Tuesday, July 26, 2011

How Do You Classify a Diaper Machine? Depends.

The question in National Presto Industries v. United States, is whether an adult diaper-making machine is classified in 8441 as other machinery for making up paper pulp, paper, or paperboard or in 8479 as other machinery having an individual function, not specified or included elsewhere in Chapter 84. Typically, one would assume that 8441 will apply because it is more specific than 8479, which is a basket provision. But, that analysis skips past General Rule of Interpretation 1. If the goods fit in 8441, they go there.

Presto, the plaintiff in this case, reasoned that because Customs classifies diapers as articles of paper pulp, the machine that makes a diaper must fall within 8441. Presto backs this up with Customs and Border Protection rulings saying that paper pulp provides the essential character to diapers. In addition, the Explanatory Notes to 8441 broadly state that 8441 covers machinery for producing made up articles of paper pulp.

The government, argues that because paper pulp makes up only a portion of the diaper, 8441 does not fully describe the operation of the machine.

Relying entirely on GRI 1, the Court of International Trade rejected the government's argument. First, it found that the heading specifically requires an inquiry into the type of product produced by the machinery. That is a diaper. Second, diapers are products of paper pulp. Thus, the machine produces articles of paper pulp and, therefore, goes in 8441. Plato could not have said it better.

[Note to self: Best. Headline. Ever.]

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