AFR of Protest No. 3004-07-100006; Flexalcon packaging material

HQ H008142 November 26, 2008 CLA-2 OT:RR:CTF:TCM H008142 HkP CATEGORY: Classification TARIFF NO.: 3921.90.40 Port Director Port of Blaine U.S. Customs and Border Protection 9901 Pacific Highway Blaine, WA 98230 RE: AFR of Protest No. 3004-07-100006; Flexalcon packaging material Dear Port Director: This is our decision regarding the Application for Further Review (“AFR”) of Protest No. 3004-07-100006, timely filed by counsel on behalf of Alcan Packaging Food and Tobacco, Inc. (“Alcan”), concerning the classification of Flexalcon flexible packaging material under the Harmonized Tariff Schedule of the United States (“HTSUS”). Samples of the merchandise at issue were provided by counsel to this office in August 2007. In reaching our decision we have taken into consideration arguments made by counsel during a meeting with staff in this office on April 3, 2008, as well as in a supplemental submission received on April 18, 2008. FACTS: The merchandise at issue, Flexalcon, is described by Protestant as being flexible packaging (cold formable composite material) for retortable (sterilizable) products. It is a direct substitute for conventional packaging such as aluminum cans, steel cans, or glass jars, and has been used to package military rations. Flexalcon’s barrier properties protect the food contents of the package from the penetration of light, water vapor, oxygen, microorganisms, mold, yeast, odor and insects, and also prevents the loss of aroma, vitamins, liquid, fat and CO2/N2. It is made of aluminum and plastic layers adhered together through a lamination process. Flexalcon is imported in material lengths. Detailed information was submitted on 3 colors of Flexalcon: silver, MRE sand beige, and printed Pinnacle/Dial. For simplicity, the silver-colored material will be discussed as a representative sample. According to the submitted information, Flexalcon material used as a lid for packaging is a three layer sandwich construction consisting of 19 microns of polyethylene (PET) film, 12 microns of aluminum foil and 75 microns of polypropylene (PP) film laminated together with adhesive. The layers of plastics account for 83 % of the thickness, 72 % of the weight and 67 % of the value of the material. The middle foil layer accounts for 11% of the thickness, 23% of the weight and 25% of the value of the lid. The Flexalcon material used to make the body of packaging consists of 30 microns OPP (oriented polypropylene) film, 45 microns of aluminum foil, 15 microns of OPA (oriented polyamide, a nylon) film, and 75 microns PP film, with an adhesive between each layer. The plastics account for 67% of the thickness, 48% of the weight, and 44% of the value of the material. The aluminum foil accounts for 25% of the thickness, 48% of the weight, and 49% of the value. Adhesive accounts for the balance. According to the submitted information, the aluminum used to make the lid is thinner than the aluminum used to make the base of the packaging because the lids do not need to be formed. According to the Flexalcon Fact Sheet, plastics, while having barrier properties, allow oxygen migration and result in a packaged food product having a maximum shelf-life of 14-21 days. Aluminum provides barrier properties for at least three years of shelf-life. Because of its metal properties, Flexalcon has a low oxygen transmission rate of 0.06 ccm/m2/24h/atm, and a low water transmission rate of 0.01g/m2/24h. The Fact Sheet also states that the plastic components provide specific support functions for the aluminum. Specifically, the plastic improves deep drawing formability, which refers to the extent to which the material can be drawn or stretched to form a pocket in the base material. Without plastic the base material can only be drawn 10% of the width of the material but with plastic, it can be drawn 20 – 30%. The OPA film increases bursting strength, improves piercing and pinhole strength and sustains the aluminum during forming. The OPP film protects the aluminum from mechanical and chemical influences. The PET film provides protection for the aluminum and provides a surface for printing. Finally, the PP film improves package stiffness and supports the sealing together of the base and the lid. Included in the supplemental information provided by Protestant was a letter from the Department of the Army which stated, among other things, with respect to military rations packaging: From a barrier standpoint, the most critical component of the flexible packaging material is the aluminum layer because of its inherent barrier properties. These barrier properties are responsible for keeping light, moisture, oxygen and micro-organisms out of the packaged food, and keeping aroma, vitamins, liquid and