Textiles Must Be 'Completely Embedded' for Classification as Chapter 39 Plastics, CAFC Says
Textiles are “completely embedded” in plastics, and classifiable in chapter 39 of the tariff schedule, when their fibers are fixed by a surrounding mass of plastic, though the plastic does not necessarily have to cover all sides of the fibers, the U.S. Court of Appeals for the Federal Circuit said in a May 2 decision affirming a lower court on the classification of sausage casings.
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Kalle USA argued its sausage casings, made of a woven textile sheet coated on one side with a thin plastic layer that only fills the interstitial spaces between the fibers, should have been classified in subheading 3917.39.0050 as plastic tubes, dutiable at 3.1 percent. Instead, CAFC ruled CBP and the Court of International Trade were correct in classifying them as made-up textiles of subheading 6307.90.98, which carries a 7 percent duty (see 1711030046).
The section notes for textiles and the notes to chapter 63 delineate that some plastic-coated textiles are classifiable as textiles, and others are considered plastics for tariff classification purposes. Plastic-coated textiles are classifiable in chapter 59 of the tariff schedule, and specifically in heading 5903, which covers textile fabrics that have been impregnated, coated, covered or laminated in plastic.
Note 2(a)(3) to heading 5903 sets the dividing line. It says heading 5903 does not cover products in which the textile fabric is either “completely embedded in plastic or entirely coated or covered on both sides with such material.” Instead, such products fall in chapter 39, CAFC said. “[T]o be ‘completely embedded,’ the fabric must be ‘completely’ or entirely fixed in a surrounding mass of plastic.” Because Kalle’s casings are not fixed in a surrounding mass of plastics, they are not completely embedded in plastics for tariff classification purposes, and are classifiable as textiles, CAFC said. “Kalle’s casings do not fix the fabric in a surrounding mass of plastic. Rather, the casings have a plastic coating on one side,” it said.
However, this does not require “every surface of the fiber to be fixed and surrounded by a mass of plastic,” CAFC ruled. “For example, a fabric may be ‘completely embedded’ in plastic by applying plastic to one side of the fabric such that plastic fixes the fabric in a surrounding mass, even if not on all sides. In contrast, a fabric may be 'covered on both sides' with plastic by applying a sheet of plastic to each side of the fabric, even though the fabric is not fixed in a surrounding mass of plastic,” the appeals court said.
Though that last point did not change the classification outcome for Kalle, it did generate some disagreement in a concurring opinion from Circuit Judge Todd Hughes. “I would find that the phrase 'completely embedded in plastics' requires every surface of a fabric’s fibers to be surrounded by plastic,” he said. To read otherwise would be to give effect to the word “completely” in the phrase “completely embedded,” Hughes said. “Here, although Kalle’s casings may be ‘embedded’ in plastic because the plastic coating is fixed to the fabric and fills the fabric’s interstices, the casings are not 'completely embedded' because their inner surfaces are free of plastic,” he said.
(Kalle USA v. U.S., CAFC # 2018-1378, dated 05/02/19, Judges Dyk, Chen and Hughes)
(Attorneys: Federic Van Arnam for plaintiff-appellant Kalle USA; Hardeep Josan for defendant-appellee U.S. government)