[Federal Register Volume 59, Number 162 (Tuesday, August 23, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-20689]
[[Page Unknown]]
[Federal Register: August 23, 1994]
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DEPARTMENT OF THE TREASURY
Customs Service
[T.D. 94-70]
Petitioner's Desire to Contest Decision Denying Domestic
Interested Party Petition Concerning Classification of Flat Goods with
Outer Surface of Plastic Sheeting, of Reinforced or Laminated Plastics
AGENCY: U.S. Customs Service, Department of the Treasury.
ACTION: Notice of petitioner's desire to contest decision on domestic
interested party petition.
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SUMMARY: This document advises the public of the desire of two
interested parties to contest Customs decision denying their petition
requesting reclassification of flat goods with outer surface of plastic
sheeting, of reinforced or laminated plastics. The petitioners have
advised Customs of their intention to file an action in the U.S. Court
of International Trade.
DATES: August 23, 1994.
FOR FURTHER INFORMATION CONTACT: Carlos Halasz, Commercial Rulings
Division, U.S. Customs Service, (202) 482-7050.
SUPPLEMENTARY INFORMATION:
Background
On December 30, 1993, Customs published a notice in the Federal
Register (58 FR 69301) inviting public comments concerning a domestic
interested party petition, filed pursuant to section 516, Tariff Act of
1930, as amended (19 U.S.C. 1516). The petitioners are Amity Leather
Company, a domestic manufacturer of flat goods, and the Luggage and
Leather Goods Manufacturers of America, Inc. (LLGMA), a trade
association for domestic producers of luggage, leather goods and
plastic flat goods. The petition relates to the tariff classification
of flat goods, with outer surface of plastic sheeting, of reinforced or
laminated plastics.
Schedule 7, Part 12, Subpart A, Headnote 2, of the prior tariff,
the Tariff Schedules of the United States (TSUS), provided that the
term ``reinforced or laminated plastics'' was limited to articles
composed of rigid plastic materials. Item 706.42, TSUS, provided for
flat goods of reinforced or laminated plastics, dutiable at 5.5 cents/
pound + 4.6 percent ad valorem. Accordingly, this item was limited to
flat goods composed of rigid plastics. Flat goods with an outer surface
of non-rigid plastics were classified in item 706.61, TSUS. The
applicable rate of duty was 20 percent ad valorem.
Subheading 4202.32.1000, Harmonized Tariff Schedule of the United
States (HTSUS), provides for articles of a kind normally carried in the
pocket or in the handbag, with outer surface of sheeting of plastic, of
reinforced or laminated plastics. The applicable rate of duty is 12.1
cents/kilogram + 4.6 percent ad valorem. Following the enactment of the
HTSUS, Customs initially concluded that the definition of ``reinforced
or laminated plastics'' contained in the TSUS continued to be
applicable under the HTSUS. See Headquarters Ruling Letters (HRL)
083261, dated September 14, 1989; HRL 084020, dated June 7, 1989; HRL
083415, dated May 18, 1989. In these decisions, Customs recognized that
the term was not defined in the HTSUS. However, Customs determined that
the definition of this phrase as set forth in the TSUS represented its
common and commercial meaning. Hence, flat goods with an outer surface
of non-rigid plastics were precluded from subheading 4202.32.1000,
HTSUS. Pursuant to subheading 4202.32.2000, HTSUS, the applicable rate
of duty for these articles was 20 percent ad valorem.
This issue was revisited in HRL 950048, dated March 2, 1992. In
that decision, Customs observed that the classification of a container
under heading 4202, HTSUS, is made with reference to its outer surface.
Subheading 4202.32, HTSUS, provides for articles of a kind normally
carried in the pocket or handbag (a classification encompassing
articles similar to ``flat goods'' under the TSUS), with outer surface
of plastic sheeting. The breakout for ``reinforced and laminated
plastics'' occurs at the eight-digit national classification level
beneath the six-digit international breakout for plastic sheeting.
Consequently, the breakout for ``reinforced or laminated plastics''
must be interpreted in a manner consistent with the fact that its
superior six-digit subheading provides for ``plastic sheeting.''
Heading 3921, HTSUS, when read in conjunction with heading 3920,
HTSUS, provides for sheets of cellular plastic which have been
reinforced, laminated or similarly combined with other materials. The
Explanatory Note to heading 3921 states in pertinent part that the
heading covers cellular sheets of plastics not elsewhere described
which have been ``reinforced, laminated, supported or similarly
combined with other materials.'' The terms ``reinforced'' and
``laminated'' in this context refer to methods by which cellular
plastic sheeting may be ``combined'' with other materials (e.g.,
textiles). Thus, cellular plastic sheeting that is ``reinforced'' means
that the sheeting has been strengthened or supported by means of a
supplementary backing. Cellular plastic sheeting that has been
``laminated'' means that the sheeting has been united or bonded with
other materials. In HRL 950983, dated June 15, 1992, Customs determined
that the classification of flat goods with outer surface of noncellular
plastic should also be made with reference to Chapter 39, HTSUS.