flavor in. Studies have shown that the use of aluminum foil offers the highest rate of impermeability. It also enables packaged food to meet or exceed the mandatory requirement of having a minimum shelf life of three years at 80°F. The merchandise was entered on various dates between October 23, 2005, and March 19, 2006, in subheading 7607.20, HTSUS, which provides for: “Aluminum foil (whether or not printed, or backed with paper, paperboard, plastics or similar backing materials) of a thickness (excluding any backing) not exceeding 0.2 mm: Backed.” These entries were rate advanced by U.S. Customs and Border Protection (“CBP”) and liquidated under subheading 3921.90, HTSUS, which provides for: “Other plates, sheets, film, foil and strip, of plastics: Other.” The entries were liquidated on August 18, 2006. A protest was timely filed on February 13, 2007, in which Protestant asserted that the proper classification is under subheading 7607.20, HTSUS. ISSUE: What is the proper classification of Flexalcon flexible packaging material under the HTSUS? What is the meaning of the term “backed” for purposes of heading 7607, HTSUS? LAW AND ANALYSIS: Initially, we note that the matter protested is protestable under 19 U.S.C. §1514(a)(2) as a decision on classification. The protest was timely filed within 180 days of liquidation of the first entry for entries made on or after December 18, 2004. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, § 2103(2)(B)(ii), (iii) (codified as amended at 19 U.S.C. § 1514(c)(3) (2006)). Further Review of Protest No. 3004-07-100006 was properly accorded to protestant pursuant to 19 C.F.R. § 174.24 because the decision against which the protest was filed is alleged to be inconsistent with a ruling of the Commissioner of Customs or his designee with respect to the same or substantially similar merchandise. 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 HTSUS provisions under consideration are as follows: 3921 Other plates, sheets, film, foil and strip, of plastics: * * * 3921.90 Other: 7607 Aluminum foil (whether or not printed, or backed with paper, paperboard, plastics or similar backing materials) of a thickness (excluding any backing) not exceeding 0.2 mm: * * * 7607.20 Backed: Note 10 to Chapter 39 provides: In headings 3920 and 3921, the expression “plates, sheets, film, foil and strip” applies only to plates sheets, film, foil and strip (other than those of chapter 54) and to blocks of regular geometric shape, whether or not printed or otherwise surface-worked, uncut or cut into rectangles (including squares) but not further worked (even if when so cut they become articles ready for use). Note 1(d) to Chapter 76 provides, in relevant part: Flat-surfaced products (other than the unwrought products of heading 7601) coiled or not, of solid rectangular (other than square) cross section with or without rounded corners (including “modified rectangles” of which the two opposite sides are convex arcs, the other two sides being straight, of equal length and parallel) of a uniform thickness[.] …. Headings 7606 and 7607 apply, inter alia, to plates, sheets, strip and foil with patterns (for example, grooves, ribs, checkers, tears, buttons, lozenges) and to such products which have been perforated, corrugated, polished or coated, provided that they do not thereby assume the character of articles or products of other headings. The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the HTSUS. While not 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 at the international level. See T.D. 89-80, 54 Fed. Reg. 35127 (Aug. 23, 1989). The General ENs to Chapter 39 provide, in relevant part: * * * This Chapter also covers the following products, whether they have been obtained by a single operation or by a number of successive operations provided that they retain the essential character of articles of plastics: …. (b) Plates, sheets, etc., of plastics, separated by a layer of another material such as metal foil, paper, paperboard. EN 39.21 provides, in relevant part: This heading covers plates, sheets, film, foil and strip, of plastics, other than those of heading 39.18, 39.19 or 39.20 or of Chapter 54. It therefore covers only cellular products or those which have been reinforced, laminated, supported or similarly combined with other materials. (For the classification of plates, etc. combined with other materials, see the General Explanatory Note.) The General ENs to Chapter 76 provide, in pertinent part: Products and articles of aluminum are frequently subjected to various treatments to improve the properties or appearance of the metal, to protect it from corrosion, etc. These treatments are generally those referred to at the end of the General Explanatory Note to Chapter 72, and do not affect classification