HQ 957770 - Protest and Application for Further Review No.1101-94-100612; Virola; Baboen; subheadings 4412.11 and 4412.12; Subheading Explanatory Notes to Chapter 44; Annex to the Explanatory Notes to Chapter 44; New York Ruling Letters 877078 and 875804 - United States International Trade Commision Rulings

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HQ 957770

March 25, 1996

CLA-2 RR:TC:TE 957770 NLP

CATEGORY: CLASSIFICATION

TARIFF NO.: 4412.12.2060

Port Director
U.S. Customs Service
2nd and Chestnut Streets
Philadelphia, PA 19106

RE: Protest and Application for Further Review No.1101-94-100612; Virola; Baboen; subheadings 4412.11 and 4412.12; Subheading Explanatory Notes to Chapter 44; Annex to the Explanatory Notes to Chapter 44; New York Ruling Letters 877078 and 875804

Dear Sir:

This is a decision on application for further review of protest no. 1101-94-100612, filed on October 20, 1994, by Sandler, Travis & Rosenberg, on behalf of their client, Russell Stadelman & Co., against the former District Director's decision concerning the classification of plywood under the Harmonized Tariff Schedule of the United States (HTSUS).

Counsel has provided us with three submissions dated November 23, 1994, October 9, 1995, and January 4, 1996. Counsel also met with Headquarters personnel on September 22, 1995, to discuss the issues in this case.

FACTS:

The product at issue is plywood imported from Brazil and is described by the importer as "virola, sumauma, faviera, mangue, amesclao, breu, or any other species."

According to the submitted commercial invoices, the entries subject to protest were comprised of the following two types of wood: faviera (Parkia spp.) and sumauma (Ceiba Pentandra).

Upon liquidation, the subject plywood was classified by Customs in subheading 4412.12.2060, HTSUS, which provides for the following:

Plywood, veneered panels and similar laminated wood: Plywood consisting solely of sheets of wood, each ply not exceeding 6 mm in thickness:
Other, with at least one outer ply of nonconiferous wood:
Not surface covered, or surface covered with a clear or transparent material which does not obscure the grain, texture or markings of the face ply:
Other:
Other:
Other:
Not surface covered.

Plywood classifiable in this subheading is subject to a rate of duty of 8% ad valorem.

It is counsel for the importer's position that all plywood which is commonly and commercially known as "Virola" in the U.S. and Brazil should be classified as virola under subheading 4412.11.2060, HTSUS. This includes all plywood imported by Stadelman from Brazil, including that invoiced as virola, sumauma, faviera, mangue, amesclao, breu or any other species. Subheading 4412.11.2060, HTSUS, provides for the following:

Plywood, veneered panels and similar laminated wood: Plywood consisting solely of sheets of wood, each ply not exceeding 6 mm in thickness:
With at least one outer ply of the following tropical woods: Dark Red Meranti, Light Red Meranti White Lauan, Sipo, Limba, Okume, Obeche, Acajou d' Afrique, Sapelli, Baboen, Mahogany (Swietenia spp.), Palissandre du Bresil or Bois de Rose femelle:
Not surface covered, or surface covered with a clear or transparent materials which does not obscure the grain, texture or markings the face ply:
Other:
Other:
Other:
Not surface covered.

Articles from Brazil classified in this subheading are eligible for duty free treatment under the Generalized System of Preferences.

ISSUE:

Whether plywood that is claimed to be commonly and commercially known as virola is classifiable in subheading 4412.11.2060, HTSUS, as plywood with at least one outer ply of Baboen?

LAW AND ANALYSIS:

The classification of goods under the HTSUS is governed by the General Rules of Interpretation (GRI's), taken in order. GRI 1 provides that classification shall be determined according to the terms of the headings 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 GRI's may be applied, taken in order.

