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HQ 955113


November 16, 1993

CLA-2 CO:R:C:M 955113 RFA

CATEGORY: CLASSIFICATION

TARIFF NO.: 7308.90.90, 9817.00.50

Ms. Judith L. Haggin
Geo. S. Bush & Co., Inc.
P.O. Box 8829
Portland, Oregon 97208

RE: Unfinished greenhouse; steel structure; agricultural or horticultural equipment; essential character; GRI 2(a); EN 73.08; Heading 9406; HQs 083930, 086883, 087076, 089936, 954785; NY 830527

Dear Ms. Haggin:

In a letter dated July 22, 1993, to the Regional Commissioner of Customs in New York, on behalf of Prins Greenhouses (USA) Inc., you inquired as to the tariff classification of unfinished greenhouses under the Harmonized Tariff Schedule of the United States (HTSUS). Your letter was referred to this office for a response.

FACTS:

The merchandise is unfinished greenhouses, constructed of walls made of steel glazing bars in which glass is fitted, and covered with PVC profiles to secure the glass panes. All of the above mentioned material (except for the glass panes), along with the roof, the ventilation system and the structural aluminum tubes will be imported unassembled from Holland. The glass will be obtained in the United States.

ISSUE:

Do unfinished greenhouses qualify for duty-free entry as agricultural or horticultural equipment, under Chapter 98, 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 shall be determined according to the terms of the headings and any relative section or chapter notes.

You refer to NY 830527, dated November 30, 1990, in which Customs held that complete prefabricated greenhouses are provided for under heading 9406, HTSUS. You state that unfinished greenhouses have the essential character of a complete greenhouse according to GRI 2(a). GRI 2(a) states in part:

[a]ny reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. . . .

The Harmonized Commodity Description and Coding System Explanatory Notes (EN) constitute the Customs Cooperation Council's official interpretation of the HTSUS. While not legally binding, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. EN VIII to GRI 3 provides the following guidance in determining essential character:

The factor which determines essential character will vary as between different kinds of goods. It may, for example, be determined by 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 goods.

In general, essential character has been construed to mean the attribute which strongly marks or serves to distinguish what an article is: that which is indispensable to the structure, core or condition of the article. See HQ 954785 (September 22, 1993). The issue to be determined here is whether the unassembled greenhouse as imported without the glass panes, has the essential character of the completed, assembled greenhouse. We are of the opinion that the essential character of the greenhouse is provided by the glass panes. The glass panes are the components which create the controlled environment and protect the plants being cultivated and, therefore, are the components which mark or serve to distinguish a completed greenhouse. As the subject merchandise without the glass panes does not have the essential character of a completed greenhouse, it cannot be classified as an unfinished greenhouse under heading 9406, HTSUS.

It is well settled that classification is based upon the condition of an article at the time of importation. United States v. Citroen, 223 U.S. 407 (1911). Therefore, classification of the subject merchandise is based on the steel structure's condition as imported. Pursuant to GRI 2(a), the unassembled steel structure is classified as an assembled steel structure. EN 73.08, page 1020, states as follows: "heading [7308] also includes products such as. . . frameworks for greenhouses and forcing frames. . . ." We find that the steel structure of the greenhouse is classifiable under subheading 7308.90.90, HTSUS, which provides for: "Structures . . .and parts of structures. . . of iron or steel . . .: [o]ther: [o]ther. . . ."

Moreover, 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 provision, 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 heading must be met in accordance with GRI 1. Thirdly, the article must comply with the actual use provision required 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).

The first part of the test is to determine whether unfinished greenhouses are excluded from heading 9817.00.50, HTSUS. To do this we must first determine under which heading or subheading it is classified. As stated, the unfinished greenhouse is provided for under subheading 7308.90.90, 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(ij).

The second part of the test calls for the greenhouse to be included within the terms of heading 9817.00.50, HTSUS, as required by GRI 1. The greenhouse must be "machinery", "equipment" or "implements" used for "agricultural or horticultural purposes". For this part of the test, the initial determination to be made is what agricultural or horticultural pursuit is in question. It is your position that the greenhouse assists in cultivating plants in a controlled environment. This is clearly an agricultural pursuit.

The next determination to be made is whether the subject merchandise is "machinery", "equipment" or "implement". Webster's II New Riverside University Dictionary (1988) defines machinery, equipment, and implement as follows: Machinery: machines or machine parts in general. . . the working parts of a machine. . . a system of related elements that operates in a definable way. . . .

Equipment: the act of equipping or state of being equipped . . . something with which one is equipped. . . .

Implement: a tool, utensil, or instrument for doing a task . . . an article used to outfit or equip . . . .

Based on the submitted information, we find that the steel structure meets the definition of equipment to be used for agricultural purposes. After importation the steel structure will be assembled with glass panes which will create a controlled environment for the cultivation of plants. Therefore, we find that the merchandise meets the second part of the test for classifying an item in heading 9817.00.50, HTSUS.

The third part of the test is that importers meet the actual use requirements of section 10.131 through 10.139, Customs 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:

Under the authority of GRI 1, the submitted merchandise is provided for in heading 7308. It is classifiable in subheading 7308.90.90, HTSUS, which provides for: "Structures. . . and parts of structures. . .of iron or steel. . .: [o]ther: [o]ther. . . ." The column 1, general rate of duty is 5.7 percent ad valorem. Additionally, the unfinished greenhouses are eligible for duty- free treatment under heading 9817.00.50, HTSUS, provided the actual use requirements of section 10.131-10.139, Customs Regulations [19 CFR 10.131-10.139], are satisfied.

Sincerely,

John Durant, Director
Commercial Rulings Division

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