of the goods. The General ENs to Chapter 72 provide, in relevant part: (C) Subsequent manufacture and finishing The finished products may be subjected to further finishing treatments or converted into other articles by a series of operations such as: …. (2) … …. (d) Surface finishing treatment, including: …. (v) coating with non-metallic substances, e.g., … coating with ceramics or plastics[.] …. (g) Lamination[.] Protestant believes that Flexalcon is properly classified in heading 7607, HTSUS, as backed aluminum foil, using a GRI 1 analysis. In support of classification in heading 7607, HTSUS, as “backed” foil, Protestant cites Headquarters Ruling Letter (“HQ”) 967682, dated December 14, 2005, in which CBP classified sheets of flexible magnetic shielding material, known as “Finemet,” as a flat-rolled product of other alloy steel of heading 7226, HTSUS. Finemet consisted of 5 alternating layers: (1) PET film, (2) adhesive, (3) Finemet ribbon, (4) adhesive, and (5) PET film. The production process was described in HQ 967682 as follows: “Alloy steel, in ribbon form, is first produced by ejecting molten steel from a crucible onto a rotating chill roll. The molten steel is rapidly quenched, then heat treated, after which adhesive is applied to both sides and PET is applied by a laminating process.” CBP found that the uniting of the five alternating layers of PET film and alloy steel ribbon constituted “lamination,” which was designed to improve the properties of the alloy steel ribbon. Protestant is of the view that, like the Finemet product, Flexalcon should be classified as a flat metal product under the appropriate chapter for aluminum. In support of this, Protestant cites the General Explanatory Note to Chapter 76, which explains, among other things, that aluminum products and articles may be subjected to various treatments, such as lamination, that do not affect the classification of those goods in Chapter 76, HTSUS. See General EN to Chapter 76. See also General EN to Chapter 72 (incorporated by reference into the General EN to Chapter 76). HQ 967682 is one of a series of rulings that revoked previous CBP decisions on the classification of laminated steel sheeting. See 39 Cust. B. & Dec. No. 43, October 19, 2005, Proposed Revocation of Ruling Letters and Treatment Relating to Tariff Classification of Laminated Steel Sheet. Those decisions concerned the issue of whether lamination advanced flat-rolled steel beyond the scope of Chapter 72. The analysis in HQ 967682 was not based on a determination of whether or not the product at issue in that case was backed, which is the question here. Consequently, we are unable to rely on its analysis because it does not assist in construing the provisions of heading 7607, HTSUS. Protestant argues that backed foil of heading 7607, HTSUS, can have two backs and relies on the phrase “excluding any backing” found in the text of heading 7607, HTSUS. In particular, Protestant focuses on the meaning of the term “any” in that phrase, the adjectival form of which is defined in Webster’s Third New International Dictionary (1976) and quoted by Protestant as meaning, among other things, “one, some or all indiscriminately of whatever quantity.” The parenthetical phrase “excluding any backing” is not commentary on the definition of the word “backing” or on the way in which backing is adhered to foil. It refers to the materials (i.e., paper, paperboard, plastics or similar backing materials enumerated earlier in the heading text) that must be discounted when measuring the thickness of backed aluminum foil. Furthermore, as noted by Protestant, the term “any” is used as an adjective, that is, it modifies the noun “backing.” Therefore, the term “any” cannot be construed in isolation but must be understood in relation to the phrase of which it is a part. The tariff does not define the term “backed”. When a tariff term is not defined by the HTSUS or the legislative history, its correct meaning is its common, or commercial, meaning. Rocknel Fastener, Inc. v. United States, 267 F.3d 1354, 1356 (Fed. Cir. 2001). "To ascertain the common meaning of a term, a court may consult 'dictionaries, scientific authorities, and other reliable information sources' and 'lexicographic and other materials.'" Id. (quoting C.J. Tower & Sons of Buffalo, Inc. v. United States, 673 F.2d 1268, 1271, 69 C.C.P.A. 128 (C.C.P.A. 1982); Simod Am. Corp. v. United States, 872 F.2d 1572, 1576 (Fed. Cir. 1989)). The Random House Dictionary of the English Language defines “backing” as “that which forms the back or is placed at or attached to the back of anything to support, strengthen, or protect it.” The aluminum industry defines the term “backed foil” as “a lamination composed of foil and a coherent substrate. The substrates or