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HQ 966955




September 15, 2004

CLA-2 RR:CR:MG 966955 MG

CATEGORY: CLASSIFICATION

TARIFF NO.: 3923.10.0000

Robert T. Hume
Hume & Associates
1924 N Street, NW
Washington, DC 20036

RE: Reconsideration of NY J83824; Plastic Clamshell Container Model KIT 2000

Dear Mr. Hume:

This letter is in reply to your letter of January 21, 2004 and subsequent letter, dated April 27, 2004, submitted after a meeting held at Headquarters on April 15, 2004, on behalf of importer Tradewind Farms, Inc. (“Tradewind”). You request that we reconsider our determination in NY J83824, dated May 7, 2003, regarding the classification of the Plastic Clamshell Container Model Kit 2000 (“Model Kit 2000”) under the Harmonized Tariff Schedule of the United States (“HTSUS”). We have reviewed the classification in NY J83824 and have determined that the same is correct. This ruling sets forth the correct classification.

FACTS:

The Model Kit 2000 is a 4-pound grape clamshell container imported from Italy. You submit that the Model Kit 2000 was specifically designed for use in packing grapes and other fresh fruits in the field to remove field heat, reduce loss from decay, and improve the shelf life and freshness of the harvested produce. You further submit that, because the produce is packed in the field, mechanical damage to the produce is reduced. Additionally, rigidity and increased ventilation are some of the benefits of this product and the Model Kit 2000 provides better penetration of sulfur dioxide, which is applied as a fungicidal fumigant before and during storage.

NY J83824 properly classified the Model Kit 2000 in subheading 3923.10.0000, HTSUSA, which provides for “Articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and other closures, of plastics: Boxes, cases, crates and similar articles.” You submit that the Model Kit 2000 should be classified under subheading 9817.00.5000, HTSUSA, as “Machinery, equipment and implements to be used for agricultural or horticultural purposes.”

The main issue of this reconsideration request lies in the applicability of subheading 9817.00.5000, HTSUSA, to the merchandise classified in NY ruling I89645 of January 6, 2003. The merchandise in question (i.e., plastic clamshell containers) was classified in subheading 3923.10.0000, HTSUSA, which provides for plastic articles for the conveyance or packing of goods. NY ruling I89645 did not address the applicability of subheading 9817.00.5000, HTSUSA.

While the primary classification under subheading 3923.10.0000, HTSUSA, was not questioned, in NY J83824 we were asked to determine the applicability of subheading 9817.00.5000, HTSUS, to the Model Kit 2000 plastic containers. We held that subheading 9817.00.5000, HTSUS, was not applicable to the Model Kit 2000 because the packing and bringing of agricultural produce to the market is not an agricultural endeavor and hence not within the ambit of the requested provision.

ISSUE:

Is the Model Kit 2000 classified as an article for the conveyance or packing of goods or as an implement to be used for agricultural or horticultural purposes?

LAW AND ANALYSIS:

Merchandise imported into the U.S. is classified under the HTSUS. Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule and any relative section or chapter notes and, unless otherwise required, according to the remaining GRIs taken in order. GRI 6 requires that the classification of goods in the subheadings of headings shall be determined according to the terms of those subheadings, any related subheading notes and mutatis mutandis, to the GRIs 1 through 5.

The Harmonized Commodity Description and Coding System Explanatory Notes (EN’s) represent the official interpretation of the Harmonized System at the international level and facilitate classification under the HTSUS by offering guidance in understanding the scope of the headings and GRIs. The ENs, although not dispositive nor legally binding, provide a commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUS. See T.D. 89-80, 54 Fed. Reg. 35127 (August 23, 1989).

