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HQ 084540

MARCH 5, 1990

CLA-2 CO:R:C:G 084540 PR


TARIFF NO.: 355.85, TSUS

District Director of Customs
77 S.E. Fifth Street
Miami, Florida 33131

RE: Internal Advice Request 15/89

Dear Sir:

This is in response to your memorandum of March 31, 1989, concerning a request for internal advice by Wilkie, Farr & Gallagher on behalf of Spradling International Inc., and Productos Quimicos Nacionales, Ltda., on the classification of certain woven fabrics.


The subject fabrics are woven, of man-made fibers, and coated or laminated with polyvinyl chloride plastics (PVC). The coated fabrics are stated to be over 70 percent by weight of, and in chief value of, the PVC material.


(1) A notice of rate advance was sent advising that the subject merchandise is classifiable under the provision for other coated or filled fabrics, in item 355.85, Tariff Schedules of the United States Annotated (TSUSA). This classification was predicated on the decision in Elbe Products Corp. v. U.S., Court of Appeals for the Federal Circuit, Appeal No. 87-1619 (decided May 16, 1988). The importers believe that Elbe does not apply and that the merchandise is properly classifiable as entered, under the provision for coated or filled fabrics of man-made fibers, over 70 percent by weight of rubber or plastics, in item 355.81, TSUS.

(2) Where Customs has issued a "binding" ruling, must it first notify the addressee of that ruling prior to enforcing the principles of a court case which have the effect of changing that ruling?

(3) Do the principles of a judicial decision take precedence over an established and uniform practice of classification, or must Customs go through formal rule making procedures to change that practice?

(4) May Customs reliquidate entries that have not been protested to effectuate the principles of court decision?


Prior to the Elbe decision, the merchandise was classified in item 355.81, TSUS. However, that decision concerning nonwoven fabrics which were coated with and in chief value of plastics, stated that there was no authority to disregard the value of the plastics material in the classification of the merchandise. While the merchandise before the court may be slightly different than the merchandise which is the subject of this ruling, the principles expressed in that court case are clearly applicable to the classification of the instant merchandise. As in Elbe, following the court's reasoning, there is no authority, either by statute or in the legislative history to the TSUS, to disregard the value of the PVC material. Since the merchandise is stated to be in chief value of plastics, it cannot be classified under a provision which requires it to be in chief value of man-made fibers.

It is also contended that Customs had an established and uniform practice to classify the subject merchandise in item 355.81, and that Customs must adhere to that practice. Section 315,, Tariff Act of 1930, as amended (19 U.S.C. 1315) prohibits Customs from issuing an administrative ruling which would impose a higher rate of duty than that being imposed pursuant to an established and uniform practice of classification. Furthermore, Customs had issued an administrative ruling to one of the parties here involved that the instant merchandise was classifiable in item 355.81.

It was the decision of the Court of Appeals for the Federal Circuit, not Customs, which enunciated clear principles of classification mandating the change in classification. Section 152.16(e), Customs Regulations (19 CFR 152.16(e)), requires that unless Customs otherwise directs, the principles of any court decision adverse to the government shall be applied not only prospectively, but also
to all unliquidated entries and protested entries which have not been acted upon. Since it was the court decision which required the change in classification, no notice, either for a change of practice or for a change in a "binding" ruling, is required.

However, since the merchandise at issue is not identical to that before the court in Elbe, Customs has no authority to apply the principles of a court decision adverse to the government to entries which have been liquidated and which have not been protested.


The subject merchandise is properly classifiable in item 355.85, TSUS. All unliquidated entries and liquidated entries for which a protest has been filed and not acted upon should be classified in accordance with the principles set out in the Elbe decision. A copy of this ruling should be furnished to the initiator of the internal advice request.


//H. Volenick// for

John Durant, Director

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