655 F.2d 1107 | C.C.P.A. | 1981
Lead Opinion
The Government appeals from the judgment of the United States Court of International Trade
BACKGROUND
The subject merchandise, imported by Elbe from Spain in November 1976, is described in entry papers as “Forrita 80” and “Plantilla 80” and consists of rolls of flexible nonwoven fabrics of man-made fibers coated or filled with a plastic binder and having a plastic coating on one surface. Forrita 80 and Plantilla 80 are “imitation” leathers manufactured principally for use as linings in footwear. When so used, the plastic coating is the only surface visible in the completed product. -
Customs Service officials classified the merchandise under item 355.25, TSUS.
The Court of International Trade sustained Elbe’s claim, holding that the merchandise is “almost wholly of” plastics within the meaning of item 771.42, TSUS (as the quoted term is defined in General Headnote 9(f) (iii)),
ISSUE
Whether the trial court erred in holding the merchandise properly classifiable under item 771.42, TSUS.
The Government maintains that the imported merchandise is not excluded from classification in schedule 3, subpart 4C by headnote 1 (vii) because the merchandise is not an “article” within the meaning of that headnote. That term, says the Government, was intended to include only finished consumer goods and not intermediate manufactured products, such as Forrita 80 and Plantilla 80, as evidenced by the statute and its legislative history.
In support of that contention, the Government points to schedule 3, headnotes 2(a)(vi) and 5.
Citing the legislative history contained in the House Report on the Tariff Schedules Technical Amendment Act of 1965, the Government says that the articles so excluded are limited to finished products which incorporate a coated fabric, of the type referred to in the legislative history, e.g., gloves, luggage, handbags, and do not include interim products such as the imported rolls of coated fabrics.
In response to the Government’s contentions, Elbe cites United States v. Canadian Vinyl Industries, Inc., 64 CCPA 97, C.A.D. 1189, 555 F. 2d 806 (1977), as stare decisis.
Canadian Vinyl involved the proper tariff classification of an imitation patent leather manufactured by coating plastic onto a nylon fabric. In affirming the decision and judgment of the lower court, this court held that the imported rolls of fabric were “articles” within the meaning of headnote 1(vii) and properly classifiable under item 771.40, TSUS as strips or sheets in imitation of patent leather. In rejecting a restrictive interpretation of the term “articles” as used in the headnote, this court said:
[W]e find no basis in the statute or even in the cited legislative history to read the word “article” in such restrictive manner. Although finished products such as gloves and luggage are discussed in the legislative history as examples of “articles,” there is no narrowing definition given therein for the term. In our view the films, strips, sheets, etc. enumerated in the superior heading to item 771.40 are all articles which are excludable from schedule 3 by virtue of headnote 1 (vii) to part 4C of schedule 3, provided they meet the other classification requirements in issue.
Id. at 105-106, 555 F. 2d it 811.
Contrary to the restricted and narrow meaning that the Government would attribute to the term “articles”, this court in Canadian Vinyl noted various portions of the legislative history establishing that Congress intended no distinction for classification purposes between finished and partly finished articles. Pointing to one such portion, this court said:
This view * * * is reinforced by the Tariff Classification Study, Submitting Report (1960) (TCS), Schedule 7, p. 440, which states:
[T]he proposed provisions of part 12 [of schedule 7] do not distinguish between products on the basis of whether they are or are not made into finished or partly finished articles. Objective distinctions based on specified dimensions have been substituted.
Id. at 106, 555 F. 2d at 811.
Though the Government urges that the Canadian Vinyl decision is in error and should not be applied here, we find no reason to depart
The Government cites various provisions in schedule 3, which it says support its interpretation of “articles”, but that term as used in various other schedule 3 provisions is clearly not restricted in the manner the Government claims. For example, subpart 4C, headnote 2(a) reads in part:
2. For the purposes of the tariff schedules—
(a) the term “coated or filled”, as used with reference to textile fabrics and other textile articles, means that any such fabric or other article has been coated or filled ....
The phrase “textile fabrics and other textile articles” clearly indicates that “articles” refers here, inter alia, to textile fabrics.
