CIT Rules Canada Lumber with an Angle Cut is HTS 4407 Sawn Wood

July 2, 2010 by Marie Rapport|Penalties and Courts

In Canex International Lumber Sales Ltd., v. U.S., the Court of International Trade ruled that cut lumber, with an angle cut on one end and a square cut on the other end was properly classified as sawn wood under Harmonized Tariff Schedule (HTS) 4407.10.0015 free of duty, and not as roof trusses under 4418.90.4020 at 3.2% ad valorem, or as other articles of wood under 4421.90.9840 at 3.3% ad valorem.

Between April and November 2000, Canex imported merchandise consisting of 2x4 and 2x6 spruce-pine-fir, machine stressed rated lumber of varying lengths that had been angle cut on one end and square cut at the opposite end. On entry, Canex filed an end use statement certifying that the lumber was purchased for use as truss components and that the angle cut was used in finished trusses.

U.S. Customs and Border Protection classified and liquidated the merchandise under HTS heading 4407, and also issued notices of liquidated damages to Canex for failing to provide the permits required under the U.S. and Canada Softwood Lumber Agreement.

Canex conceded that its lumber could be used by purchasers as ordinary dimension lumber, but they argued that because the lumber would require further re-cutting, it was more than dimension lumber. Further, they stated that the imported merchandise was suitable for use in truss construction and should be classified under HTS 4418.

The CIT stated that the imported merchandise was not classifiable under HTS 4418 because it was neither readily identifiable as roof truss pieces, nor was it sufficiently advanced to be dedicated solely or principally for use in roof trusses.

Canex alternatively asserted its merchandise should be classified under HTS heading 4421 because of its machine rated grade, species, load bearing tensile strength and precision angle cut at one end. The CIT stated that none of these items would preclude classification under HTS heading 4407.

The CIT noted that this merchandise was identical in all pertinent respects to the merchandise at issue in two previous court cases Millenium I and Millenium II, in which the court held that 2x3, 2x4, and 2x6 SPF lumber of even lengths, which was cut to precise angle on one end and square cut on the other end and intended to be used in trusses, was considered properly classified as standard dimension lumber under HTS heading 4407.

BP Note

During this period, lumber classified under HTS 4407 required a permit under the U.S. and Canada Softwood Lumber Agreement. In addition, the Customs regulations required that a bond be filed on importation and entry with a condition that the principal agreed to establish to the satisfaction of Customs within twenty business days that the Government of Canada had issued an export permit. If the permit was not filed liquidated damages could be assessed equal to $100 per thousand broad feet. Canex did not submit the permit within the allotted time.

(See ITT’s Online Archives or 03/16/09 news 09031635, for BP summary of Millenium II case affirming classification under HTS 4407 of lumber used in manufacturing roof trusses. CAFC Slip Op 07-1401.)

Slip Op. 10-74 (dated 06/29/10)