The Court of Appeals for the Federal Circuit affirmed March 7 that U.S. Customs and Border Protection properly classified net wraps as warp knit fabrics under HTSUS 6005.39.00 (10 percent duty) rather than as parts of harvesting machinery under HTSUS 8433.90.50 (duty-free) or parts of agricultural machinery under HTSUS 8436.99.00 (duty-free).
The products at issue are two types of net wrap, both of which are synthetic fabrics used to wrap around bales of harvested crops (e.g., hay, straw, silage) so that when the bales are released from the baling machine they maintain their compressed, round structure and are easier to transport. These wraps are made up of high-density polyethylene film layers that have been knit on a Raschel machine and wrapped around a cardboard core.
The CAFC stated that the wraps do not qualify as parts of harvesting or agricultural machinery because they are used by those machines as inputs and serve their key function (maintaining the shape of the compressed bale) outside the machines. The court pointed to previous rulings that consumable items are not dedicated solely for use with a machine (and thus considered parts) simply because they are used exclusively by that machine.
The CAFC also said that the wraps are not integral to the function of the baling machines, which are capable of collecting crop pieces and compacting them into a bale without the wraps.
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