US Says CIT Skirted GRI 2(a) Analysis in Customs Decision, Vies for Rehearing
The Court of International Trade committed "clear error" in classifying Honeywell's precut, radial, chordal and web fabric pieces used in airplane brakes as part of an aircraft under Harmonized Tariff Schedule heading 8803 without performing a GRI 2(a) analysis, the U.S. argued. Defending its bid for a rehearing before the trade court, the government said Honeywell's claim that there's no "significant flaw" in the CIT's decision ignores the fact that the court at no point found the brake segments to be a "finished part" (Honeywell International v. United States, CIT # 17-00256).
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In January, the court held that Honeywell's brake segments were "parts of an aircraft" under heading 8803 and not "fabrics" under heading 6307 (see 2501300051). Judge Mark Barnett said heading 8803 won out since the parts don't have any other purpose and don't require further processing before serving as brake disc components.
The U.S. sought a rehearing of this decision, arguing that the court erred by focusing on the post-importation "downstream use" of the segments in the manufacturing of needled preforms. In the court's decision, Barnett described the brake discs' manufacturing process, including the role of the imported radial, web and chordal segments in that process.
In short, the segments are made into needled preforms, which are then made into carbonized preforms. These preforms are then manufactured into carbon-carbon preforms, and, finally, into carbon-carbon aircraft brake discs, the U.S. said. The government argued that Barnett erred in failing to address whether the imported segments or the needled preforms "constituted a finished or unfinished 'part' of an aircraft" under GRI 2(a) (see 2503030041).
GRI 2(a) holds that tariff terms apply to unfinished or incomplete articles with the same essential character as finished products.
The U.S. claimed that a GRI 2(a) analysis is needed, since it shows that "only finished parts or unfinished parts with the essential character of the finished part, can be classified as the finished article." The government added that Barnett also "misinterpreted an applicable note, i.e., Note 3 to Section XVII, HTSUS, by interpreting the Note’s language of 'suitable for use solely or principally with the articles of those chapters' to include goods which are suitable for use in the manufacture of articles of those chapters." The U.S. said the judge went against the note's "plain meaning."
Responding to Honeywell's claim that the U.S. is just trying to relitigate the case, the government said Honeywell ignores the fact that Barnett never engaged in a GRI 2(a) analysis. "Nowhere in the opinion does the Court explicitly state that the imported segments are a finished part of an aircraft," the brief said. Instead, Barnett classified the segments as aircraft parts, since they are "identifiable to the downstream article and are used for no other purpose," the brief said.
The U.S. added that it was "clear error" to engage in a GRI 3(a) analysis without first engaging in a GRI 2(a) analysis. Honeywell said while the brake segments may be prima facie classifiable in heading 6037, it's a separate issue from whether the brake segments properly fit in this tariff provision. The government said the "basis" for this claim is "unclear as these issues are directly addressed in the design and hierarchal structure of the GRIs."
Courts are only to choose between two tariff provisions under GRI 3 if one can't be chosen under either GRI 1 or 2(a). "Perhaps, when the finished state of the article is clear, an extensive consideration of GRI 2(a) may not be necessary," the brief said. "But for the facts of this case, the physical state of the segments (which are unfinished) is central to arriving at the proper classification, and the framework of GRI 2(a) must be applied if classification cannot be resolved through GRI 1."