CLA-2 RR:CTF:TCM 968266 KBR
Gordon C. Anderson
C.H. Robinson Worldwide, Inc.
8855 Columbine Road
Eden Prairie, MN 55347-4148
RE: Classification and Country of Origin; Gift Card
Dear Mr. Anderson:
This is in reference to your letter on behalf of Americhip Inc., dated May 17, 2006, to the Bureau of Customs and Border Protection (“CBP”), National Commodity Specialist Division, New York, in which you requested a binding ruling concerning the classification under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA), and the country of origin marking, of gift cards. You provided a sample for our review.
The article involved is a plastic gift card. The card measures approximately 2 1/8 inches by 3 3/8 inches. The gift card is printed in China with a picture of a wrapped package and a trademarked store logo on the front. The back of the gift card is printed with the terms and conditions of using the gift card. Also printed on the back of the card is the statement “Made in China.” After importation a bar code must be printed on the gift card. Upon purchase by a consumer, a cashier must “activate” the card at which point a variable dollar value is designated for the card in the retailer’s automated inventory/checkout system. The cost of the imported gift card is nearly equal to the cost of printing the bar code.
You believe the card should be classified in subheading 4911.99.8000, HTSUSA, as “Other printed matter, including printed pictures and photographs: Other: Other: Other: Other.” You also believe that the gift card is substantially transformed by the processing after importation. Alternatively, if the gift card must be marked to indicate its foreign country of origin, you ask if the statement “Printed in PRC” is an acceptable country of origin designation.
What is the classification of the gift cards?
Are the gift cards substantially transformed by the post-importation processing?
LAW AND ANALYSIS:
Classification of merchandise under the HTSUSA is in accordance with the General Rules of Interpretation (GRI). GRI 1 provides that classification is determined according to the terms of the headings and any relative section or chapter notes. Merchandise that cannot be classified in accordance with GRI 1 is to be classified in accordance with subsequent GRI.
The Explanatory Notes (EN) to the Harmonized Commodity Description and Coding System represent the official interpretation of the tariff at the international level. The ENs, although neither dispositive nor legally binding, facilitate classification by providing a commentary on the scope of each heading of the HTSUSA, and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The HTSUSA provisions under consideration are as follows:
4907.00.0000 Unused postage, revenue or similar stamps of current or new issue in the country in which they have, or will have, a recognized face value; stamp-impressed paper; banknotes; check forms; stock, share or bond certificates and similar documents of title
4911 Other printed matter, including printed pictures and photographs:
The ENs for heading 4907, HTSUSA, include in that heading:
(F) Stock, share or bond certificates and similar documents of title. These are formal documents issued, or for issue, by public or private bodies conferring ownership of, or entitlement to, certain financial interests, goods or benefits named therein. Apart from the certificates mentioned, these documents include letters of credit, bills of exchange, travellers’ cheques, bills of lading, title deeds and dividend coupons. They usually require completion and validation.
Banknotes, cheque forms, and stock, etc., certificates are generally printed on special paper bearing special watermarkings or other marks, and are usually serially numbered. Lottery tickets printed on special security paper and serially numbered are, however, excluded from this heading and are generally classified in heading 49.11.
Products of the kinds described fall in this heading when in quantity as a commercial transaction, usually by the issuing authority, whether or not the documents (e.g., share certificates) require completion and validation.
The instant gift card is a private issuance which entitles the bearer to a financial benefit at the applicable store and also meets the description in the EN through its requirement to be validated at a cash register to activate the gift card. However, the articles described in the EN are formal business documents such as stock and bond certificates, using almost a calligraphic engraving quality in the printing. Although after activation it will have financial value, the instant gift card is of a more “commonplace” nature, more similar to store coupons.
CBP has repeatedly found that printed coupons are classified in heading 4911, HTSUSA. See NY 870276 (January 30, 1992), NY 869412 (December 30, 1992) and HQ 085476 (October 5, 1989). The coupons, like the instant gift card, are printed and may be given to the merchant for value, either a percentage discount or an actual dollar amount.
In HQ 961958 (November 5, 1999), involving certificates of authenticity, CBP discussed the differences between headings 4907 and 4911. Although a bar code was printed on the certificate, there was no value attached to the certificate. Therefore the certificate was classified in heading 4911. Likewise, the instant gift card has no value until after the gift card has been purchased and “activated.”