The HTSUS headings under consideration are as follows:

3923 Articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and other closures, of plastics:

3923.10.0000 Boxes, cases, crates and similar articles

9817.00.5000 Machinery, equipment and implements to be used for agricultural or horticultural purposes

GRI 1 provides that articles are to be classified by the terms of the headings and relative Section and Chapter Notes. For an article to be classified in a particular heading, the heading must describe the article, and not be excluded therefrom by any legal note. Once an article is classified using the GRIs and any pertinent section and chapter notes, consideration may be given to the special classification provisions, if appropriate. If an article is described by a provision of Chapter 98 and all applicable requirements are met, then the Chapter 98 provision and its duty rate prevail over the classification and tariff rate from the international portion of the tariff. See Chapter 98, U.S. Note 1. The Chapter 98 provision would then be the ultimate classification for purposes of importation into the United States. See the Informed Compliance Publication entitled “What Every Member of the Trade Community Should Know About: The Agricultural Use Provisions,” dated March 2004.

Subheading 9817.00.50, HTSUS, provides for the duty-free entry of machinery, equipment and implements to be used for agricultural or horticultural purposes. This is a provision based on actual use. See HQ 953152, dated March 15, 1993. A tariff classification controlled by the actual use to which the imported goods are put in the United States is satisfied only if such use is intended at the time of importation, the goods are so used and proof thereof is furnished within three years after the goods are entered. See Additional U.S. Rule of Interpretation 1(b), HTSUS.

Your request for reconsideration contends that the packing of produce in the field “to remove field heat, reduce decay and improve the shelf life of the harvested produce” is an agricultural purpose. And that, therefore, the Model Kit 2000 qualifies for duty-free treatment under the special provision of subheading 9817.00.50, HTSUS, as an article destined to be used for an agricultural or horticultural purpose.

We have consistently held that before an article can be classified in subheading 9817.00.50, HTSUS, and qualify for the agricultural use exemption it must first satisfy each part of the following three-part test, taken in order.
the articles must not be among the long list of exclusions to heading 9817.00.50 or 9817.00.60 under Section XXII, Chapter 98, Subchapter XVII, U.S. Note 2;
the terms of heading 9817.00.50 or 9817.00.60 must be met in accordance with GRI 1; and
the merchandise must meet the actual use conditions required in accordance with sections 10.131  10.139 of the CBP Regulations (19 CFR 10.131  10.139).

If a good fails any part of the test, then recourse would have to be made to its primary classification. See HQ 086211, dated March 24, 1990.

At the outset, we note that the Model Kit 2000 is not precluded from classification in subheading 9817.00.50, by any of the exclusions in Chapter 98, Subchapter XVII, U.S. Note 2, HTSUS, and, therefore, meets the first part of the test. The crux of this case lies within the second part of the test, which requires that the merchandise meet the terms of the heading as required by GRI 1. Hence, for subheading 9817.00.50, HTSUS, to apply the Model Kit 2000 must be machinery, equipment or an implement used for agricultural or horticultural purposes.

In defining the terms of subheading 9817.00.50, HTSUS, we refer to the definitions found in Webster's II New Riverside University Dictionary (1988).

Machinery: 1. Machines or machine parts in general. 2. The working parts of a machine. 3. A system of related elements that operates in a definable way.

Equipment: 1. The act of equipping or state of being equipped. 2. Something with which one is equipped.

Implement: 1. A tool, utensil, or instrument for doing a task. 2. An article used to outfit or equip.

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.

It is undisputed that the Model Kit 2000 conforms to the definition of implement or equipment. To determine whether the second part of the test is met, we must first ascertain what the nature of the agricultural or horticultural pursuit is. In this regard, it is necessary to identify the activity in which the good is engaged or employed. Actual use in an agricultural or horticultural pursuit is the test. And if there is a nexus between the Model Kit 2000 and an agricultural or horticultural purpose, then the second part of the test is satisfied.