Heading 4412, HTSUS, covers plywood, veneered panels and similar laminated wood. Subheading 4412.11, HTSUS, provides for the following:

Plywood, veneered panels and similar laminated wood: Plywood consisting solely of sheets of wood, each ply not exceeding 6 mm in thickness:
With at least one outer ply of the following tropical woods: Dark Red Meranti, Light Red Marantic White Lauan, Sipo, Limba, Okume, Obeche, Acajou d' Afrique, Sapelli, Baboen, Mahogany (Swietenia spp.), Palissandre du Bresil or Bois de Rose femelle:

Therefore, for plywood to be classifiable under subheading 4412.11, HTSUS, it has to have at least one outer ply of one of the listed wood species, in this case, Baboen, as claimed by counsel. There is no other legal text applicable in this case. As is discussed below, the species are listed by their pilot-names and the Annex to the Explanatory Notes of Chapter 44 makes it clear which wood species are encompassed by each pilot-name.

The Explanatory Notes (ENs) to the Harmonized Commodity Description and Coding System constitute the official interpretation of the international Harmonized System (HS), which forms the structure of the HTSUS through the six-digit level. The ENs "provide a commentary on the scope of each heading of the Harmonized System", as intended by the drafters of the HS, and "are thus useful in ascertaining the classification of merchandise under the system." While they are not legally binding, "they should be consulted for guidance" on the classification of merchandise. (See Treasury Decision 89-80, quoting from a report of the Joint Committee on the Omnibus Trade and Competitiveness Act of 1988, 23 Cust. Bull. 379 (1989), 54 Fed. Reg. 35, 127 (August 23, 1989) In T.D. 89-80, Customs stated that the ENs should always be consulted when classifying merchandise.

The Subheading Explanatory Note to Chapter 44 provides the following on page 623:

Names of certain tropical woods

For the purposes of classification in subheadings of headings 44.03, 44.07, 44.08 and 44.12, certain tropical woods are designated according to the pilot-name recommended by the International Technical Association for Tropical Timber (l'Association Technique Internationale des Bois Tropicaux) (ATIBT). The pilot-name is based on the popular name employed in the principal country of production or of consumption.

The relevant pilot-names, together with corresponding scientific names and local names, are listed in the Annex to the Explanatory Notes to this Chapter.

The drafters of the HS created in the ENs for Chapter 44 an Annex to clearly indicate what each pilot-name means and to list the universe of scientific and common names that are within the scope of each pilot-name. The ATIBT nomenclature on which this Annex is based draws its pilot-name from the common name in the principal country of production; however, that common name has a foundation and scope in particular scientific species. The pilot-name is tied to specific wood species as the above EN uses the word corresponding. In the instant case, the Annex to the ENs at page 643 lists the pilot-name Baboen and a corresponding list of scientific names of the species covered under this pilot-name and local names. Based on the above EN, it appears that Surinam was the principal country of production on which this pilot-name was based. As the Annex reads, virola was used as a common name for Baboen in Colombia. All the wood species listed belong to the genus Virola and the pilot-name Baboen clearly correlates directly to woods of this genus. Therefore, plywood with at least one outer ply of Baboen means plywood with at least one outer wood veneer of the genus Virola as specified in the scientific column in the Annex. As listed on the commercial invoice, the plywood at issue is faviera (Parkia spp.) and sumauma (Ceiba Pentandra). Thus, as it is not disputed that the plywood in question is not of the genus Virola, it is not classifiable in subheading 4412.11.2060, HTSUS.