In NY 802460 (October 14, 1994), CBP found that another similar article, a plastic phone card, was classified in heading 4911, HTSUSA. One side of the plastic phone card was printed with the telephone company’s logo, a photo of a ski resort and the redemption value of $20. The back of the plastic phone card was printed with instructions for using the card, a special “800” telephone number, a unique 12 digit card number (“PIN”), and the phrase “Do not insert in telephone.” The PIN of the phone card is similar to the bar code of the instant gift card. Further, the phone card is not a necessary item to redeem the value. A consumer can memorize the PIN and not have to use the actual phone card. Therefore, there is no real value attached to the phone card itself. The phone card was classified in heading 4911. See also, HQ 086745 (July 3, 1990). The gift card, as imported without the bar code and before being activated, also has no value. Therefore, we find that the instant gift cards are classified in heading 4911, specifically subheading 4911.99.8000, HTSUSA, as “[o]ther printed matter, including printed pictures and photographs: [o]ther: [o]ther: [o]ther: [o]ther.”
Section 304 of the Tariff Act of 1930 (19 U.S.C. §1304), provides that, unless excepted, every article of foreign origin imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the United States the English name of the country of origin of the article. Congressional intent in enacting 19 U.S.C. §1304 was that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods, the country of which the goods is the product. "The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will." United States v. Friedlander & Co., 27 C.C.P.A. 297 at 302 (1940).
Part 134, CBP Regulations (19 CFR Part 134), implements the country of origin marking requirements and the exceptions of 19 U.S.C. §1304. Section 134.1(b), CBP Regulations (19 CFR 134.1(b)), defines "country of origin" as the country of manufacture, production or growth of any article of foreign origin entering the United States. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the "country of origin" within the meaning of the marking laws and regulations. The case of United States v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98)(1940), provides that an article used in manufacture which results in an article having a name, character, or use differing from that of the constituent article will be considered substantially transformed and, as a result, the manufacturer or processor will be considered the ultimate purchaser of the constituent materials. In such circumstances, the imported article is excepted from marking and only the outermost container is required to be marked. See, 19 CFR 134.35(a).
However, if the manufacturing or combining process is merely a minor one which leaves the identity of the article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff'd, 702 F.2d 1022 (Fed. Cir. 1983). The instant gift cards undergo minor processing after importation. The only operation performed after importation and prior to the purchasing decision is the printing of the bar code on the gift card. Further, activating the card at the cash register does not effect the card itself, but only notifies a computer program that the card has value. The printing of the bar code and the activation at a cash register although necessary, are simple operations requiring little effort or expertise.
In HQ 733085 (July 13, 1990) and HQ 558868 (February 23, 1995), CBP found that programming SecureID cards was a substantial transformation. However, the SecureID cards were much more complex articles than the instant gift cards. The SecureID had a memory, several electronic components, an LCD screen and underwent complex programming which significantly increased the article’s value. CBP has also found that writing a program onto a computer diskette is a substantial transformation of an unprogrammed diskette. See, e.g., HQ 732087 (February 7, 1990). However, the printing of a bar code is a much simpler action than programming a computer diskette. Therefore, the country of origin of the gift cards is China and the finished gift cards must be marked with that country of origin accordingly.
You also ask if the designation “Printed in PRC” is an acceptable country of origin marking for China. CBP has repeatedly found that the abbreviation “PRC” is not acceptable for country of origin marking purposes. See, e.g., HQ 560693 (March 6, 1998), and HQ 562901 (November 6, 2003).
In accordance with the above discussion, the gift cards are classified in heading 4911, HTSUSA, specifically subheading 4911.99.8000, HTSUSA, as “Other printed matter, including printed pictures and photographs: Other: Other: Other: Other.” The 2006 column one general rate of duty is Free.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUSA and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov/tata/hts.
The gift cards are not substantially transformed by the printing of a bar code and activation operations performed in the United States. The country of origin of the gift cards is China and the finished gift cards must be marked with the country of origin accordingly. The abbreviation “PRC” is not an acceptable country of origin marking designation.
Gail A. Hamill, Chief
Tariff Classification and Marking Branch