Application for Further Review of Protest No. 4601-07-102169; Non-woven material used in milk strainers

HQ H021222 August 06, 2010 CLA-2 OT:RR:CTF:TCM H021222 JPJ CATEGORY: Classification TARIFF NO.: 5911.40.0000 Port Director Port of Newark U.S. Customs and Border Protection Protest & Control 1100 Raymond Blvd, Suite 402 Newark, NJ 07102 RE: Application for Further Review of Protest No. 4601-07-102169; Non-woven material used in milk strainers Dear Port Director: This is our decision regarding the Application for Further Review (“AFR”) of Protest Number 4601-07-102169, timely filed on behalf of Ahlstrom Mount Holly Springs LLC (“Ahlstrom”), concerning the classification of non-woven material used in milk strainers under the Harmonized Tariff Schedule of the United States (“HTSUS”). On May 5, 2009, a meeting was held with protestant and members of my staff. During the meeting, protestant requested the opportunity to submit additional written argument. The request was granted, and on August 7, 2009, protestant’s submission was received. Five samples were submitted to this office for examination. FACTS: The merchandise at issue was entered on May 30, 2006. At the time of entry, Ahlstrom entered the merchandise under subheading 5911.40.0000, HTSUS, pursuant to Headquarters Ruling (HQ) 967326, dated December 13, 2004, which was issued to Ahlstrom and involved the same merchandise. The entry liquidated on April 13, 2007. On October 10, 2007, Ahlstrom filed a protest against the tariff classification of the merchandise in subheading 5911.40.0000, HTSUS. The merchandise involved in HQ 967326 was described as follows: The merchandise at issue is described as “non-woven filtration media composed of a polyester blend (with cellulose and viscose fibers) with an acrylate binding agent, which is designed for straining milk and is used in milk strainers, filter funnels, and in the vessels and tanks in the milking industry. It is specifically designed for food contact.” Three of the samples are manufactured by a wet laid process and two of the samples are made by a paper making process with a final wood pulp content of 13%. The merchandise is imported into the U.S. in rolls and is subsequently cut and in some cases sewn into one of two shapes. The first shape is round and is inserted as a cross section of a pipe through which milk flows to the milk storage vessel. The second shape is cut and sewn into the shape of a long, slightly tapered funnel which strains the milk as it flows to the storage tank through the pipes. ISSUE: Whether the non-woven material used in milk strainers is classified in heading 5603, HTSUS, as a non-woven or in heading 5911, HTSUS, as a technical use fabric. LAW AND ANALYSIS: Initially, we note that the matter protested is protestable under 19 U.S.C. §1514(a)(2) as a decision on classification. The protest was timely filed within 180 days of liquidation of the first entry for entries made on or after December 18, 2004. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, § 2103(2)(B)(ii), (iii) (codified as amended at 19 U.S.C. § 1514(c)(3) (2006)). Further Review of Protest No. 4601-07-102169 was properly accorded to protestant pursuant to 19 C.F.R. § 174.24(c) because the decision against which the protest was filed involves matters previously ruled upon by the Commissioner of Customs or his designee or by the Customs courts but facts are alleged or legal arguments presented which were not considered at the time of the original ruling. Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRI’s). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs may then be applied. The HTSUS provisions under consideration are as follows: 5603 Nonwovens, whether or not impregnated, coated, covered or laminated: * * * * * * 5911 Textile products and articles, for technical uses, specified in note 7 to this chapter: * * * * * * Note 7 to Chapter 59 reads: Heading 5911 applies to the following goods, which do not fall in any other heading of section XI: (a) Textile products in the piece, cut to length or simply cut to rectangular (including square) shape (other than those having the character of the products of headings 5908 to 5910), the following only: (i) Textile fabrics, felt and felt-lined woven fabrics, coated, covered or laminated with rubber, leather or other material, of a kind used for card clothing, and similar fabrics of a kind used for other technical purposes, including narrow fabrics made of velvet impregnated with rubber, for covering weaving spindles (weaving beams); (ii) Bolting cloth; (iii) Straining cloth of a kind used in oil presses or the like, of textile material or of human hair; (iv) Flat woven textile fabric with multiple warp or weft, whether or not felted, impregnated or coated, of a kind used in machinery