United States v. Canadian Vinyl Industries

• Decision Date: 12 May 1977
• Docket Number: Customs Appeal No. 76-11.
• Citation: 555 F.2d 806
• Parties: The UNITED STATES, Appellant, v. CANADIAN VINYL INDUSTRIES, INC., Appellee.
• Court: U.S. Court of Customs and Patent Appeals (CCPA)

555 F.2d 806

The UNITED STATES, Appellant, v. CANADIAN VINYL INDUSTRIES, INC., Appellee.

Customs Appeal No. 76-11.

United States Court of Customs and Patent Appeals.

May 12, 1977.

Rex E. Lee, Asst. Atty. Gen., Washington, D. C., David M. Cohen, Chief, Customs Section, John J. Mahon, New York City, attorneys of record, for appellant.

Barnes, Richardson & Colburn, New York City, attorneys of record, for appellee, Michael Stramiello, Jr., James S. O'Kelly, New York City, of counsel.

Before MARKEY, Chief Judge, and RICH, BALDWIN and MILLER, Judges, PHILIP NICHOLS, Judge, United States Court of Claims.

NICHOLS, Judge.¹

This appeal is from the judgment of the United States Customs Court, C.D. 4626, 408 F.Supp. 1377, 76 Cust.Ct. 1, sustaining appellee's claim that its imported merchandise is entitled to classification under item 771.40, Tariff Schedules of the United States (TSUS), instead of under item 355.82, TSUS, as classified. Appellee alternatively claimed classification under items 771.42, 774.60 and 355.85. We affirm.

The pertinent statutory provisions involved in this appeal, with rates of duty in effect at time of importation, are as follows:

General Headnotes and Rules of Interpretation:

* * * * * * *

9. Definitions. For the purposes of the schedules, unless the context otherwise requires—

* * * * * * *

(f) the terms "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:

(i) "of" means that the article is wholly or in chief value of the named material;

* * * * * * *

(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; . . .

* * * * * * *

SCHEDULE 3.—TEXTILE FIBERS AND TEXTILE PRODUCTS

Schedule 3 Headnotes

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2. For the purposes of the tariff schedules—

(a) the term "textile materials" means—

(i) the fibers (cotton, other vegetable fibers, wool and hair, silk, and manmade fibers) provided for in part 1 of this schedule,

(ii) the yarn intermediates and the yarns provided for in part 1 and part 4 (elastic yarns) of this schedule,

(iii) the cordage provided for in part 2 and part 4 (elastic cordage) of this schedule,

(iv) the fabrics provided for in part 3 and part 4 of this schedule,

(v) braids, as defined in headnote 2(f), infra, and

(vi) except as provided by headnote 5, articles produced from any of the foregoing products;

* * * * * * *

4. For the purposes of the tariff schedules—

* * * * * * *

(b) In determining the component fibers of chief value in coated or filled, or laminated, fabrics and articles wholly or in part thereof, the coating or filling, or the non-textile laminated substances, shall be disregarded in the absence of context to the contrary.

5. For the purposes of parts 5, 6 and 7 of this schedule and parts 1 (except subpart A), 4, and 12 of schedule 7, in 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.

Part 4.—Fabrics of Special Construction Or For Special Purposes; Articles of Wadding Or Felt; Fish Nets; Machine Clothing

* * * * * * *

Subpart C.—Wadding, Felts, and Articles Thereof; Fish Netting And Nets; Artists' Canvas; Coated or Filled Fabrics; Hose; Machine Clothing; Other Special Fabrics

Subpart C headnotes:

1. The provisions of this subpart do not cover—

* * * * * * *

(vii) other articles specially provided for in schedule 7 or elsewhere.

2. For the purpose of the tariff schedules—

* * * * * * *

(c) the provisions in this subpart for fabrics, coated or filled with rubber or plastics material, or laminated with sheet rubber or plastics (items 355.65-85), cover products weighing not over 44 ounces per square yard without regard to the relative quantities of the textile fibers and the rubber or plastics material, but do not cover products weighing over 44 ounces per square yard unless they contain more than 50 percent by weight of textile fibers.