This interpretation of the subject HTS provision is not novel. The following two rulings demonstrate that wood of heading 4412, HTSUS, is defined by its botanical nature and for it to be classifiable as having one outer ply of "Baboen" in subheading 4412.11.2060, HTSUS, it must be of the genus Virola. In New York Ruling Letter (NYRL) 875804, dated July 16, 1992, Customs dealt with the classification of hardwood plywood composed of various hardwoods indigenous to northern Brazil such as assacu, esponja, sucuriuba, sumauma and muiratinga. The plywood was classified in subheading 4412.12.2060, HTSUS. This ruling indicates that woods such as sumauma and muiratinga are dutiable and are not considered to be classifiable as "Baboen", or any other named tropical wood, in subheading 4412.11.2060, HTSUS. Moreover, in NYRL 877078, dated September 2, 1992, Baboen plywood from Brazil was classified in subheading 4412.11.2060, HTSUS. In that case, the wood was described as "red virola/baboen plywood"
and the botanical name of the species of wood of the outer plies was Virola surinamensis. The ruling stated the following: "The above classification and rate of duty will apply only if at the time of importation the merchandise is in fact plywood with at least one outer ply of Virola surinamensis. The invoice filed with the entry should state the actual species of wood by botanical name for both outer plies." Thus, classification in subheading 4412.11.2060, HTSUS, was determined by the botanical name of the wood, not its common and commercial meaning.

Background on the Annex to Chapter 44

The EN Annex to chapter 44 was drafted to assist users of the nomenclature in Chapter 44 to decipher the scope of tropical wood pilot-names used in the six-digit international nomenclature. As alluded to above, the Annex is completely derived from the nomenclature of the International Technical Association for Tropical Timber (l'Association Technique Internationale des Bois Tropicaux). The ATIBT nomenclature enjoys international acceptance by the United Nations Conference on Trade and Development (UNCTAD) and the Harmonized System Committee (HSC) of the Customs Co-operation Council (CCC), among others.

In 1977, UNCTAD submitted a study on chapter 44 to the CCC's Technical Team drafting the HS, in which it recommended a structured nomenclature which identified tropical woods most important to exporting countries. The Technical Team decided to draft subheadings so that similar species were grouped together. Second, it noted that many of the wood species concerned were designated in numerous ways in commerce and, in some cases, the same species may have many different names according to local dialect. Doc. 23.769, HSC, Dec. 1977. As a result, the UNCTAD suggested the use of the ATIBT pilot-names.

The Technical Team took the advice of UNCTAD and designated scientific species by their pilot-names, names selected by the ATIBT. The HSC ratified this approach in October 1978. Doc. 24.590/Annex III, Report of HSC16. The pilot-name is that used for a given species in the principal country of production or of consumption, or the most commonly known name. The ATIBT selects a pilot-name from the only existing international nomenclature on tropical timber, established by agreement between producers of, or traders in, tropical timber and scientific bodies. Annex at 5, Doc. 24.153, HSC15, April 1978.

The usefulness of the ATIBT nomenclature is demonstrated in the following situation.
When the ATIBT's nomenclature was developed, there was a problem in distinguishing the Swietenia of South America, known as Mahogany in the United Kingdom, from African Khaya. In France, the word Acajou was used to cover both Swietenia and Khaya. For the purposes of the ATIBT nomenclature, it was decided that the pilot-name Mahogany should be reserved for Swietenia (i.e. the American species), and this name is now used both in France and in the United Kingdom. The pilot-name Acajou d'Afrique was reserved for Khaya. This is probably why the HSC decided subsequently to clarify the term Mahogany, in the nomenclature in heading 4412 and elsewhere, with the scientific name Swietenia spp. Annex to Doc. 24.153, HSC15, April 1978.

Finally, in April 1981, the HSC directed the Technical Team at the CCC to clarify the pilot name references in chapter 44 by preparing a General EN to the chapter, which later became the above discussed Annex, setting forth the Latin names (scientific names) and corresponding local names for each pilot name. Doc. 26.902, HSC 25, April 1981.

Counsel's arguments in favor of classifying the imported plywood as "baboen" in subheading 4412.11, HTSUS

Counsel for the importer argues that as the pilot-name for tropical woods listed in the Annex is based on a popular name, there is no requirement that wood be classified based on its scientific genus. If there is no requirement that wood be classified based on its scientific genus, then it is classified based on its common and commercial designation. Therefore, if the wood is commonly and commercially known as virola, and virola is listed in the Annex as a local name for Baboen, even if it is not scientifically Virola, it should be classified as Baboen in subheading 4412.11.2060, HTSUS. Counsel cites various case law to support their arguments. Moreover, counsel states that the plywood they are importing is commonly and commercially known as virola and as such it should be classified in subheading 4412.11.2060, HTSUS. Counsel provides various statements to support their position.

