United States Court of International Trade

Slip Op. 22-15

Before the Court in RKW Klerks, Inc., v. United States, Slip Op. 22-115 (October 04, 2022) were cross motions for summary judgment on the classification of net wraps imported for wrapping round bales of harvested crops and keeping these compressed in a round structure after they are released from the baling machine.

At issue was whether the imported Netwraps constitute synthetic “warp knit fabrics” that could be classified by Customs under subheading 6006.39.00 of the Harmonized Tariff Schedule of the United States (HTSUS) at a duty rate of 10 percent ad valorem. Based on the General Rules for Interpretation (GRI) 1, the court had to “determine the appropriate classification ‘according to the terms of the headings and any relative section or chapter notes’ … [with] terms of the HTSUS … construed according to their common commercial meaning.” The court found that the Netwraps are covered by the plain language of subheading 6005 because Netwraps are knitted on Raschel machines and the dictionary definition of warp knit is “knit fabric produced by machine with the yards running in a lengthwise direction,” consistent with the language of this subheading.

Plaintiff contended that the Netwraps should instead be classified under HTSUS subheading 8433.90.50 as “parts” of harvesting machinery or 8433.90.00 or “parts” of agricultural machinery duty free. But the court ultimately rejected this argument, basing its analysis on two tests set forth by the Federal Circuit to determine whether merchandise may be classified as “part” of another article. The first analysis turned on whether the functionality of the article depends on the claimed part. Whereas plaintiff argued that Netwraps were integral to the function of a hay baler because, without the Netwraps, a hay baler could not make usable round bales, the government argued that round bailing machines can interchangeably use net wrap or twine to wrap the bales; Netwrap was to a harvesting machine what a spool of thread is to a sewing machine. The court indeed found that Netwraps are not integral to round hay balers as a toner cartridge would be for photocopiers, as plaintiff argued. Despite Netwraps being the preferred method, the court found that without them, round hay balers can nevertheless compress crops into bale form and secure the bales with alternative materials. The court distinguished these claimed parts from materials that are permanently affixed to the machine of which they are a part since Netwraps do not remain affixed to round hay balers after the bailing process. The second analysis centered on whether the claimed part, at the time of importation, is “dedicated solely for use” in such article. Although the parties did not contest this issue, the court asserted that Netwraps have only one commercial use which is to wrap hay or silage bales. The court applied the same analysis to reject the argument that Netwraps are parts of other agricultural machinery.