backing may be either self-adherent or bonded to the foil by means of an interposed adhesive. Paper, woven fabrics, cellophane, polyethylene film and the like are typical examples of such backings or substrates.” (Cited in HQ 965210, March 20, 2002; HQ 966769, January 5, 2004.) Based on these sources, CBP has previously found that the word “backed” is defined, in pertinent part, as “having a back, setting or support”. Id. The Oxford English Dictionary (2008) defines the noun “back” as: “3. a. gen. That side or surface of any part … of any object, which answers in position to the back; that opposite to the face or front, or side approached, contemplated or exposed to view; e.g. the back of the head, of the leg; the back of a house, door, picture, bill, tablet, etc.” Also, “5. a. The side of any object away from the spectator, or spectators generally, the other or far side. at the back of: behind, on the farther side of[.]” Furthermore, EN 74.10 (which applies, mutatis mutandis, to heading 76.07 (see EN 76.07)) explains that: “[F]oil, such as that used for making fancy goods, is often backed with paper, paperboard, plastics or similar backing materials, either for convenience of handling or transport, or in order to facilitate subsequent treatment, etc.” Based on the common and commercial meaning of the word “backed” and the explanation provided in the ENs, we find that foil with a coherent substrate joined to its “back” in order to strengthen, support, or protect the foil or to facilitate its handing, transport or subsequent treatment may be classified in heading 7607, HTSUS, as “backed” foil on the basis of GRI 1. Accordingly, it is evident that the phrase “excluding any backing” refers to any one of the types of backing enumerated in heading 7607, HTSUS. Flexalcon is not described by the term “backed”. Although the plastic layers are added to the foil for strength and to support, protect, and facilitate handling, transport and subsequent treatment of the foil, the plastics are added to both sides of the foil and, therefore, cannot properly be considered “backing”. In this regard, we note that CBP has previously classified foil product comprised of a layer of plastic sandwiched between two layers of aluminum foil as “backed” aluminum foil under heading 7607, on the basis of GRI 1. See HQ 960276, dated August 1, 1997. However, the foil product classified in that ruling was an aluminum foil/plastic/aluminum foil composition while the product currently under consideration is a plastic/aluminum foil/plastic composition. The product classified in HQ 960276 was properly found to be “backed” because one side of each layer of the foil was adhered to a common inner plastic substrate, that is, the foil was placed “back-to-back” on the substrate, in order to strengthen the foil. In the current situation, both the front and the back of the internal foil layer are adhered to the back of each external plastic layer. Consequently, we find that the merchandise at issue is not similar to the merchandise classified in HQ 960276 and cannot be classified in the same provision. Furthermore, we find that Flexalcon cannot be classified under heading 7607, HTSUS, as “not backed” aluminum foil on the basis of a GRI 1 analysis because it is combined with another material but is not backed or coated. Note 1(d) to Chapter 76 allows for foil which has been coated (the other specified treatments do not concern the combination of foil with other materials) to be classified in heading 7607, HTSUS, using GRI 1, provided that the foil has not assumed the character of an article or product of another heading. This is also explained in the General ENs to Chapter 72, which applies, in part, to products of Chapter 76 (see General EN to Chapter 76). CBP has previously found that a “coating” is “a layer of any substance spread over a surface.” See HQ 966769, dated January 5, 2004, in which CBP determined that lacquer applied in liquid form and which hardened subsequent to its application was a coating and not a backing. We note that “lamination” is not mentioned in Note 1(d) to Chapter 76. Consequently, Flexalcon is not classifiable in heading 7607, HTSUS. In its supplemental submission, Protestant argues that “the explicit terms of … heading [3921] only refers to a part (i.e. the plastic substrates) of the finished good.” Further: Note 10 to Chapter 39, HTSUS, which defines the key language contained in this tariff provision, does not describe the Flexalcon packaging materials, either in their imported or finished condition; Based on their physical attributes and utility, Flexalcon does not retain the essential character of plastics as required by the ENs to HTSUS Chapter 39; and HTSUS heading 3921 is a “basket” provision and is, therefore, not the preferred classif