OT:RR:CTF:VS H318294 UBB

Juan J. Porras
Center Director, Machinery
Center for Excellence and Expertise
109 Shiloh Dr.
Laredo, TX 78045

RE: Application for Further Review of Protest No. 5501-20-101069; Northern Tool & Equipment Co. Inc.; Sprayers; 9817.00.50, HTSUS

Dear Mr. Porras:

This is in reference to the Application for Further Review (“AFR”) of Protest No. 5501-20-101069, timely filed on January 22, 2020, on behalf of Northern Tool & Equipment Co. Ltd. (hereinafter, the “protestant”), concerning the eligibility of certain agricultural or horticultural sprayers for duty-free treatment under subheading 9817.00.50, HTSUS.

FACTS:

The merchandise subject to the protest at issue consists of sprayers that Northern Tool claims are agricultural/horticultural sprayers, imported under subheadings 8424.41.1000 and 8424.49.0000, Harmonized Tariff Schedule of the United States (“HTSUS”). The protestant claims that it imports these sprayers and sells them to various customers who will use them in agricultural and/or horticultural applications. They claim that the sprayers generally consist of a pump, sprayer gun and receptacle for insecticide. CBP liquidated the entries on various dates from August 30, 2019 to November 1, 2019, under subheadings 8424.41.1000 and 8424.49.0000, HTSUS. CBP also assessed Section 301 duties of 25 percent ad valorem on the merchandise. Counsel for the protestant timely filed a protest on January 22, 2020 , claiming that the sprayers are properly classifiable under subheading 9817.00.50, HTSUS. The protestant provided the following documents for the entries at issue in support of their claim: a list of the various models of sprayers along with product information on each; a printout of a webpage showing various models of sprayers for sale; and, subsequent to the filing of the protest, a blanket certification of actual use for sprayers covering the period September 1, 2018 through September 1, 2021.

ISSUE:

Whether the sprayers are eligible for duty-free treatment under subheading 9817.00.50, HTSUS.

LAW AND ANALYSIS:

Subheading 9817.00.50, HTSUS, is an actual use provision. To fall within a 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).

CBP Regulations, 19 C.F.R. § 10.131 through § 10.139, provide the requirements that must be met in order for Northern Tool’s entries to qualify under the actual use tariff provisions. In particular, 19 C.F.R. § 10.133 provides that three conditions must be met in order to qualify for a free or lower rate of duty pursuant to an actual use provision. These are:

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

Further, § 10.134 provides that:

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 for warehouse a declaration as to the intended use of the merchandise, or by entering the proper subheading of an actual use provision of the Harmonized Tariff Schedule of the United States (HTSUS) and the reduced or free rate of duty on the entry form. Entry made under an actual use provision of the HTSUS may be construed as a declaration that the merchandise is entered to be used for the purpose stated in the HTSUS, provided the Center director is satisfied the merchandise will be so used. However, the Center director shall require a written declaration to be filed if he is not satisfied that merchandise entered under an actual use provision will be used for the purposes stated in the HTSUS.

Hence, the declaration of intent must be made at the time of importation and can be made in one of two ways: (a) an actual declaration of intent as to the intended use of the merchandise, or (b) by entering the proper subheading of an actual use provision.

In Tradewind Farms, Inc. v. United States, the Court of International Trade confirmed that “[w]hichever option [under 19 C.F.R. § 10.134] an importer chooses, the action must be made at the time of entry.” 31 CIT 664, 670 (Ct. Intl. Trade 2007). In Tradewind Farms, the importer entered certain container goods under a non-actual use provision. After the goods were liquidated, the importer filed a protest against the liquidation and sought to classify the goods under an HTSUS actual use subheading for agricultural or horticultural use. In that case, the importer did not file a declaration of intended use when it entered the subject goods, and it did not enter the goods under an actual use provision. Instead, the importer argued that it satisfied the requirements of the actual use regulations by filing its protest as evidence of its intent to use the goods for agriculture or horticultural purpose. Tradewind Farms, 31 CIT at 669. In rejecting the importer’s arguments, the court explained that whether an importer decides to file a separate declaration of intended use or enters the goods under an actual use provision, either action must be made at the time of entry. Id. at 670. It further explained that “the law and regulations make clear that the importer must have the intention to use its merchandise for a particular actual use at the time of entry. A protest filed one year after entry is simply not evidence of the presence of the necessary intention at the time of entry.” Id. at 671. Therefore, if an importer does not enter the goods under an actual use provision or file a separate declaration of intended use at the time of entry, then it cannot later seek to reclassify the goods under actual use tariff provisions by means of a protest.

CBP has repeatedly denied protests seeking reclassification to an actual use provision where the protestant entered goods without properly evidencing declaration of intent pursuant to 19 C.F.R. § 10.133 and 10.134. In HQ H312693, dated July 18, 2021, the protestant sought to reclassify to 9817.00.60, HTSUS lawn mower engines that had been imported under subheading 8407.90.90, HTSUS and no declaration of intent had been filed with the entry. CBP found that the protestant did not meet the requirements of 19 C.F.R. § 10.133 and 10.134. The protestant submitted a certificate attesting to the intended use of the lawn mower engines, but the certificate was submitted after the date of entry. See also HQ H240589 (July 18, 2014) (CBP denied protest where protestant sought reclassification to an actual use provision also subject to the requirements of 19 C.F.R. § 10.131 through § 10.139, but did not timely file a declaration of intent or use an actual use provision at the time of entry); HQ 965354 (February 14, 2002) (CBP revoked an earlier ruling, HQ 961431, dated December 1, 1998, where the declaration of intended use was filed twenty-one days after the date of the entry summary; CBP held that failure to file the required intent declaration with entry indicates noncompliance with 19 C.F.R. § 10.133).

In this case, Northern Tool entered the sprayers under subheadings 8424.41.1000 and 8424.49.0000, HTSUS, neither of which are actual use provisions. Northern Tool did not file a declaration of intent as to the intended use of the merchandise at the time of entry. Subsequent to filing this protest, counsel for protestant submitted a blanket declaration purportedly covering the period during which the entries at issue were made. The declaration, while signed, does not indicate the date it was signed and, more importantly, it was not filed as part of the entry at the time of importation. As such, Northern Tool has failed to satisfy the requirements of the actual use regulations set forth at 19 CFR 10.131 through 10.139. Pursuant to Tradewind Farms, Northern Tool may not cure this error or reclassify its imported goods by means of a protest. Tradewind Farms, 31 CIT at 670 (“The court cannot find in the language of the regulations any indication that Customs intended that the filing of a protest could be substituted for the specific notice procedures contained [in 19 C.F.R. § 10.133 and § 10.134]. Nor can it elsewhere find any indication that such was Customs's intent.”).

As part of its protest, Northern Tool submitted two memos and documentation seeking to corroborate the agricultural or horticultural use of its imported sprayers. However, it is not § 10.133(b) that is at issue here, but rather the requirements of § 10.133(a) and § 10.134. We do not need to reach the issue of whether the sprayers are properly classifiable as agricultural or horticultural goods.

HOLDING:

The protest should be DENIED. The sprayers are not eligible for duty-free treatment under subheading 9817.00.50, HTSUS.

In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP 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 Trade, Regulations and Rulings will make the decision available to CBP personnel, and to the public on the Customs Rulings Online Search System (CROSS) at https://rulings.cbp.gov/ which can be found on the U.S. Customs and Border Protection website at http://www.cbp.gov and other methods of public distribution.

Sincerely,

For Craig T. Clark, Director
Commercial and Trade Facilitation