A similar conclusion is compelled by the language of schedule 3, subpart 4C, headnote 1, which excludes from classification in that subpart, various named items (headnote l(i)-(vi)) and “other articles specially provided for in schedule 7 or elsewhere” (headnote l(vii)).
Moreover, the following language of headnote 5, a headnote the Government cites in support of its position, supports the exclusion from schedule 3, of a coated, filled or laminated fabric per se provided the recited condition is met:
[T]he fabric shall be regarded not as a textile material but as being wholly of * * * plastics to the extent that (as used in the article) the * * * plastics forms either .the outer surface of such article or the only exposed surface of such fabric.
Because we find that the term “articles” as used in headnote l(vii) may properly encompass merchandise such as Forrita 80 and Plantilla 80, the appropriate inquiry is whether the Court of International Trade correctly held that merchandise classifiable under item 771.42, TSUS.
That court found that the visual and tactile qualities of the plastic coating impart to the merchandise its ability to serve as an imitation leather and thereby provide its essential character. Applying headnote 9(f) (iii),
The Government says that headnote 9(f) should not have been applied because that headnote is not applicable to coated or filled textile materials, and that schedule 3, headnote 4(b) should be applied instead. Application of headnote 4(b) would, in the Government’s view, preclude consideration of the plastic coating and compel classification of the merchandise under item 355.25, TSUS as an article “of manmade fibers” regardless of the relative value of the plastics component.
The Government’s contention is without merit. That headnote 4(b) does not mandate disregard of the coating or filling substance in the manner propounded by the Government was made clear by the Court of International Trade in Marshall Co. v. United States, 67 Cust. Ct. 316, C.D. 4291, 334 F. Supp. 643 (1971). In considering the proper classification of imported rubber-coated rayon fabric, the court said:
The components of the merchandise are rayon fabric and rubber* * * . We are in accord that it is in chief value of man-made fiber * * * on the evidence presented* * * . We do not agree * * * that it can be considered wholly of man-made fibers on the ground that under headnote 4(b) * * * the substances used for laminating, coating or filling are to be disregarded. Headnote 4(b) is directed toward the determination of the component fibér of chief value and is applicable where it is necessary to decide whether vegetable fiber, wool, silk, or manmade fiber is the fiber in chief value. In making that determination, the coating, filling, or laminating substance is to be disregarded. The headnote is no indication that it should be disregarded for other purposes. Braircliff Clothes, Ltd. v. United States, 55 Cust. Ct. 227, C.D. 4194 (1971).
Id. at 323, 334 F. Supp. at 648.
Because the question of component fiber in chief value is not at issue in this case, application of headnote 4(b) is inappropriate.
The Government says that even if general headnote 9(f) is applicable, the subject merchandise is not “almost wholly of” plastics because the non-woven fabric substrate and its plastic coating are equally essential to the usefulness of the product. The Government says that neither component, each being equally essential, can provide the essential character of the complete article.
There is ample evidence of record to support the trial court’s holding that the plastic coating supplies the essential character of the merchandise. It is undisputed that the foremost characteristic of Forrita 80 and Plantilla 80, the ability to simulate the appearance of leather, is solely attributable to the plastic coating. Moreover, in serving as linings in footwear, only the plastic surfaces of Forrita 80 and Plantilla 80 are exposed.
Though it is undisputed that the nonwoven fabric substrate contributes desirable properties to the merchandise, there is no: evidence that it alters the essential character of the merchandise or that it is indispensable. On the contrary, though some type of substrate is required, a nonwoven fabric need not be used. There is evidence that woven fabrics and paper are satisfactory substitutes.
CONCLUSION
Schedule 3, subpart 4C, headnote l(vii) excludes from classification in that subpart “articles specially provided for in schedule 7 or elsewhere”. Those “articles” are not restricted to finished consumer goods and may include intermediate products.
Because the essential character of Forrita 80 and Plantilla 80 is imparted by the plastic coating, the merchandise is properly classifiable under item 771.42, TSUS. As such, it is excluded from schedule 3, subpart 4C by headnote 1(vii) to that subpart. Accordingly, the judgment of the Court of International Trade is affirmed.
