US Requests Rehearing on Case Involving Classification of 'Parts of Parts' for Aircraft Brakes
The United States sought Feb. 28 a rehearing of the Court of International Trade’s decision regarding the classification of precut chordal, radial and web fabric pieces used in airplane brakes. The products’ importer, Honeywell, would avoid duties if the ruling stands (Honeywell International Inc. v. U.S., CIT # 17-00256).
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The case, Judge Mark Barnett has said, considers “the extent to which a part of a part is a part for tariff purposes.” The fabric pieces in question are components of aircraft brake discs, which are themselves components of aircraft braking systems.
In its rehearing motion, the government argued that General Rule of Interpretation 2(a) -- which says tariff terms apply to incomplete or unfinished articles with the same essential character -- should have been applied in this case, saying the rule allows for analysis of parts, not just "articles."
Honeywell successfully argued before the trade court that the fabric pieces were “parts of an aircraft” under Harmonized Tariff Schedule heading 8803, not “fabrics” under heading 6307 (see 2409090038) and 2410070026). Barnett preferred the former heading because the parts don’t have any other purpose and don’t require further processing before serving as brake disc components (see 2501300051).
But the court’s ruling “neglected to consider the application of necessary legal principles,” the U.S. argued in its rehearing motion.
Applying the first GRI, the court actually agreed that the fabric pieces prima facie fell under the government’s favored heading, heading 6307, the U.S. noted. But it ultimately concluded, “using a flawed analysis” that meant forgoing any consideration of GRI 2(a), that the products fell under heading 8803 based on GRI, the government said.
Before it can consider which heading is most specific, the court had to consider whether the fabric pieces were “unfinished parts” of brake discs, the U.S. said. If it did so, it would have analyzed the products’ “essential character” and likely determined that they didn’t have the same essential character of the brake discs.
“Paradoxically, the Court recognized that the status of an article being finished or unfinished is relevant to the classification decision here,” but failed to pursue the proper analysis, the government said. It noted the court “understood the segments to be arguably unfinished because ‘[a]t first glance, the segments do not look like parts of aircraft,’ they ‘are not installed directly on an aircraft,’" and "the segments ‘are used in their condition as imported to produce the needled preforms that are, thereafter, used in the manufacturing of aircraft brake discs.’”
Instead of conducting the proper HTS analysis, the court wrongly undertook a “common law parts analysis,” the government said. In a footnote, the court “infer[red]” that GRI 2(a) doesn’t apply to parts, but the provision orders that “[a]ny reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished.” Nothing in its text “precludes a ‘part’ from being an ‘article,” it said.
The court also will sometimes forgo a GRI 2(a) analysis because many goods are obviously not unfinished, but this was not true of this case, it said. As a result, the court’s failure to analyze the issue by following the hierarchical interpretation rules of the tariff schedule was an error, it argued.