* * * * * * *

Woven or knit fabrics (except pile or tufted fabrics), of textile materials, coated or filled with rubber or plastics material, or laminated with sheet rubber or plastics:

* * * * * * *

Of man-made fibers:

                355.81  Over 70 percent by weight of
                         rubber of plastics 
                355.82  Other .................................... 12.5¢ per lb
                                                                 + 15% ad val
                

* * * * * * *

SCHEDULE 7.—SPECIFIED PRODUCTS; MISCELLANEOUS AND NONENUMERATED PRODUCTS

* * * * * * *

PART 12.—RUBBER AND PLASTICS PRODUCTS

* * * * * * *

Subpart B.—Rubber and Plastics Waste and Scrap; Rubber and Plastics Film, Strips, Sheets, Plates, Slabs, Blocks, Filaments, Rods, Tubing and Other Profile Shapes

* * * * * * *

Subpart B headnotes:

1. This subpart covers rubber or plastics products (other than waste or scrap) in the following forms:

* * * * * * *

(b) film, strips, sheets, and plates, all the foregoing (whether or not printed, embossed, polished, or otherwise surface-processed) made or cut into rectangular pieces over 15 inches in width and over 18 inches in length; * * *

* * * * * * *

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:

                771.40  Made in imitation of patent
                         leather ................................... 4% ad val
                

The legislation under which this interrelated maze of provisions was devised was known, somewhat ironically, as the Customs Simplification Act of 1954, 68 Stat. 1136, Pub.L. 768, 83rd Cong. 2d Sess. Emphasis supplied.

The merchandise, invoiced as "Polyurethane 305," consists of flexible sheets of a laminated material imported in rolls. The material has a glossy polyurethane "skin" on one side and a nylon fabric on the reverse side. The evidence of record (four exhibits and the testimony of three witnesses) unequivocally establishes that the principal and only use of the merchandise is as a substitute for patent leather in the construction of footwear, the polyurethane skin being always outside. Similar material is sometimes used in ladies handbags.

The Customs Court read General Headnote 9(f)(i) in conjunction with the language "of textile materials" in the superior heading to item 355.82 to require that the merchandise be wholly or in chief value of the nylon fabric as a prerequisite for proper classification under item 355.82. General Headnote 10 of the TSUS defines chief value as follows:

(f) an article is in chief value of a material if such material exceeds in value each other single component material of the article.

Since the testimony established the costs of the components of the nylon fabric and polyurethane coating as 51 cents and $1.13, respectively, the court held that the merchandise did not meet the chief value test and was, therefore, improperly classified. The court then turned to appellee's proposed classification of the merchandise under item 771.40. It held that the merchandise was "almost wholly of" plastics, as the quoted term is defined in General Headnote 9(f)(iii), because the essential character thereof was imparted by the polyurethane "skin." The court also noted the unrebutted testimony of record which established that the merchandise was made in imitation of selected varieties of patent leather in holding that classification under item 771.40 was proper.

Appellant contends that the court erred in applying the chief value test of General Headnote 9(f)(i) to the whole (as opposed to the nylon portion) of the merchandise. It argues that the language of the superior heading to items 355.65-.85, headnotes 2(a)(iv) and 4(b) to schedule 3, headnote 2(c) to part 4C of schedule 3, and amendments to schedules 3 and 7 of the TSUS by the Tariff Schedules Technical Amendments Act of 1965 (TSTAA)² and related legislative history, all specifically provide for the classification of the merchandise under item 355.82.

Appellant also contends that classification under item 771.40 is improper because the polyurethane "skin" does not impart the essential character to the merchandise. Thus, it is not "almost wholly of" plastics within the meaning of General Headnote 9(f)(iii). Alternatively, appellant contends that if the merchandise is described under both items 355.82 and 771.40, then the rule of relative specificity requires classification under item 355.82. Finally, appellant argues that if this court finds both provisions equally applicable, even under the rule of relative specificity, item 355.82 must prevail by virtue of General Interpretative Rule 10(d), which provides:

(d) if two or more tariff descriptions are equally applicable to an article, such article shall be subject to duty under the description for which the original statutory rate is highest * * *.

Appellee contends that the Customs Court properly applied a chief value test in holding the merchandise improperly classified under item 355.82. It also contends that the evidence of record supports the court's finding that the merchandise is "almost wholly of" plastics and made in imitation of patent leather. Thus it argues that classification under item 771.40 was proper. It also contends that if classification under item 771.40 is proper, then headnote 1(vii) to part...