Counsel contends that a tariff term is to be construed according to its common and commercial meaning. As the term "Baboen" is not defined in either the HTSUS or its legislative history, for tariff purposes, the correct meaning for virola is its common and commercial meaning. Counsel argues that the classification of this merchandise based on its scientific denomination was rejected 171 years ago by the Supreme Court in Two Hundred Chests of Tea, 22 U.S. 430 (1824), wherein tea that was commonly known as bohea, but was, from a scientific standpoint, actually a mix of bohea, souchong, Congo and other teas, was classified as bohea tea. The issue was "whether, in a commercial sense, the tea in question is known, and bought, and sold, and used under the denomination of bohea tea." The evidence established that the bohea tea of commerce was not usually a distinct and simple substance, but was a compound made up in China of various kinds of the lowest priced black teas. The Court stated that "Congress must be understood to use the word in its known commercial sense." Counsel argues that these principles are applicable to the instant case.

First, we note that Customs has not stated that as a matter of course under U.S. tariff laws, merchandise is classified according to its scientific basis. What we are stating is that where there is an express intent to describe an article in such terms, we will follow that intent. In the instant case, the ENs provide Customs with an aid in determining the scope of the subject provision. The intent they provide is to classify the articles based on their scientific appellations and we are following that intent. In Two Hundred Chests of Tea, there were no Explanatory
Notes to aid in defining the scope of tariff terms. It is when a tariff term is not clearly defined in
the HTSUS or the ENs that its correct meaning is generally resolved by ascertaining its common and commercial meaning. See, Medline Industries, Inc. V. United States, Slip-Op. 94-94, June 7, 1994, 18 CIT___. Congress was well aware of the ENs and the language used to establish the classification of imported products. The status of the EN to the HS is specifically addressed in the report of the Joint Committee on the Omnibus Trade and Competitiveness Act of 1988. It is there stated: The Explanatory Notes constitute the Customs Cooperation Council's official interpretation of the Harmonized System." See T.D. 89-80. Therefore, Congress has taken cognizance of the ENs as useful in classifying merchandise under the HS and as generally indicative of the proper interpretation of the HS. House Conf. Rep. No. 100-576, 100th Cong., 2d. Sess. 549 (1988)

In their submission, counsel discusses that certain woods in Chapter 44 are described in scientific terms and others are described in popular terms. They reason that the tariff provisions for woods described scientifically may be interpreted from a scientific standpoint and those woods described by a common name should be interpreted according to their common meaning. Specifically, counsel states that in the list of woods in subheading 4412.11, HTSUS, the wood described after Baboen is Mahogany (Swietenia spp.). Parenthetically, in describing Mahogany as Swietenia spp., Congress used a scientific name. For the term Baboen, the Surinam common name was used and, therefore, according to counsel, the provision for Baboen should encompass all woods commonly known as virola.

We note that in the relevant six-digit subheading of 4412.11 HTSUS, Mahogany is the only wood that has the scientific designation following it. As discussed above on page 5, there appears to be a specific rationale behind the designation of Mahogany scientifically in the 6-digit subheading. Other woods may not have had the same vocabulary problem as Mahogany. Therefore, this designation should not be read as precluding the other wood species listed from being defined in scientific terms.

Furthermore, as more support for counsel's position that the scientific denomination of tariff terms has been rejected, they cite Alexandria International, Inc. v. United States, 13 CIT 689 (1989). In this case, the Court of International Trade (CIT) had to determine whether fish which were, scientifically, anchovies, but were labeled, imported, marketed, bought and sold as "sardines", were classified under the tariff provision for sardines or the tariff provision for anchovies. According to the CIT, the Government provided ample and convincing evidence of a common and commercial meaning of "sardines" that included not only "true" sardines within the scientific meaning of that term, but also other, closely related and similar packaged fishes, including the merchandise at issue here.