or for other technical purposes; (v) Textile fabric reinforced with metal, of a kind used for technical purposes; (vi) Cords, braids and the like, whether or not coated, impregnated or reinforced with metal, of a kind used in industry as packing or lubricating materials. (b) Textile articles (other than those of headings 5908 to 5910) of a kind used for technical purposes (for example, textile fabrics and felts, endless or fitted with linking devices, of a kind used in paper-making or similar machines (for example, for pulp or asbestos-cement), gaskets, washers, polishing discs and other machinery parts). Additional U.S. Rules of Interpretation (AUSRI) 1(a) states: 1. In the absence of special language or context which otherwise requires— (a) a tariff classification controlled by use (other than actual use) is to be determined in accordance with the use in the U.S. at, or immediately prior to, the date of importation, of goods of that class or kind to which the imported goods belong, and the controlling use is the principal use. The Harmonized Commodity Description and Coding System Explanatory Notes ("EN’s") constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the EN’s provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 Fed. Reg. 35127-28 (Aug. 23, 1989). The EN to heading 5603, HTSUS, states, in relevant part: Except where they are covered more specifically by other headings in the Nomenclature, the heading covers nonwovens in the piece, cut to length or simply cut to rectangular (including square) shape from larger pieces without other working, whether or not presented folded or put up in packings (e.g., for retail sale). These include: facing webs (overlay) for incorporation in laminated plastics; top-sheets for the manufacture of disposable baby napkins (diapers) or sanitary towels; fabrics for the manufacture of protective clothing or garment linings; sheets for filtering liquids or air, for use as stuffing materials, for sound insulation, for filtration or separation in road building or other civil engineering works; substrates for manufacturing bituminous roofing fabrics; primary or secondary backing for tufted carpets, etc….. The EN to heading 5603, HTSUS, also lists exclusions which include, among other goods: Nonwovens for technical uses, of heading 59.11. The EN to heading 5911, HTSUS, states, in relevant part, as follows: Straining cloth (e.g. woven filter fabrics and needled filter fabrics), whether or not impregnated, of a kind used in oil presses or for similar filtering purposes (e.g., in sugar refineries or breweries) and for gas cleaning or similar technical applications in industrial dust collecting systems. The heading includes oil filtering cloth, certain thick heavy fabrics of wool or of other animal hair, and certain unbleached fabrics of synthetic fibres (e.g., nylon) thinner than the foregoing but of a close weave and having a characteristic rigidity. It also includes similar straining cloth of human hair. It is protestant’s position that the merchandise is classified in heading 5603, HTSUS, which provides for “[n]onwovens, whether or not impregnated, coated, covered or laminated.” Note 7 to Chapter 59 states that heading 5911, HTSUS takes precedence over the other headings of Section XI. Accordingly, heading 5911, HTSUS, must be eliminated as a classification option before goods can be classified in heading 5603, HTSUS. Two criteria have to be satisfied for classification in heading 5911, HTSUS: (i) the textile products must be for technical use, and (ii) they must be goods described in paragraphs (a) and (b) to Note 7. In GKD-USA, Inc. v. United States, 931 F. Supp. 875 (Ct. Intl. Trade 1996), the Court found that there is no clearly stated Congressional intent as to the meaning of the tariff phrase “straining cloth of a kind used in oil presses or the like”, and construed the tariff terms according to their current common and commercial meaning. Id. at 879-880. The Court determined that “straining cloth” is generally referred to as “filter cloth”, and described the process of filtration, in relevant part, as “the process in which solid particles in a liquid or gaseous fluid are removed by the use of a filter medium that permits the fluid to pass through but retains the solid particles”. Id. at 880. In GKD-USA, the Court also interpreted the phrase “of a kind used in oil presses or the like”. Id. at 880-881. The Court determined that an oil press is a machine that provides a mechanism to hold the filter medium and provides the force necessary to cause the fluid to flow. Id. The Court interpreted “oil presses or the like” to include the various presses described therein which are all used to remove liquid and retain solids by creating a pressure differential. Id. Thus, the Court determined