As the terms ``laminated'' and ``reinforced'' are discussed in
these terms with regard to plastic sheeting, Customs found that it was
erroneous to interpret the phrase ``reinforced or laminated plastics''
to be limited to rigid plastics. Such an interpretation would allow the
terms ``reinforced'' and ``laminated'' to have one meaning at the
eight-digit classification level, and another at the six-digit
classification for plastic sheeting. As the superior heading in this
instance is that for plastic sheeting, Customs concluded that the terms
should be interpreted consistently so as to refer to methods of
combining plastic sheeting with other materials.
Petitioner's Viewpoint
Petitioners observe that the phrase ``reinforced or laminated
plastics'' is not defined in the HTSUS and contend that there is no
support within the HTSUS for Customs interpretation of these terms.
Specifically, petitioners state that in HRL 950048, Customs adopted a
definition of ``laminated'' that is unsupported by the text of the
HTSUS. Moreover, petitioners refer to subheadings 6506.10.30 (safety
head gear), 9401.80.20 (seats), 9403.70.40 (furniture), 9403.90.40
(other furniture and parts thereof), HTSUS, where the phrase
``reinforced or laminated'' appears. The petitioners allege that the
classification of goods under these provisions has been limited to
rigid plastics.
Alternatively, petitioners argue that the terms ``reinforced'' and
``laminated'' as utilized in connection with plastic sheeting of
heading 3921, have no bearing on the interpretation of the phrase
``reinforced or laminated plastics.'' Hence, plastic sheeting of
heading 3921, HTSUS, that has been reinforced or laminated with other
materials, describes goods distinct from goods composed of ``reinforced
or laminated plastics.''
Furthermore, petitioners note that heading 3921, which encompasses
plastic sheeting combined with other materials, is not limited to
plastic sheeting which has been reinforced or laminated. The
petitioners infer from HRL 950048 that Customs is of the opinion that
all materials classified within heading 3921 constitute reinforced and
laminated plastics of subheading 4202.32.1000. From this premise,
petitioners conclude that Customs has erroneously narrowed the scope of
heading 3921.
The arguments set forth above have been advanced to demonstrate
that the meaning of the phrase ``of reinforced or laminated plastics''
in subheading 4202.32.1000 cannot be found within the HTSUS or its
accompanying Explanatory Notes. As a result, petitioners contend that
the meaning of the phrase must be in accordance with congressional
intent and its common and commercial meaning.
Documents have been submitted to support the proposition that the
common and commercial meaning of the phrase ``reinforced or laminated
plastics'' limits its scope to rigid plastics and that the HTSUS was
enacted with the intent to continue this interpretation. For example,
petitioners allude to the Omnibus Trade and Competitiveness Act of
1988, Pub. L. 100-418, which states that the conversion from the TSUS
to the HTSUS was intended to be essentially revenue neutral. Our
attention is directed to the fact that subheading 4202.32.1000, HTSUS,
which provides for the articles at issue, with outer surface of plastic
sheeting, of reinforced or laminated plastics, is dutiable at the same
rate previously applicable for flat goods, of reinforced or laminated
plastics, under item 706.42, TSUS. Moreover, petitioners have proffered
excerpts from plastic industry publications and other sources which
limit ``reinforced or laminated plastics'' to rigid plastics.
Based on the foregoing, petitioners conclude that Customs must
reconsider HRL 950048 and its progeny and classify the instant
merchandise within subheading 4202.32.2000, HTSUS.
Comments
Four comments were received in opposition to the petition. As a
threshold issue, the commenters argue that the LLGMA is not an
``interested party'' as set forth in Section 516(a), Tariff Act of
1930, as amended (19 U.S.C. 1516(a)). Consequently, the LLGMA lacks
standing to bring the domestic interested party petition.
The commenters observe that the statutory definition for the phrase
``reinforced or laminated plastics'' contained in the TSUS was not
carried over to the HTSUS. This omission is interpreted as evidence
that Congress intended not to apply the TSUS definition to the HTSUS.
Accordingly, Customs should not limit the provision for ``reinforced or
laminated plastics'' to rigid plastics.
The commenters also reason that the common and commercial meaning
of the term ``reinforced or laminated plastics'' is its plain meaning.
Citing lexicographic sources, they contend that the plain meaning of
the terms ``reinforce'' and ``laminate'' is consistent with Customs
interpretation. Furthermore, the commentators assert that the
definition petitioners advance is a narrow and technical interpretation
which is not commonly utilized in the flat goods industry.
Finally, the commenters note that under the HTSUS flat goods are
classified according to their outer surface. On the other hand, under
the TSUS flat goods were classified under the doctrine of chief value.
Hence, the provisions in the TSUS and HTSUS encompassing what are
commercially known as flat goods are not analogous. For this reason,
the commenters conclude that arguments concerning the goal of revenue
neutrality are misplaced.
