CLA-2: OT:RR:CTF:TCM H035968 KSH
Gregory S. McCue, Esq.
Laura R. Ardito, Esq.
Steptoe and Johnson LLP
1330 Connecticut Avenue N.W.
Washington, DC 20036-1795
RE: Revocation of HQ H011657, dated April 18, 2008; 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 reconsideration of Headquarters Ruling Letter (HQ) H011657, issued on April 18, 2008, concerning the classification of Visqueen polythene greenhouse tunnels under the Harmonized Tariff Schedule of the United States (HTSUS). The greenhouse tunnels were previously classified in HQ H011657, in heading 6306, HTSUS, which provides for “Tarpaulins, awnings and sunblinds; tents; sails for boats, sailboards or landcraft; camping goods:” Samples of the Visqueen polythene coverings have been provided for review.
In your request for reconsideration, you have provided additional information that the greenhouse tunnel coverings are composed entirely of Visqueen polythene. Accordingly, CBP has reviewed the classification of the greenhouse tunnels and has determined that the cited ruling is in error.
HQ H011657 is a Headquarters ruling on Protest 2904-07-100028. In accordance with San Francisco Newspaper Printing Co. v. United States, 9 CIT 517, 620 F. Supp. 738 (1985), the liquidation of the entries covering the merchandise which was the subject of Protest 2904-07-100028 was final on both the protestant and CBP. Therefore, this decision has no effect on those entries.
Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. 1625(c)(1)), as
amended by section 623 of Title VI, notice of the proposed action was published on February 12, 2009, in Volume 43, Number 8 of the Customs Bulletin. CBP received one comment in response to the proposed notice.
FACTS:
The merchandise was described in HQ H011657 as follows:
The entries at issue are described in the entry documents as "Haygrove multi-bay tunnels for flower and vegetable growing." Protestant has submitted marketing information on Haygrove 3 and 4- Series tunnels to this office. According to the submitted information, the Haygrove 3-Series is designed for sheltered sites where crops need low cost protection during spring, summer and early autumn. The 3-Series is used for four raised beds of strawberries, summer flowers and high value vegetable crops. Features include: -frame constructed using 35mm steel
-bay width from 5.5 m (18 ft.) up to 7.2 m (24 ft.)
-built on 1.5 m (5 ft.) or 2 m (6.5 ft.) legs
-Open-end kit strut system enabling full tractor access
-Wire bracing using top, leg and star wire systems
-All steel pre-galvanised both outside and inside the steel tube
-Visqueen polythene, shade net or insect net provided.
The 4-Series is used by growers for five raised beds of strawberries, raspberries, high value flowers, salads, vegetables, ornamentals and nursery stock. Its features are similar to the 3-series but for the width of the bay, the height of the legs and the gauge of the steel.
The greenhouse tunnels use a Visqueen polythene covering which is a
polyethylene film. The film is included in the greenhouse tunnel kits as large rolls of 800m in various widths ranging from 8m to 12m. There are no holes or grommets in the rolls. The film is clipped onto the tunnels’ steel frames. One of two types of Visqueen polythene are included in the tunnel kits, to wit: (1) High UV Luminance (Luminance THB) and (2) High UV Clear (UVI). Each type is imported in measurements of either 150 or 180 microns (mu). Luminance THB is a thermal heat barrier and a 90% diffusing polythene. UVI is used where crops need rain, hail, wind and frost protection and the grower is not looking to manipulate the photo-spectrum that enters the greenhouse. UV films have specific calibrated levels of UV to enable them to be guaranteed for 3 seasons irrespective of the UV intensity of the geographical area.
ISSUE:
Whether the greenhouse tunnels are classified in heading 3920, HTSUS, as other sheets of plastic, heading 6306, HTSUS, as tents, or heading 7308, HTSUS, as structures of steel.
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:
6306 Tarpaulins, awnings and sunblinds; tents; sails for boats, sailboards or
landcraft; camping goods:
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:
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, 156 (2001), the Court defined "sheet" as a "material in the form of a continuous stem covering or coating."
In Sarne Handbags Corp. v. United States, 100 F. Supp. 2d 1126, 1134
(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.
Note 1 to Chapter 63 states that "Subchapter 1 applies only to made up articles, of any textile fabric."
The provisions of heading 9817.00.50 and 9817.00.60 do not apply to: * * * (e) articles of textile material[.]
As noted in HQ H011657, numerous attempts were made to obtain a
swatch of the polyethylene material, however, none were successful. In the absence of evidence to the contrary, it was presumed that the polyethylene was formed from fabric woven from strips not measuring over 5mm in width. Accordingly, the merchandise was not excluded from classification in Section XI as a textile article, or from Chapter 63, HTSUS.
However, in the request for reconsideration, new evidence has been provided that the polyethylene sheeting is not strip. Rather, it is 800m rolls of varying lengths of solid, non-woven polyethylene. Insofar as the Visqueen polythene is not a textile material, it is excluded from Chapter 63, HTSUS, by Note 1 to Chapter 63, HTSUS.
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.
One comment was received in opposition to the proposed notice. The commenter contends that the proper classification of the instant merchandise is in heading 8436, HTSUS, as “Other agricultural, horticultural … machinery.” 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 this case, there is no evidence that the merchandise at issue is used in mechanized agricultural systems similar to that described in Ludvig Svensson. As such, the greenhouse tunnels 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 3, the Series 3 and Series 4 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.
EFFECT ON OTHER RULINGS:
HQ H011657, dated April 18, 2008, is revoked.
In accordance with 19 U.S.C. 1625 (c), this ruling will become effective 60 days after its publication in the Customs Bulletin.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division