In addition, counsel states that the Justice Department, in their brief for the Alexandria case, correctly dismissed a phylogenetic table noting "[t]his scientific terminology has negligible value for Customs purposes." Similarly, counsel argues that the phylogenetic table prepared by Customs officials in the instant case has negligible value for Customs purposes. However, we note that, in the Alexandria case, the table that was consulted was not part of the ENs. In the instant case, the table that we are consulting is discussed in the Subheading EN to Chapter 44 and is laid out in the Annex to the ENs for Chapter 44. As stated before the ENs constitute the CCC's official interpretation of the HS and should be consulted for guidance on the classification of merchandise.

In Alexandria, the defendant U.S. successfully persuaded the CIT that, absent a contrary intent by Congress in using a tariff term, where a tariff and commercial meaning are identical, classification will be in agreement with the commercial meaning, overriding a contrary scientific meaning that is not widely known or followed. In the instant case, we have a tariff term to interpret that has various, not identical, common meanings. We have an EN Annex that provides guidance that should not be ignored and which sets forth the HS drafters intention to define the scope of a legal term with corresponding scientific and common meanings. We do not have any agreed upon tariff and common and commercial meaning for virola, nor are we overriding a contrary scientific meaning. We have clear EN guidance with which to define the scope of the tariff term "Baboen". The subheading EN to Chapter 44, HTSUS, and the EN Annex to Chapter 44 are sufficient evidence that the scientific genus of tropical woods form the basis for the pilot names used as tariff terms.

Counsel states that the plywood imported by Stadelman from Brazil is commonly and commercially known in the U.S. as virola. Counsel believes that the Government has provided ample and convincing evidence that the common and commercial meaning of virola includes not only true virola, but it also includes other closely related Amazonian woods that are virtually indistinguishable in veneer form from true virola. These statements are said to support classification of the subject wood as Baboen in subheading 4412.11.2060, HTSUS.

We note that some of the statements referred to in counsel's submission were made in a case involving whether wood was classified as softwood vs. hardwood, not whether wood was classified as having an outer ply of "Baboen". They are not germane to the determination of the proper scope of subheading 4412.11, HTSUS. Moreover, while Customs does not dispute the fact that plywood comprised of mixed Brazilian hardwoods may move in the trade as "virola", it is the use of the word "baboen" and the finding that the wood is of the genus "Virola" that triggers classification in subheading 4412.11.2060, HTSUS. The term "baboen" is clearly defined in the EN and it includes only wood species of the genus Virola. Therefore, plywood imported by Stadelman from Brazil must have at least one outer ply of a wood species specifically named
under subheading 4412.11, HTSUS, in this case Baboen. If it does not it cannot be classified in this subheading. In any case, as we have stated, we do not have to resort to determining whether the subject plywood is commonly and commercially known as virola as we determine the classification based on the scientific genus of the wood in question.

Moreover, counsel enclosed an affidavit from Frank Sheridan, president of the International Hardwood Products Association (IHPA). He states the term "virola" during the last 15 years has become a generic grouping of various similar species. As of 8 years ago many of these similar species were imported and marketed as virola. However, Mr. Sheridan also states that channels of distribution at both the wholesale and retail level would be familiar with the identification of "virola" rather than species such as amesclao, breu, or faviera.

We note that in Mr. Sheridan's affidavit he states that he is expressing a personal opinion. Therefore, this letter cannot be said to represent a trade position. Counsel has also stated that one reason near species are commercialized as virola is because not even trained scientists can distinguish between "true" virola and other closely allied species. The above letter does seem to counter counsel's statement.

