Doctor Blade Material; Application for Further Review of Protest No. 0401-08-100003

HQ H022270 June 30, 2010 CLA-2 OT:RR:CTF:TCM: H022270 RM CATEGORY: Classification TARIFF NO.: 3926.90.99 Port Director Port of Boston U.S. Customs and Border Protection 10 Causeway Street, Room 603 Boston, MA 02222 RE: Doctor Blade Material; Application for Further Review of Protest No. 0401-08-100003 Dear Port Director: The following is our decision regarding the Application for Further Review (“AFR”) of Protest No. 0401-08-100003, timely filed by counsel on behalf of Kadant U.K. Ltd. (formerly known as Thermo Web Systems, Inc.), concerning the classification and liquidation of certain doctor blade material under the Harmonized Tariff Schedule of the United States (“HTSUS”). In reaching this decision, we have considered supplemental submissions dated March 20, and June 9, 2009, made to this office. Samples of the imported merchandise were included with the request. The merchandise was entered on various dates between September 6, 2006, and July 30, 2007, under heading 6815, HTSUS, as “Articles of stone or of other mineral substances (including carbon fibers, articles of carbon fibers and articles of peat), not elsewhere specified or included.” U.S. Customs and Border Protection (“CBP”) issued a Request for Information (CBP Form 28) on June 8, 2007, and a Notice of Action (CBP Form 29) on September 13, 2007, advising Kadant that the merchandise was rate advanced and would be liquidated under heading 3926, HTSUS, specifically in subheading 3926.90.99, as “Other articles of plastics and articles of other materials of headings 3901 to 3914.” CBP liquidated the goods accordingly on September 28, 2007. Protestant timely filed the instant protest and AFR on January 7, 2008. FACTS: Kadant’s® Carbotek100, Carbotek, Carbovik, Syntek and SyntekPlus are laminate materials used to manufacture doctor blades (i.e., thin plates used to scrape built-up pulp and other contaminants from the surface of a paper-making machine’s cylinder rolls). They are imported coiled, in strips that are 50 meters long by 3 inches wide, and have a lengthwise beveled edge. Protestant described the Carbotek 100 as being composed of epoxy resin-impregnated carbon fiber cloths whereas the Carbotek, Carbovik, Syntek and SyntekPlus are composed of epoxy resin-impregnated carbon fiber and glass fiber cloths. The materials are obtained by impregnating the individual carbon fiber or carbon fiber and glass fiber cloths with epoxy resin, stacking the resulting layers on top of each other, and bonding them together using heat to form a hard, laminated plate. MODEL COMPOSITION THICKNESS  Carbotek100 carbon fiber and epoxy resin laminate 0.055 and 0.080 inches  Carbotek carbon fiber, glass fiber and epoxy resin laminate 0.062 and 0.080 inches  Carbovik carbon fiber, glass fiber and epoxy resin laminate 0.055 and 0.075 inches  Syntek carbon fiber, glass fiber, and enhanced epoxy resin laminate 0.055 and 0.075 inches  SyntekPlus carbon fiber, glass fiber, and enhanced epoxy resin laminate 0.060 and 0.080 inches   Documentation provided by Protestant indicates that the carbon fiber is the most expensive component in all of the models at issue. Carbon fiber predominates by weight in the Carbotek100 and Carbotek; resin in the Carbovik, Syntek, and the .080-inch SyntekPlus; and fiberglass in the 0.06-inch SyntekPlus. ISSUES: Whether the doctor blade material is classified under heading 3926, HTSUS, as other articles of plastic, or under heading 6815, HTSUS, as articles of carbon fibers not elsewhere specified or included. Whether Protestant is entitled to a claim of treatment pursuant to Section 177.12(c) of the CBP Regulations (C.F.R § 177.12(c)). LAW AND ANALYSIS: Initially, we note that the matter 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 for all involved entries. (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. 0401-08-100003 was properly accorded to Protestant pursuant to 19 C.F.R. § 174.24(a) 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, or with a decision made at any port with respect to the same or substantially similar merchandise. Specifically, Protestant alleges that the decision is inconsistent with New York Ruling Letter (“NY”) 818299, dated April 23, 1996, NY 892392, dated December 13, 1993, and NY 871724, dated March 13, 1992, wherein CBP classified carbon fiber products coated with resin under heading 6815, HTSUS. I. CLASSIFICATION 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 2006 HTSUS provisions under consideration are as follows: 3926 Other articles of plastics and articles of other materials of headings 3901 to 3914: 3926.90 Other: 3926.90.99 Other … * * * 6815 Articles of stone or of other mineral substances (including carbon fibers, articles of carbon fibers and articles of peat), not elsewhere specified or included: 6815.10.00 Nonelectrical articles of graphite or other carbon … * * * The doctor blade materials at issue are composed of two or more materials which are, prima facie, classifiable in different headings (i.e., carbon fiber (heading 6815) and plastic (heading 3926)). As no single heading describes the merchandise in its entirety, it is classified applying GRI 3(b), as if consisting of the material which gives the good its essential character. GRI 3(b) provides, in pertinent part: When by application of rule 2(b) or for any other reason, goods are, prima facie classifiable under two or more headings, classification shall be effected as follows: … Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable. The Explanatory Notes to GRI 3(b) state, in relevant part: In all