CLA-2 OT:RR:CTF:TCM H242030 HvB
Port Director
U.S. Customs and Border Protection
Port of Charlotte
1901 Cross Beam Drive
Charlotte, North Carolina 28217-2823
Attn: Elizabeth Orraca, Import Specialist
RE: Cold Foils; Application for Further Review of Protest Number 1512-12-100118
Dear Port Director:
This is in response to the Application for Further Review (AFR) of Protest 1512-12-100118, dated September 7, 2012, by counsel on behalf of Kurz Transfer Products, L.P. (Protestant), in response to your classification of cold foils under the Harmonized Tariff Schedule of the United States (HTSUS).
FACTS:
On May 10 and 18, 2011, the Protestant entered the subject merchandise through Port of Charlotte, NC in heading 3212, HTSUS as “stamping foil” and “hot stamping foil.” The entries were liquidated accordingly on March 23 and March 30, 2012. However, on September 7, 2012, the Protestant filed a Protest and AFR with the Port and took the position that the subject merchandise is classifiable as “transfers” in heading 4908, HTSUS. The Protest was timely filed, and an AFR was forwarded for our consideration.
On December 3, 2012, the Port issued a Request for Information (CF-28) to the importer in which descriptive or illustrative information on the merchandise was requested. Counsel for the importer responded via a letter to the port dated January 3, 2013. On July 30, 2013, counsel sent us a supplemental submission. Included were samples and product brochures of the subject merchandise. In making a decision, we took into consideration these additional materials.
The subject merchandise consists of plain metallic cold foils that are imported in rolls and are identified as “Alufin KPW OP, Alufin KPS-OF, and Colorlit Luxor, Alufin Foils” on the invoices. This decision covers the entries at issue. None of the entries cover patterned cold foils.
The cold foils consist of metallized thin sheets that are used in commercial print jobs such as magazines, and household consumable product labels (e.g., beverage and toothpaste packaging labels). Each foil consists of six layers: a protective resin top coat, a PET (polyethylene terephlate) layer, a release coat layer, an aluminum layer, a tie coat layer that acts as an inner coat adhesive, and an adhesive sizing coat layer.
Like hot stamping foils, the cold foil process uses standard printing plates, i.e., either offset or flexographic printing, and pressure to apply the foil to the substrate, which in this case consists of plastic or non-absorbent paper. The cold foil process happens as follows: First, using offset or flexographic printing plates mounted on cylinders, the desired image is printed or laminated onto the substrate, via pressure. Next, an adhesive is applied to the substrate in the desired design or pattern by means of a printing unit. Next, the cold foil is introduced via print cylinders and the adhesive-coated substrate is then pressed together with the cold foil by means of a nip roller (pressure). Ultraviolet (UV) light is then used to cure the adhesive through the foil, allowing it to bond to the substrate. Excess foil is then removed. The PET layer is then removed before final presentation.
In its marketing materials and in brochures, the Protestant indicates that the instant cold foils are similar to hot stamping foils, e.g., “Kurz cold stamping foils possess the same quality characteristics you have come to expect from our hot stamping foils.” In a brochure, the Protestant describes the instant KWP and KP cold foils as follows: “KPW or KP are used to signify those foils that can be processed by means of cold foil transfer process”. In addition, the Protestant describes the subject Alufin foil (along with its other product line, Luxor) as follows:
LUXOR® (gold and metallic colors) and ALUFIN® (silver) - the umbrella name in the KURZ Group for its wide range of grades of aluminium [sic] metallized foils - is synonymous with expertise in hot stamping technology and highest quality stamping foils.
Thus, the Protestant markets its cold foils as “stamping foils.”
Protestant states that the aluminum pigment layer comprises the main layer and that the customer removes the protective PET layer after application to the substrate. The instant cold foils are imported and sold under the color names “Luxor” and “Alufin”. Protestant states that heat is not used during the printing process, and asserts that the subject merchandise is classifiable as transfers in heading 4908, HTSUS.
ISSUE:
Whether the subject cold foils are classified under subheading 3212, HTSUS, as stamping foils, or under heading 4908, HTSUS, transfers.