Counsel states that the Brazilian plywood industry's letter to the IHPA objecting to redesignating virola as "mixed Brazilian hardwood" and the IHPA's letter back to the Brazilian plywood industry confirming their rejection of the proposal also show that the trade clearly rejected the notion that the common and commercial meaning of virola should be defined according to the scientific designation. First, there is nothing in either letter that discusses the distinction between the scientific definition and the common and commercial meaning of the term baboen or virola. Second, though this group may be a part of the trade, it cannot be said that this letter is an indication that "the trade" clearly rejects the redesignation. In fact, if there was a redesignation, their products would possibly be affected, so this is somewhat self-serving.

Counsel also states that Customs laboratory reports make it clear why the trade commercializes a number of Amazonian species similar to scientific virola as virola. Counsel states that even the Customs Service cannot distinguish between virola, cieba and other species in veneer form under laboratory conditions and provides two copies of laboratory reports to support this statement. First, we note that the laboratory reports submitted by counsel do not correspond to the entry numbers and dates for the merchandise in the submitted protest. As these lab reports do not coincide with the entries at issue, they do not prove that the laboratory was unable to identify which species the plywood at issue are made of. The circumstances behind the submitted lab reports are unknown. Despite this fact, however, we believe that these lab reports do not support the contentions of counsel. The first lab report states that the light side of the plywood has been identified as virola spp. and the dark side as copaifera spp. The second lab report specifies that the wood is not virola spp. and it states that a supplemental report will be issued on identification of the species. It appears clear to us that the Customs lab can distinguish wood species and neither report states that the plywood cannot be identified by species of wood.

Finally, counsel in its submission of October 9, 1995, discusses the issue of commingling and the application of General Note (GN) 17(c), HTSUS. Counsel claims that commingling allied "near" species was recognized by the Customs Service Headquarters in Treasury Decision (T.D.) 54613(2), published in 1958. Counsel states that in this decision, Headquarters determined that the presence of other species of wood than the named wood was to be disregarded for tariff purposes if that wood was visually indistinguishable and would not be segregated.

We do not believe that the commingling argument or the above ruling have application in this case. The protestant never claimed at the time of entry that the merchandise was commingled. According to the National Import Specialist for wood products, Customs has not found the importer's shipments to be commingled and this cannot be claimed long after the merchandise is gone. In any case, commingled merchandise must follow the rules, regulations, and requirements as set forth in GN 17, HTSUS. The protestant has not shown any proof of commingling, any information as to what species were present and why the highest rate of duty rule of GN 17 would not apply.

We do note that counsel's own position seems to negate the commingling argument. Counsel states that the plywood it imports is virola: it may be comprised of closely allied species that are not necessarily of the genus Virola, but it is regarded as virola based on its common and commercially definition. If the tariff language at issue- Baboen- was interpreted according to counsel's position and it was determined that the plywood was virola based on the common and commercial definition, there would be no need to discuss the issue of commingling. The plywood would be considered "Baboen" and it would be so classified. However, as Customs interprets this tariff provision, if the plywood is not comprised of an outer ply of wood of the genus Virola, then it cannot be classified in subheading 4412.11.2060, HTSUS, and resort to the commingling provisions of GN 17 would prove to be unnecessary. It appears to us that the commingling argument becomes an issue when the plywood is comprised of wood of the Virola genus and lesser amounts of wood of dutiable species. As the commercial invoices reflect that the plywood is not commingled and it is not comprised of the "named wood", to wit, Baboen, but other species of wood, there appears to be no need to enter into a further discussion of commingling and the subject plywood is to be classified in subheading 4412.12.2060, HTSUS.

HOLDING:

We find that the term "baboen" used in subheading 4412.11, HTSUS, includes only wood species of the genus Virola. Therefore, for the plywood imported by Stadelman from Brazil to qualify for classification in subheading 4412.11.2060, HTSUS, it must have at least one outer ply of a wood species of the genus Virola. Based on the evidence in front of Customs, the protestant has not proven that the subject wood is comprised of the genus Virola. As such, the protest is denied in full. A copy of this ruling should be attached to the Customs Form 19 and provided to the protestant as part of the notice of action.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be mailed by your office to the Protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in the ACS and the public via the Diskette Subscription Service, Lexis, Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director

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