these cases the goods are to be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable. The factor which determines essential character will vary as between different kinds of goods. It may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods. As stated by the Court of International Trade in Structural Industries v. United States, 360 F. Supp. 2d 1330, 1336 (citations omitted) (2005), “the essential character of an article is that which is indispensable to the structure, core or condition of the article, i.e., what it is.” See also Conair Corporation v. United States, 29 Ct. Int’l Trade, 888, 895 (citations omitted) (2005), (discussing "the concept of ‘essential character’ found in GRI 3(b)”). The factors that determine an article’s essential character “vary between different kinds of goods.” See EN (XII) to GRI 3. Examples of such factors include the bulk, quantity, and weight of a material, as well as the role of the material in relation to the use of the product. See 3GMermet Fabric Corp. v. United States, 135 F. Supp. 2d 151, 159 (Ct. Int’l Trade 2001). Protestant submits that the carbon fiber imparts the materials’ essential character because it is “… substantially stronger, resists wear, and is more abrasion-resistant than glass fiber or the epoxy which is used to bind the fibers together” and that, “in all cases, [it] exceeds the cost of the glass fiber/resin fabric.” Protestant adds that, as a result, doctor blades with a carbon fiber core – like the ones at issue – have an increased wear life, lower friction coefficients, and are also much stiffer, yet less abrasive, than the glass fiber or plastic equivalents. Our research supports the conclusion that doctor blades with a carbon fiber core are stronger and less abrasive on the rolls upon which they operate than those with plastic or fiberglass core. See U.S. Patent No. 6,643,890 (filed Dec. 1, 2000) (“Carbon fibers … are characterized by their high tensile strength and stiffness, but they are not considered abrasive.”). See also U.S. Patent No. 6,643,890 (“Plastic blades … tend to have low stiffness and … degrade at the temperatures used in the papermaking process.”) and U.S. Patent No. 6,565,712 (filed May 17, 2001) (“Glass fiber substrates … are subject to water absorption and can be very abrasive to some materials”). However, uncoated carbon fibers are brittle. See Deborah D.L. Chung, Carbon Fiber Composites (Butterworth-Heinmann Publishers, 1994, pg. 81). It is the hardened epoxy resin (i.e., the plastic) that gives the subject materials their rigid character and makes them suitable for doctoring. The carbon fiber core simply reinforces the epoxy resin to make it stronger and more durable. Accordingly, we find that the materials are classified under heading 3926, HTSUS, as if consisting only of plastic; the component that gives them their essential character. Specifically, they are classified in subheading 3926.90.99, HTSUS, as “Other articles of plastics…: Other. Other.” See HQ 963309, dated May 31, 2000, and HQ 954366, dated September 7, 1993 (doctor blade materials composed of a fiberglass-reinforced plastic classified under heading 3926, HTSUS). Protestant alleges that CBP classified articles of a similar material composition under heading 6815, HTSUS, in NY N035031, dated September 5, 2008 (epoxy-impregnated unidirectional carbon fiber), NY 818299, dated April 23, 1996 (carbon fiber reinforced honeycomb core coated with resin), NY 892392, dated December 13, 1993 (carbon yarns coated with a thermoplastic resin), and NY 871724, dated March 13, 1992 (unidirectional prepreg graphite fiber). However, inasmuch as the articles discussed in those rulings were composite goods classified by application of GRI 3(b) (as if they consisted only of the material which gives them their essential character), and were used for purposes other than doctoring, they are not substantially similar and their classification does not dictate the classification of the instant doctor blade materials. TREATMENT Protestant contends that CBP previously accorded a “treatment” to substantially identical transactions in accordance with Section 177.12(c) of the CBP Regulations (19 C.F.R. § 177.12(c)), and that CBP failed to follow the notice-and-comment procedure outlined in 19 U.S.C. § 1625(c)(2) when it revoked it. Specifically, Protestant argues that CBP consistently classified the same or substantially similar doctor blade material under heading 6815.10.00, HTSUS, for over eight years, from April 15, 1999, until September 13, 2007. In support, Protestant submitted a copy of a faxed memo from an Import Specialist at the Port of Boston, dated April 15, 1999, addressing the classification of the Carbotek100, Carbotek, and Carbovick material, which reads, in pertinent part: Per your recent inquiry, this is to advise that the classification review of “Doctor Blades” has been completed. The National Import Specialist concurs with this team that the proper classification should be HTS 6815.10.0000/FREE. Protestant also submitted an approved request for administrative relief, dated February 18, 2000, which shows that CBP subsequently liquidated those entries accordingly. Finally, Protestant enclosed a CBP Form 29 (Notice of Action) issued by the Port of Boston on September 13, 2007, wherein CBP determined that the merchandise at issue in this case would be reclassified and liquidated in subheading 3926.90.99, HTSUS. 