LAW AND ANALYSIS:
Initially we note that the matter is protestable under 19 U.S.C. §1514(a)(2) as a decision on classification and the rate and amount of duties chargeable. The protest was timely filed on September 7, 2012, within 180 days of liquidation, pursuant to 19 U.S.C. §1514(c)(3). Further review of Protest 1512-12-100118 was properly accorded to protestant pursuant to 19 C.F.R. §174.24. Specifically, in accordance with Section 174.24(c), the decision against which the protest was filed is alleged to be inconsistent with a ruling of the Commissioner of Customs or his designee. Specifically, Protestant alleges that the Port’s decision is inconsistent with New York Ruling Letter (NY) L88019, dated October 31, 2005.
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order.
The following provisions of the HTSUS are under consideration:
3212 Pigments (including metallic powders and flakes) dispersed in nonaqueous media, in liquid or paste form, of a kind used in the manufacture of paints (including enamels); stamping foils; dyes and other coloring matter put up in forms or packings for retail sale:
3212.10 Stamping foils
4908 Transfers (decalcomanias):
4908.90 Other
Note 6 to Chapter 32, HTSUS, provides:
The expression "stamping foils" in heading 3212 applies only to thin sheets of a kind used for printing, for example, book covers or hat bands, and consisting of--
(a) Metallic powder (including powder of precious metal) or
pigment, agglomerated with glue, gelatin or other binder; or
(b) Metal (including precious metal) or pigment, deposited on a
supporting sheet of any material.
* * *
The Harmonized Commodity Description and Coding System Explanatory Notes ("ENs") constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
EN 32.12 provides, in relevant part:
(B) STAMPING FOILS
These products (also known as blocking foils) consist of thin sheets of either:
(1) Metallic powder (including powder of precious metal), or pigment, agglomerated with glue, gelatin or other binder, or
(2) Metal (including precious metal) or pigment, deposited by vaporisation, cathodic sputtering, etc., on a supporting sheet of any material (e.g., paper, plastics).
They are used, with the application of pressure (and generally of heat), for printing book covers, hat bands, etc., by hand or machine.
EN 49.08 provides, in relevant part:
Transfers (decalcomanias) consist of pictures, designs or lettering in single or multiple colours, lithographed or otherwise printed on absorbent, lightweight paper (or sometimes thin transparent sheeting of plastics), coated with a preparation, such as of starch and gum, to receive the imprint which is itself coated with an adhesive. This paper is often backed with a supporting paper of heavier quality. The designs are sometimes printed against a background of metal leaf.
When the printed paper is moistened and applied with slight pressure to a permanent surface (e.g., glass, pottery, wood, metal, stone or paper), the coating printed with the picture, etc., is transferred to the permanent surface.
This heading also covers vitrifiable transfers, i.e. transfers printed with vitrifiable preparations of heading 32.07.
Transfers may be used for decoration or utility purposes, e.g., for decorating pottery or glass, or for marking various articles such as vehicles, machines and instruments.
...
The heading also excludes transfer paper of the types known as stamping foils or blocking foils, prepared with a coating of metal, metal powder or pigment, and used for printing book covers, hat bands, etc. (heading 32.12). Other transfer papers, as used in lithographic work, fall in heading 48.09 or 48.16 as appropriate.
* * *
Since EN 49.08 excludes “stamping foils” of heading 3212, and such exclusion is consistent with the heading text, we first determine whether the instant cold foils are classifiable in heading 3212, HTSUS, before we can consider whether they meet the terms of heading 4908, HTSUS. The subject merchandise consists of metal on a supporting sheet applied to substrates using conventional printing methods which utilize pressure and UV light to print the intended foil design onto the substrate in accordance with Note 6 to Chapter 32 and EN 32.12.
