE:
Whether the boarding, folding and bagging machines, or any combination of these machines, constitutes a functional unit for tariff purposes.
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LAW AND ANALYSIS:
Under General Rule of Interpretation (GRI) 1, Harmonized Tariff Schedule of the United States (HTSUS), goods are to be classified 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.
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System. Though not dispositive, the ENs provide a commentary on the scope of each heading of the Harmonized System. Customs believes the ENs should always be consulted. See T.D. 89-80. 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).
Section XVI, Note 4, HTSUS, states, in relevant part, that where a combination of machines, whether separate or interconnected by piping, by transmission devices, by electric cables or other devices, contribute together to a clearly defined function covered by one of the headings in Chapter 84 or Chapter 85, then the whole is classified in the heading appropriate to that function. Relevant ENs, on p. 1227, state that for purposes of Note 4 the expression “intended to contribute together to a clearly defined function” covers only combinations of machines essential to the performance of the function specific to the functional unit as a whole, and thus excludes machines or appliances fulfilling auxiliary functions which do not contribute to the function of the whole. The ENs on p. 1228 specifically state that component parts not complying with the terms of Section XVI, Note 4, HTSUS, fall in their own appropriate headings.
The heading 8422 ENs counsel cites indicate that packing and wrapping machines of that heading may, as a secondary function, cut, mold or press previously prepared products into purely presentational forms without affecting their essential character. Thus, counsel concludes, pressing the pantyhose
(i.e., boarding) is merely an incidental operation that is secondary to the machine’s primary wrapping and packing function, which is described by heading 8422. In our opinion, counsel’s interpretation of the cited ENs is relevant in a composite machine analysis under Section XVI, Note 3, HTSUS. This Note applies where a single machine performs complementary or alternative functions and authorizes classification according to a machine’s principal function. Each machine at issue here performs a single, discrete function, so that any issue of complementary or alternative functions does not appear relevant in a functional unit analysis.
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Packing or wrapping is the function of machines of heading 8422 which is at issue here. The record indicates that pantyhose may be sold at retail either in wrinkled, non-pressed form (i.e., L’eggs), or boarded, folded and packaged
(i.e., Donna Karan). The machines at issue in this protest produce pantyhose of the latter class or kind. The ENs on p. 1228 list numerous examples of machines and equipment regarded as functional units under Section XVI, Note 4. Among these is brewhouse machinery of heading 8438, HTSUS, which provides for industrial machinery for the preparation of food or drink. The example, however, does not regard bottling machines and label-printing machines as contributing to the function described by heading 8438; rather, they are auxiliary appliances that are utilized after the drink is prepared. This EN indicates these machines are separately classifiable. Analogizing this EN to the machines under protest, we conclude that the boarding machine performs a finishing operation, the last step in the production of the pantyhose. It does not contribute to the function of packing or wrapping described by heading 8422, as these are processes which occur after the pantyhose are produced. For this reason, the boarding machine is separately classified in heading 8451, HTSUS.
The next issue is whether the folding machine and the wrapping machine constitute a functional unit provided for in heading 8422. The folding machine forms the pantyhose around a cardboard insert, after which the bagging machine puts them in a plastic envelope and then into a cardboard package. In our opinion, the folding machine contributes to the wrapping or packaging function because folding is a necessary step to preserve the form and shape of the pantyhose for presentational purposes, prior to being final packaged. The folding machine and bagging machine contribute to the clearly defined function of packing or wrapping appropriate to machines of heading 8422.
HOLDING:
Under the authority of GRI 1 and Section XVI, Note 4, HTSUS, the model 720 folding machine and the model 750 bagging machine are provided for in heading 8422. They are classifiable together in subheading 8422.40.90, HTSUS. The model 820 boarding machine is provided for separately under heading 8451. It is classifiable in subheading 8451.80.00, HTSUS. These machines should be reclassified as indicated, and the protest ALLOWED or DENIED, as appropriate, depending on whether the reliquidation results in a net increase or decrease in duties.
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In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
John Durant, Director
Commercial Rulings Division