that in order for a good to be classified in subheading 5911.40.00, HTSUS, the good must be a filter cloth used on a press “designed to separate liquids from solids through a change in pressure”. Id. Therefore, the Court did not limit “straining cloth” to a kind used on a particular type of press, but by the manner in which the separation of liquids from solids occurred (emphasis added). In Airflow Technology, Inc. v. United States, 524 F. 3d 1287 (Fed. Cir. 2008), the Court of Appeals for the Federal Circuit held that air filter media was properly classified under subheading 5911.40.00, HTSUS. In reaching its decision, the court had the opportunity to shed light on the phrase “straining cloth of a kind used in oil presses or the like”. The court stated, in relevant part, that the plain meaning of the term “straining cloth” suggests that it refers only to products that separate solids from liquids. Id. at 1291. The court went on to say that although the terms “straining” and “filtering” carry similar meanings, they do not have identical meanings, and they differ in one critical aspect—“straining” suggests removing solids from liquids while “filtering” suggests removing solids from liquids or gases. Id. at 1292. The court concluded that the term “straining cloth” carries a different and narrower meaning than the term “filter cloth”, and that the CIT erred in finding the two terms to be interchangeable. Id. The court deduced from the plain meaning of the term that “straining cloth” encompasses only products that separate solids from liquids. Id. The court further stated that the phrase “or the like”, which means “the same, or very similar to,” clearly modifies the phrase “of a kind used in oil presses” and not the term “straining cloth”. Thus “straining cloth” must be of a kind used in oil presses or machinery that is the same or very similar to oil presses. Id. The court found that the common meaning of the phrase “of a kind used in oil presses or the like” means “of a kind used in oil presses or other mechanisms that separate solids from liquids.” (emphasis added). Id. Ahlstrom argues that GKD-USA has no precedential value because the merchandise at issue in that case was a filter press belting made of a woven fabric, while the merchandise at issue herein is made of a nonwoven fabric (emphasis added). Ahlstrom provides definitions of “woven fabric” and “nonwoven fabric” from Fairchild’s Dictionary of Fashion (7th ed. 2008). According to that source, woven fabric is composed of two basic series of yarn: warp and filling. Weaving is the interlacing of these two yarns to form a fabric; the specific manner in which the two sets of yarns are interlaced determines the weave. Nonwoven fabric, on the other hand, contains a textile structure produced by bonding or interlocking of fibers, or both; accomplished by mechanical, chemical, thermal, or solvent means and combinations thereof (ASTM). Ahlstrom explains that “the interlocking fibers of woven fabrics generally provide greater tensile strength than nonwovens, and, . . .are very different products than the nonwoven grades at issue”. In relation to the merchandise in GKD-USA, Ahlstrom explains that “the woven, belt filters of the GKD case were engineered to withstand use in a filter designed to extract liquids from high solids products by applying a compression force that contracts the solid(s) and wrings out the liquids from it”. Ahlstrom argues that milk is not a “high solids product”, in that in its prerefined form it generally should not be composed of any solids but is purely liquid. Similarly, unlike the defining characteristics of filters used in oil presses “or for similar filtering purposes (e.g., in sugar refineries or breweries). . .”, Ahlstrom argues that the ENs to heading 5911 state that these filters are used to filter “high solid particles” such as the olives in oil presses, the grape skins and pulp or grain mash in beer or wine presses, and the sugar cane mash in sugar refinery presses, and to extract the liquids from these products. Ahlstrom cites Airflow for the proposition that filtration materials that are not used in the type of filters that share the essential characteristics of an oil press are excluded from classification within heading 5911, HTSUS. Ahlstrom argues that just as the court in Airflow decided against an “over-expansive” interpretation of subheading 5911.40, HTSUS, to conclude that “straining cloth” did not include air filter media, a similar broad interpretation of subheading 5911.40, HTSUS, to include the nonwovens at issue as “straining cloth of a kind used in oil presses or the like” is likewise impermissible. Ahlstrom concludes that the milk filtration methodology, the amount of pressure required, and the ultimate goal of this small segment of