Protestant contends that because heat is not used to apply the instant cold foil to a substrate, the instant goods are not described by heading 3212, HTSUS, as stamping foils because of the parenthetical “and generally of heat” in EN 32.12. However, we do not find support for this statement. The EN does not restrict the heading to those foils that utilize heat. Furthermore, the ENs, which are persuasive but not binding authority, cannot be used to narrow the scope of the legal text of a heading. Consequently, the application of heat is not required for goods of heading 3212, unless the legal text requires otherwise. See Chevron, U.S.A., Inc. v. NRDC, Inc., 467 U.S. 837 (1984). See, e.g., Headquarters Ruling Letter (HQ) 956644, dated December 8, 1994, in which CBP stated that the examples provided in the ENs for heading 3504, HTSUS, were illustrative and not restrictive. See also HQ H027186, dated March 30, 2010.
On the contrary, the instant merchandise is applied to a substrate in exactly the same way and for the same purposes as hot stamping foils, but for the use of UV light to cure the adhesive rather than the use of heat. The term “generally” in the EN alludes to this difference in methods of curing the adhesives of stamping foils. In both cases, energy is imparted to the adhesive layer to effect change in the chemical composition of the adhesive, thus allowing the foil to be bound to the target substrate. Therefore, the product is completely described by heading 3212, HTSUS.
Moreover, heading 4908, HTSUS, provides for “transfers (decalcomanias)” and describes a product, which as imported, transfers its already present image to an object. See HQ 965703, dated August 13, 2002, and HQ H092455, dated December 3, 2010 (classifying hologram stamping foils in heading 3212); See also EN 49.08. However, in the case of the Protestant’s cold foils, the essential design or image intended by the stamping process is imparted by the printing of the adhesive which determines the shape of the foil image. Unlike transfers of heading 4908, the intended final image is not present on the instant merchandise but is formed when an external stamp affixes the foil to the surface of the target, creating the intended image. Hence, the merchandise is not described by the terms of heading 4908.
In its supplemental submission, Protestant also cites to NY 808304, dated March 30, 1995, which was issued to the Protestant’s former corporate entity, for the proposition that CBP has ruled that stamping foils with images printed on the surface before importation are classified in heading 4908, HTSUS. In NY 808304, CBP classified a “Touchwood Transfer finish” in heading 4908, HTSUS. That ruling is distinguishable for several reasons. First, the article classified in NY 808304 did not meet the terms of Note 6 to Chapter 32, as it did not contain any metal and it consisted of a transparent sheet of plastic film bearing a printed woodgrain design. The instant cold foil, however, is comprised of metallized thin sheets and otherwise meets the terms of Note 6 to Chapter 32. Second, the application process differs, in that the Touchwood Transfer finish bears a design that is transferred from a carrier film and then applied to hardboard or fiberboard panels for use on furniture to create the appearance of expensive veneer. The instant cold foils, however, are used to print package labels for household consumables, such as liquor label bottles and toothpaste package labels. Third, the Touchwood Transfer finish classified in NY 808304 bears a pre-printed woodgrain design that is transferred in its entirety to substrates like furniture, unlike the instant cold foils which are printed directly onto the substrate to create the desired design or image. Thus, the products have distinct end uses and application processes.
In further support of its argument, Protestant cites to a ruling issued to itself by the German Customs Authority finding that cold foils should be classified in heading 4908 as transfers. However, CBP is not bound by decisions issued by other governments. A foreign ruling is merely instructive of how others may classify like goods and does not bind classification upon importation into the United States. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989). See HQ 960428, dated December 15, 1997, and HQ W968379, dated January 25, 2007.
By application of GRI 1, the subject cold foils are classified as “ stamping foils” in heading 3212, HTSUS, specifically subheading 3212.10, HTSUS (2012), as “Pigments…; stamping foils; dyes and other coloring matter put up in forms or packings for retail sale: stamping foils.” Accordingly, we need not address Protestant’s argument that the cold foils are classifiable pursuant to GRI 3.
HOLDING:
By application of GRI 1, the subject cold foils are classified as “ stamping foils” in heading 3212, HTSUS, specifically subheading 3212.10, HTSUS (2012), as “Pigments…; stamping foils; dyes and other coloring matter put up in forms or packings for retail sale: stamping foils.” The column one, general rate of duty is “4.7%”.
You are instructed to DENY the protest. In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision.
Sincerely,
Myles Harmon, Director
Commercial and Trade Facilitation Division