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Imported Net Wraps Are 'Parts' of Balers, Importer Argues in CAFC Appeal

Imported net wraps used to secure crops in a round bale should be classified as parts of agricultural machines rather than as "warp knit fabric," importer RKW Klerks argued in its Feb. 2 opening brief at U.S. Court of Appeals for the Federal Circuit. The appeal asks the court to reverse the judgment of the Court of International Trade and hold that imported netwrap is properly classified either as parts of hay balers under subheading 8433.90.50 or as parts of agricultural machinery under subheading 8439.90.00, both duty-free. In the further alternative, RKW asked the court to remand the case to CIT for further proceedings (RKW Klerks v. United States, Fed. Cir. # 23-1210).

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The netwrap at issue is dedicated solely for use with hay baling machines to wrap bales of hay, which meets CAFC's legal standard for a part by being "dedicated solely for sure with" hay baling machines, RKW argued. The netwrap "has only a single use," RKW said, "to wrap bales of hay produced in a baling machine." CIT ruled that to qualify as a "part," the netwrap had to meet two tests. The first test was passed due to the netwraps' sole use with baling machines. However, CIT found that the netwrap did not meet the second test as it was not an "integral, constituent, or component part, without which round hay balers could not function," and said that the netwrap’s function was distinct from the baling machine’s function. In an Oct. 4 opinion, the trade court upheld CBP's classification under 6005.39.00 as "warp knit fabric," dutiable at 10% (see 2210050032).

The lower court erred by requiring the netwraps to meet both tests, RKW argued. CIT "erroneously required netwrap to meet the 'integral to the function' test in addition to the 'dedicated solely for use with' test." RKW argued that CIT also erred because its netwrap does satisfy both tests even if that should not be a requirement. The netwraps are integral to one of a baling machine’s functions, RKW said, that of "producing hay bales wrapped with netwrap so that they retain their shape after being released." Further, its disposable and consumable nature, does not prevent it from being a "part," contrary to CIT's decision, RKW said.

Finally, RKW argues that CIT put undue weight on Wilbur-Ellis Co. v. U.S., which was decided in 1939. That case held that steel bale ties used to secure bales of hay were “not integral, constituent, or component parts of hay balers. CIT did not make a "critical distinction" that the 1930s baling machines evaluated in Wilbur-Ellis did not attach the ties to the bales and so did not produce hay bales that were secured with bale ties. The operation of tying bales was done by hand at the time Wilbur-Ellis was decided. Because securing bales was not a central function of the vintage balers it was incorrect to apply that standard to modern baling machines, RKW argued.