Response to Comments
Standing of petitioner: Section 516(a), Tariff Act of 1930, as
amended (19 U.S.C. 1516(a)) states that a domestic ``interested party''
may petition for a classification determination. An ``interested
party'' includes ``a trade or business association a majority of whose
members are manufacturers, producers, or wholesalers in the United
States of goods of the same class or kind as the designated imported
merchandise.'' The petitioners observe that the LLGMA is a trade
association with a membership which includes a substantial number of
flat goods producers. However, a majority of its members are luggage
and briefcase producers. Noting that the membership of the LLGMA does
not include a majority of flat goods producers, the commenters reason
that the LLGMA lacks standing to bring the petition.
Heading 4202, HTSUS, provides for flat goods such as spectacle
cases, purses and wallets, as well as briefcases, suitcases and
traveling bags. These articles are linked by the common physical
characteristic that they are generally designed to carry, store or
protect personal effects. We are of the opinion that manufacturers of
briefcases and luggage operate in the same trade as producers of flat
goods. On this basis, Customs concludes that flat good, briefcase and
luggage manufacturers are engaged in the production of goods of the
same class or kind for the purposes of section 1516(a)(2)(C).
Accordingly, the LLGMA has standing to bring this petition.
Tariff Classification: The instant merchandise are flat goods with
an outer surface of plastic sheeting combined with textile fabric. At
the six- digit classification level, these goods are classified
according to their outer surface of plastic sheeting. As noted above,
HRL 950048 identified heading 3921, HTSUS, as legal support for its
findings. The Explanatory Note to heading 3921 indicates that the terms
``reinforced'' and ``laminated'' are examples of how plastic sheeting
may be ``combined'' with other materials. We are of the opinion that it
would be anomalous to interpret the words ``reinforced'' and
``laminated'' in a different fashion at the six and eight-digit
classification levels. Therefore, Customs concludes that there is
adequate legal support from within the HTSUS to support its position.
Customs interprets the provision for ``reinforced or laminated
plastics'' within heading 4202, HTSUS, in light of the fact that it
appears beneath a subheading for plastic sheeting. In this context, the
terms ``reinforced'' and ``laminated'' are not limited to rigid
plastics. The petitioners have directed our attention to other
subheadings within the HTSUS which may limit ``reinforced or laminated
plastics'' to rigid plastics. Assuming for the sake of argument only
that this is the case, these provisions do not occur beneath superior
headings or subheadings providing for plastic sheeting. For this
reason, they do not bear on the interpretation of subheading
4202.32.1000, HTSUS.
Finally, Customs recognizes that heading 3921, HTSUS, describes
plastic sheeting which has been combined in any manner with other
materials. Thus, the heading includes, but is not limited to, plastic
sheeting which has been reinforced or laminated. In HRL 950048, Customs
did not conclude, as petitioners suggest, that all goods of heading
3921, HTSUS, are to be regarded as reinforced or laminated plastics.
Customs merely referred to heading 3921, HTSUS, for the proposition
that the meaning of the terms ``reinforced'' and ``laminated'' refer to
manners in which plastic sheeting may be combined with other materials.
Hence, HRL 950048 has no effect on the scope of heading 3921, HTSUS.
Decision on Petition and Notice of Petitioner's Desire to Contest
After careful analysis of the petition, supplemental submissions,
and all comments received, Customs has decided to continue its current
practice of classifying flat goods with outer surface of plastic
sheeting, of reinforced or laminated plastics. As the structure of the
HTSUS and its accompanying Explanatory Notes form the basis of this
decision, Customs does not reach the issues of congressional intent or
the common and commercial meaning of the phrase ``of reinforced or
laminated plastics.'' The petitioners were informed by letter dated
April 4, 1994 [CLA-2 CO:R:C:T 953936 ch], through their counsel, that
Customs is of the opinion that the current classification is correct
and their petition is therefore denied.
In response to Customs decision to deny the petition, on April 29,
1994, the petitioners filed notice of their intention to contest the
decision in accordance with section 516(c), Tariff Act of 1930, as
amended (19 U.S.C. 1516(c)), and section 175.23 Customs Regulations (19
CFR 175.23).
Customs has reconsidered the matter in light of the petitioners'
letter, but remains of the opinion that its April 4, 1994, decision is
correct. That decision will stand in the absence of a contrary judgment
rendered by the U.S. Court of International Trade or the U.S. Court of
Appeals for the Federal Circuit.
Authority
This notice is published under the authority of section 516(c),
Tariff Act of 1930, as amended (19 U.S.C. 1516(c)), and section 175.24,
Customs Regulations (19 CFR 175.24).
Drafting Information
The principal author of this document was Carlos H. Halasz, Office
of Regulations and Rulings, U.S. Customs Service. However, personnel
from other Customs offices participated in its development.
Approved: August 10, 1994.
George J. Weise,
Commissioner of Customs.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 94-20689 Filed 8-22-94; 8:45 am]
BILLING CODE 4820-02-P
