Trade Court Says Net Wraps Are Not Part of Round Hay Balers
The Court of International Trade in an Oct. 4 opinion ruled that CBP properly classified net wraps used for bailing hay as a warp knit fabric under Harmonized Tariff Schedule subheading 6005.39.00. Judge Mark Barnett ruled against classification under plaintiff RKW Klerks' preferred subheading 8433.90.50 as "parts" of "harvesting or threshing machinery."
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The case concerns two types of net wraps, Rondotex and TopNet, both of which are used to secure crops in a round bale. RKW Klerks brought in a single entry of these goods at the Port of Charleston 2018, where CBP liquidated them under subheading 6005.39.00 as warp knit fabrics, dutiable at 10%. RKW Klerks filed a protest, seeking classification under subheading 8433.90.50, or, alternatively, subheading 8436.99.00, both free of duty.
In weighing the different classification options, Barnett first looked to CBP's chosen subheading, though no party disputed that the net wraps are covered by the subheading's language. The judge said a warp knit is defined as a knit fabric made by a machine with the yarns running lengthwise. The explanatory note to heading 6005 says that the heading covers synthetic fabric made on warp knitting machines with fabric running lengthwise. Given that the plaintiff's net wraps clear the definition to be found as warp knit fabrics, subheading 6005.39.00 applies.
Barnett next turned to RKW Klerks' preferred subheading and whether the net wraps are classifiable as "parts" of harvesting machinery. The judge cited a U.S. Court of Appeals for the Federal Circuit case, U.S. v. Willoughby Camera Stores, which set a test for finding whether merchandise can be deemed part of another article: whether the article cannot function without the part in question. Looking to the Willoughby test, Barnett said that the net wraps cannot claim to be parts of harvesting machines.
Looking to another Federal Circuit case, Wilbur-Ellis Co. v. U.S., which said that bale ties were not part of a hay baler, Barnett said that net wraps "are not integral to the functioning of round hay balers." Instead, the wraps have their own function.
"The Netwraps are not integral to the function of the round hay balers because these machines generally are designed to use both twine and net wrap," the opinion said. "Thus, even without the Netwraps, round hay balers could compress crops into bale form and secure the bales with alternative materials. The fact that a net wrap may be the preferred method of wrapping bales is of no consequence; they are simply one of the potential inputs that round balers can use to wrap round bales."
RKW Klerks cited the CIT case Ludvig Svensson v. U.S., in which the court found that screens used in construction of a greenhouse were parts of the greenhouse since they were in an "advanced state of manufacture" and had no other uses. Barnett, though, drew a line between the facts of Ludvig Svensson and the present case. The judge said that the greenhouses could not function without the screens while the hay balers could, and that the screens remain attached to the greenhouse while the net wraps are disposable.
(RKW Klerks v. United States, Slip Op. 22-115, CIT #20-00001, dated 10/04/22, Judge Mark Barnett. Attorneys: Philip Simons of Simons & Wiskin for plaintiff RKW Klerks; Aimee Lee for defendant U.S. government)