the market are very different from the filtration methodology used in the oil press, sugar refinery, and brewery filtration markets. In support of their argument, Ahlstrom provides a copy of an advertisement from www.fuzing.com for an oil expeller/screw oil press, and a copy of an article about General Filtration and Beer and Wine Filters from www.generalfiltration.com. Ahlstrom argues that, unlike the filters used in oil presses and breweries, the nonwovens at issue are designed “to catch. . .a small number of random solids as in a net. . .and not to extract liquids from solids. . .” (emphasis added). Ahlstrom argues that a filter press “functions to separate the solids out of the liquids by squeezing or applying similar high pressure to the solids” (emphasis added). Ahlstrom argues that the nonwoven grades at issue “when used in a milk filter capacity, are not used in extraction processes (i.e., the solids are not pulled or pushed out forcibly and with great effort from the liquid milk)”. Based on this, Ahlstrom concludes that subheading 5911.40, HTSUS, covers straining cloth used in oil presses and in products similar to oil presses (emphasis added). Ahlstrom further argues that for the nonwovens at issue to be classifiable in heading 5911, HTSUS, they could not merely be similar to straining cloths used in oil presses or the like, but they would have to be commercially fungible with these goods. Ahlstrom argues that the primary physical characteristics of the merchandise, including the tensile strength, the basis weight, the thickness, and the permeability differ significantly and are not commercially fungible with “straining cloth of a kind used for oil presses and the like”. Ahlstrom cites United States v. Carborundum Co., 536 F.2d 373 (C.C.P.A.), cert. denied, 429 U.S. 979 (1976), and describes the differences in tensile strength, basis weight, thickness, and permeability, to conclude that its merchandise is not of the same class or kind as “straining cloth of a kind used in oil presses and the like” . Ahlstrom has provided data that indicates that several other nonwoven grades that are not at issue herein are sold in the U.S. for use in roofing materials and in apparel manufacture. Ahlstrom cites the fiber contents, compares them to the nonwovens at issue and concludes that the class or kind of goods, that is, “nonwoven materials made by the wetlaid process”, are very similar, despite “slight differences in component content”, which Ahlstrom believes does not “limit the potential uses of these goods” and “do[es] not restrict their end uses” (emphasis added). Ahlstrom concludes that the nonwovens at issue belong to the class or kind of goods principally used in the U.S. as reinforcing materials for apparel, and not to the class or kind of goods predominantly used in oil presses and the like. Ahlstrom cites Primal Lite Inc., v. U.S., 15 F. Supp. 2d 915 (Ct. Int’l Trade 1998), for the proposition that AUSRI 1(a) requires classification according to ordinary use, even though particular imported goods may be put to some atypical use. Ahlstrom concludes that because the total volume of nonwovens sold in the U.S. for use in apparel manufacture is more than five times that of sales for use in milk filtration, and because milk filtration is only a “subset of all the grades which have been sold in the U.S. to customers using them in apparel production”, then the use of the class or kind of merchandise to which the nonwovens at issue belong is “not as milk filters, which is an atypical use”. Therefore, Ahlstrom concludes that the merchandise at issue bears no relation to the merchandise in GKD-USA, as that merchandise is of a significantly different composition, thickness, structure, and tensile strength. Ahlstrom states that there are “no court cases that directly apply to Ahlstrom’s products, because none specifically consider the scope and application of the language of subheading 5911.40, HTSUS (and headnote 7(a)(iii) to Chapter 59, HTSUS), in relation to nonwoven filtration materials for liquids or filtration materials which are used in passive filters rather than belt filters”. The merchandise at issue in HQ 967326, was “for straining milk and is used in milk strainers, filter funnels, and in the vessels and tanks in the milking industry. It is specifically designed for food contact.” From our internet research at www.delaval.com, we confirmed that hygiene is important in the milking industry and that milk filters are high technology food grade certified to ensure they are safe to use in contact with food. As such, they must comply with FDA regulations, as well as USDA requirements. The website also states that milk filters used in different applications require different and highly specialized fabric properties in order to pe