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

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