[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