19 U.S.C. § 1625(c) provides that: A proposed interpretative ruling or decision which would – … have the effect of modifying the treatment previously accorded by the Customs Service to substantially identical transactions; shall be published in the Customs Bulletin. The Secretary shall give interested parties an opportunity to submit, during not less than the 30-day period after the date of such publication, comments on the correctness of the proposed ruling or decision. After consideration of any comments received, the Secretary shall publish a final ruling or decision in the Customs Bulletin within 30 days after the closing of the comment period. The final ruling or decision shall become effective 60 days after the date of its publication. To establish a violation of § 1625(c)(2), Protestant must show that: (1) an interpretative ruling or decision; (2) effectively modified; (3) a "treatment" previously accorded by Customs to "substantially identical transactions;" and (4) the interpretative ruling or decision had not been subject to the notice and comment process set forth in § 1625(c)(2). See Motorola, Inc. v. United States, 426 F.Supp. 2d 1367, 1372 (Ct. Int’l Trade 2006). Section 177.12(c)(1) of the CBP Regulations (19 C.F.R. §177.12(c)(1)) provides that the following rules will apply for purposes of determining whether a treatment was previously accorded by CBP to substantially identical transactions of a person: (i) There must be evidence to establish that: (A) There was an actual determination by a Customs officer regarding the facts and issues involved in the claimed treatment; (B) The Customs officer making the actual determination was responsible for the subject matter on which the determination was made; and (C) Over a 2-year period immediately preceding the claim of treatment, Customs consistently applied that determination on a national basis as reflected in liquidations of entries or reconciliations or other Customs actions with respect to all or substantially all of that person's Customs transactions involving materially identical facts and issues. Section 177(c)(1)(ii) provides that the determination of whether the requisite treatment occurred will be made on a case-by-case basis and will involve an assessment of all relevant factors. In particular, CBP will focus on past transactions to determine whether there was an examination of the merchandise by CBP or the extent to which those transactions were reviewed by CBP to determine the proper application of the CBP laws and regulations. Diminished weight will be given to transactions involving small quantities or values, and no weight to informal entries or transactions processed without examination or CBP officer review. Section 177.12(c)(1)(iv) of the CBP Regulations (19 C.F.R. § 177.12(c)(1)(iv)), provides that "(t)he evidentiary burden as regards the existence of the previous treatment is on the person claiming the treatment." Section 177.12(c)(1)(iv), further states the following:  The evidence of previous treatment by Customs must include a list of all materially identical transactions by entry number (or other Customs assigned number), the quantity and value of merchandise covered by each transaction (where applicable), the ports of entry, the dates of final action by Customs, and, if known, the name and location of the Customs officer who made the determination on which the claimed treatment is based. In addition, in cases in which an entry is liquidated without any Customs review (for example, the entry is liquidated automatically as entered), the person claiming a previous treatment must be prepared to submit to Customs written or other appropriate evidence of the earlier actual determination of a Customs officer that the person relied on in preparing the entry and that is consistent with the liquidation of the entry. The evidence submitted by Protestant demonstrates that there was an actual determination by a CBP officer regarding the facts and issues involved in the claim of treatment, and that the CBP officer that made the determination was responsible for the subject matter on which the determination was made. See 19 C.F.R. § 177.12(c)(1)(i)(A), (B). However, Protestant did not provide the sufficient evidence to prove that “over a 2-year period immediately preceding the claim of treatment, Customs consistently applied that determination on a national basis as reflected in liquidations of entries or reconciliations or other Customs actions with respect to all or substantially all of that person's Customs transactions involving materially identical facts and issues.” See 19 C.F.R. § 177.12(c)(1)(i)(C). In particular, Protestant did not list (1) all materially identical transactions by entry number (or other CBP assigned number); (2) the quantity and value of merchandise covered by each transaction (where applicable), or (3) the ports of entry, and dates of final action by CBP, as required by 19 C.F.R. § 177.12(c)(2)(iv). We conclude, therefore, that Protestant has not met the evidentiary burden to substantiate the existence of treatment previously accorded to substantially identical transactions. HOLDING: By application of GRI 3(b), the doctor blade material is classified under heading 3926, HTSUS, specifically in subheading 3926.90.99, as “Other articles of plastics …: Other: Other.” The 2006 column one, general rate of duty is: 5.3% ad valorem. Since the rate of duty under the classification indicated above is the same as the liquidated rate, you are instructed to DENY the protest in full. Protestant’s claim of treatment under 19 U.S.C. § 1625(c)(2) and 19 C.F.R. § 177.12(c) is DENIED. Sixty days from the date of the decision the Office of International Trade will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution. Sincerely, Myles B. Harmon, Director Commercial and Trade Facilitation Division