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HQ 085970

March 8, 1990

CLA-2 CO:R:C:G 085970 KWM


TARIFF NO.: 2401.20.80

Mr. W.H. Berry
Brown & Williamson Tobacco Corp.
1500 Brown & Williamson Tower
P.O. Box 35090
Louisville, Kentucky 40232

RE: Scrap or refuse tobacco; leaf tobacco

Dear Mr. Berry:

This letter is in response to your inquiry dated November 6, 1989, requesting reconsideration of the tariff classification of scrap tobacco. After review of your submission, and consideration of the issues raised, we decline to revoke or modify our ruling HQ 084808, classifying the tobacco at issue in subheading 2401.20.80, HTSUSA.


Your letter describes the merchandise at issue here as "a tobacco by-product of dust and fines." Your request for reconsideration, as well as your original request, claims that this product should be classified as tobacco refuse under subheading 2401.30.90, HTSUSA. Our ruling letter, HQ 084808, dated September 12, 1989, classified the goods in subheading 2401.20.80, HTSUSA, as unmanufactured tobacco, partly or wholly stemmed, threshed or similarly processed. You now question that classification and ask us to reconsider.


Is the "tobacco by-product" at issue here considered "refuse tobacco" within the purview of subheading 2491.30, HTSUSA?


Classification under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA) is made in accordance with the General Rules of Interpretation (GRI's). The systematic detail of the harmonized system is such that virtually all goods are classified by application of GRI 1, that is, according to the terms of the headings of the tariff schedule and any relevant Section or Chapter Notes. Then, if GRI 1 fails to classify the goods, and if the headings and legal notes do not otherwise require, the remaining GRIs may be applied, taken in order.

Under the HTSUSA, two tariff provisions are eligible for classification of these goods:

2401 Unmanufactured tobacco (whether or not threshed or similarly processed); tobacco refuse:

2401.20 Tobacco, partly or wholly stemmed/stripped:

2401.20.80 Other...................................
or, alternatively:

2401.30 Tobacco refuse:

2401.30.90 Other...................................

The issue in this case centers around the determination of whether the goods at issue fall within the scope of "tobacco refuse" of 2401.30.90, HTSUSA. It is well settled in Customs law that the scope of a tariff term is a legal question, while the determination of whether a good falls within that scope is a question of fact. The Section and Chapter Notes, which are legally binding, do not define the term "refuse" or "leaf". The Explanatory Notes, which are not binding but represent the official interpretation of the tariff schedule at the international level, provide as follows:

This heading covers:

(1) Unmanufactured tobacco in the form of whole plants or leaves in the natural state or as cured or fermented leaves, whole or stemmed/stripped, trimmed or untrimmed, broken or cut . . .

(2) Tobacco refuse, e.g., waste resulting from the manipulation of tobacco leaves, or from the manufacture of tobacco products (stalks, stems, midribs, trimmings, dust, etc.)

(Emphasis in the original). It is our opinion that "refuse tobacco" does not encompass goods such as these, and that our prior classification was correct as issued.

In HQ 084808, we cited Kuehne & Nagel, Inc. v. United States, (Slip Op. 86-138, Ct. Int'l. Trade, December 22, 1986) for the proposition that all unmanufactured tobacco is either "leaf tobacco", "stems" or "by-product". Under the HTSUSA, TSUS court decisions are not binding but are helpful in interpreting tariff terms, particularly where the HTSUSA follows or parallels the TSUS. In this case, the terms and structure of the HTSUSA differ from those of TSUS; however, we believe that the Kuehne & Nagel decision is helpful in interpreting the new nomenclature.

The Kuehne & Nagel court was concerned with the definition of "scrap" (as opposed to "leaf") tobacco under the Tariff Schedules of the United States (TSUS). In seeking a definition of scrap, the court went to great lengths to explain that scrap tobacco was a "fluid concept" in both the tobacco processing industry, and in Customs practice. The holding of the case was, essentially, that the tariff schedule classified either leaf tobacco (unmanufactured) or scrap ("stems" and "by-product"). Further, the court implied that scrap tobacco is precisely that: the waste or unusable portions (such as sweepings) remaining after handling, trimming, processing, etc. Simple excess or the rejected portion of processed (trimmed) leaf tobacco did not automatically become "scrap", especially if it was made increasingly recoverable or usable by the technology in the tobacco industry.

Under the HTSUSA, unmanufactured tobacco is classified not as "leaf" or "scrap", but as "leaf" or "refuse". While we do not decide here that the terms "scrap" and "refuse" are interchangeable, we believe that the concepts are similar. Since the Kuehne & Nagel decision, it has been Customs' position, as stated in HQ 084808, that:

The definition of stemmed cigarette leaf includes the product of the threshing [or other] process, and the fact that it has been greatly reduced in size does not change its identity as stemmed leaf.

See, HQ 084808, September 12, 1989. Since our original letter to you was issued, we have not changed our position. Contrary to your assertion, our classification of this merchandise is not based "on particle size alone", but is size independent. Regardless of the reductions in size or physical shape of the tobacco leaf made during processing, these "small particles of tobacco" retain their identity as leaf tobacco. In addition, the fact that this material may be reconstituted or homogenized into a usable tobacco product makes its "removal" from processing, before they become refuse, all the more important. Because the concept of refuse (like scrap) is "fluid", the recoverable, non- refuse portion of processed tobacco as a percentage of the whole leaf increases with technology. Hence, the merchandise which may be classified as "refuse" lessens; more and more tobacco may be identified as "leaf."


Headquarters ruling letter HQ 084808 is affirmed. The merchandise referred to by you as "by-product" of tobacco, removed during processing of the leaf, is classified in subheading 2401.20.80, HTSUSA, as tobacco, partly or wholly stemmed, threshed or similarly processed. The rate of duty on these goods is 44.1 cents per kilogram.


John A. Durant

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