The judgment of the United States Customs Court, now the United States Court of International Trade, is reported at 85 Cust. Ct. 27, C.D. 4865, 497 F. Supp. 707 (1980).
Item 355.25, TSUS provides:
Webs, wadding, batting, and nonwoven fabrics, including felts and bonded fabrics, ana articles not specially provided for of any one or combination of these products, all of tne foregoing, of tactile materials, whether or not coated or filled:
355.25 Of manmade fibers..... 120 per lb.+15% ad val.
Item 771.42, TSUS provides:
Film, strips, sheets, plates, slabs, blocks, filaments, rods, seamless tubing, and other profile shapes, all the foregoing wholly or almost wholly of rubber or plastics:
*******
Not of cellulosic plastics materials:
Film, strips, and sheets, all the foregoing which are flexible:
771.42 Other... 6% ad val.
General Headnote 9 provides in pertinent part:
9. Definitivas— For the purposes of the schedules, unless the context otherwise requires— ^
(f) the term “of”, “wholly of”, “almost wholly of”, “in part of” and “containing”, when used between the description of an article and a material (e.g., “furniture of wood”, “woven fabrics, wholly of cotton”, etc.), have the following meanings: * * *
(iii) “almost wholly of” means that the essential character of the article is imparted by the named material, notwithstanding the fact that significant quantities of some other material or materials may be present.
Headnote l(vii) provides:
1. The provisions of this subpart do not cover—
* * * * * * *
(vii) other articles specially provided for in schedule 7 or elsewhere.
Those headnotes provide in pertinent part:
Headnote 2:
2. For the purposes of the tariff schedules—
(a) the term “textile materials” means—
(i) the fibers • • *,
(ii) the yarn intermediates and the yarns • • •,
(iii) the cordage * • •,
(iv) the fabrics-,
(v) braids,-, and
(vi) except as provided by headnote 5, articles produced from any of the foregoing products.
Headnote 5:
5. fl]n determining the classification of any article which is wholly or in part of a fabric coated or filled, or laminated, with nontransparent rubber or plastics (which fabric is provided for in part 4C of this schedule), the fabric shall be regarded not as a textile material but as being wholly of rubber or plastics to the extent that (as used in the article) the nontransparent rubber or plastics forms either the outer surface of such article or the only exposed surface of such fabric.
The Government quotes the following language from the House Report (all emphasis by the Government):
Textile fabrics which have been coated or filled or laminated with rubber or plastics are made * * * for a wide variety of uses. * * * These rubber- or plastic-covered fabrics are used in making rainwear, hunting jackets, footwear, headwear, gloves, luggage, handbags, furniture, and other articles.
Subsection (a) would amend the definition of “textile materials” in headnote 2(a) of schedule 3. * * * The proposed amendment takes into account the consideration mentioned above that the textile characteristics of these fabrics may be completely lost in the final product. For example, simulated leather suitcases and gloves made of a “suf ported” vinyl bear no outward resemblance to a textile product. Thus, the proposed amendment of headnote 2(a) wrou!d exclude such fabrics from the defined concept of “textile materials” and provide for their being regarded as wholly of rubber or plastics to the extent that as used in the luggage, gloves, or other articles made therefrom, nontransparent rubber or plastics form either the outer surface of the article or the only exposed surface of the fabric.
H.B. Rep. No. 342, 89th Cong., 1st Sess. 10-13 (1955).
See note 2, supra..
Headnote 1 provides in pertinent part:
1. The provisions of this subpart do not cover—
(i) any of the products described in part 5, 6, or 7A of this schedule;
(ii) cloth-lined or reinforced paper * * *;
(iii) cloths coated with abrasives * * *;
(iv) fish landing nets * * *;
(v) laminated or reinforced plastics * * *:
(vi) hair felt, and articles thereof * * *; or
(vii) other articles specially provided for in schedule 7 or elsewhere.
See note 4, supra.
Dissenting Opinion
dissenting.
I would reverse the judgment below based on the views expressed in my dissenting opinion in United States v. Canadian Vinyl Industries, Inc., 64 CCPA 97, C.A.D. 1189, 555 F. 2d 806 (1977).