It should be noted that not all implements, apparatus or equipment used on a farm are necessarily related to an agricultural or horticultural pursuit within the meaning of these terms. See HQ 953152, supra. Certain endeavors are clearly not agricultural or horticultural in nature. For instance, because we found that aquaculture (or the farming of fish for commercial purposes) does not conform to the definition of agriculture we determined that certain fish tanks and their supporting equipment were not agricultural equipment. See HQ 950674, dated January 30, 1992 and HQ 089936 dated November 15, 1991. We have also held that a sap evaporator used to process sap into maple syrup is not an agricultural pursuit. In that case we reasoned that although the collection of sap is agricultural in nature, the processing of sap into maple syrup using the evaporator is not an agricultural purpose since it involves more than the simple preparation of a product for market, such as sorting, cleaning or grading. See HQ 952995, dated March 10, 1993.

You submit that the hail cannon in NY A86765, dated September 17, 1996 and the paper apple bag in HQ 893333, dated December 27, 1993, were used to protect crops from damage in much the same way as the Model Kit 2000. In both rulings the articles in question, were used as implements or equipment to assist in the cultivation of agricultural crops, thus meeting the definition of agriculture. You further acknowledge that these goods were used before the harvesting of the crop and not used after the harvest as a packaging and as a conveyance. Because the Model Kit 2000 does not play a role in the production of crops as do the hail cannon and the apple bag it may not be considered an implement of agriculture or horticulture.

Your submission references NY 855567, dated September 18, 1990, wherein we classified a product identified as a Dry Master, designed to remove moisture from grain products, under the agricultural use exemption. Because removal of moisture from the grain involves a simple preparation of the product for market after harvesting, the Dry Master is clearly associated with an agricultural activity. By contrast, the packing of the containers with the harvested goods is not a simple preparation of the product for market such as sorting, cleaning or grading but merely a first step in the marketing endeavor. If the Model Kit 2000 were deemed to satisfy an agricultural purpose then any equipment used for packing and transporting goods from the field to the market, such as baskets, boxes, crates, bags and the like would also satisfy such purpose.

Although the Model Kit 2000 eliminates field heat, maintains produce freshness, reduces mechanical damage to the grapes, allows penetration of sulfur dioxide before and during storage, these features relate to the packaging process and the sale for human consumption and have no nexus to an agricultural or horticultural pursuit. In HQ 965519, dated July 3, 2002, we classified plastic insert trays used as protective packaging to facilitate the shipment of tomatoes from the field to the market. The issue there was whether the packing of produce for transport goes beyond the pursuit of agriculture. We determined it did. Because the plastic insert trays serve as packaging of produce and transport to the market and do not assist in cultivating, producing or harvesting of crops, they fail the second part of the test. The plastic insert trays did not, therefore, qualify for duty free treatment as agricultural or horticultural implements in Chapter 98, HTSUS.

You aver that the use of the plastic containers relates to the definition of agriculture because it pertains to the business end of the definition. In this regard, agriculture is the science, art and business of cultivating and producing crops and not the selling of the produce. Packaging of harvested produce to bring it to market and make it more attractive to the end consumer is not related to the business of cultivating crops, but to the business of selling them. A marketing activity does not satisfy an agricultural purpose.

The packaging of produce for any purpose and particularly for the conveyance of the produce to the public market, as in the case of the Model Kit 2000, is not agricultural in nature and does not satisfy the terms of the heading. Therefore, classification of the Model Kit 2000 in subheading 9817.00.5000, HTSUSA, as an alternative classification is therefore, unwarranted. Based on the above analysis, we affirm CBP’s finding in NY J83824.

HOLDING:

The Plastic Clamshell Container Model KIT 2000 is classified in subheading 3923.10.0000, HTSUSA, which provides for “Articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and other closures, of plastics: Boxes, cases, crates and similar articles.”

Articles classified under this tariff provision have a column one, general rate of duty of 3 percent ad valorem. Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the Internet at www.ustic.gov.

EFFECT ON OTHER RULINGS:

NY ruling J83824 is AFFIRMED.
Sincerely,

Myles B. Harmon, Director
Commercial Rulings Division

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