Application for Further Review of Protest No. 0712-08-100023; Classification of jewelry boxes covered in paper with plastic coating

HQ H026897 May 20, 2010 CLA-2 OT:RR:CTF:TCM H026897 GC CATEGORY: Classification TARIFF NO.: 4202.92.90; 4202.99.10 U.S. Customs and Border Protection Champlain Service Port 237 West Service Road Champlain, New York 12919 Attn: Port Director RE: Application for Further Review of Protest No. 0712-08-100023; Classification of jewelry boxes covered in paper with plastic coating Dear Port Director, This letter is in reply to the Application for Further Review (AFR) of Protest No. 0712-08-100023, filed February 1, 2008, on behalf of protestant, Impenco, Ltd. (Impenco), against U.S. Customs and Border Protection’s (CBP) reclassification and subsequent liquidation of various entries of seventeen styles of jewelry boxes. In the disposition of this protest, consideration was also given to the substance of our meeting with counsel to Impenco on March 2, 2010, as well as several written submissions following up that meeting. FACTS: The subject merchandise consists of seventeen styles of jewelry boxes covered with coated paper. We have been provided with reports from the CBP Laboratory and Scientific Services analyzing the composition of the material coating the paper on some of the jewelry boxes from the protested entries. In pertinent part, the CBP Laboratory and Scientific Services reports conclude that the outer surface of eight of the jewelry boxes features “…an application of an enamel-type substance which contains acrylic resin, a type of plastics material”. Similarly, Impenco has provided us an independent laboratory report conducted on jewelry box style M280, which concludes, in pertinent part, that “the exterior sheet materials of [style M280] is a clear lacquer containing ester and is not a plastic”. We have also been provided with a CBP laboratory report for style M250R, which indicates, in pertinent part, that the “…outer surface has an application of a plastic material of the acrylate type”. See Lab Report No. CH20070931, dated July 24, 2007. We were not presented with CBP laboratory reports on the remaining nine styles of jewelry boxes subject to the instant protest. The merchandise was entered between September 1, 2006 and June 22, 2007, under subheading 4202.99.10 (HTSUS), which provides for, in pertinent part: “…jewelry boxes… of leather, of sheeting of plastics, of textile materials, of vulcanized fiber, or of paperboard, or wholly or mainly covered with such materials or with paper: Other: Other: Other: Of material other than leather, composition leather, sheeting of plastics, textile materials, vulcanized fiber or paperboard wholly or mainly covered with paper: Of plastics…” Based on the above CBP laboratory reports, CBP reclassified the subject merchandise under subheading 4202.92.90, HTSUS, which provides for, in pertinent part: “[t]runks, suitcases…and similar articles; traveling bags…jewelry boxes…and similar containers, of leather or of composition leather, of sheeting of plastics, of textile materials, of vulcanized fiber, or of paperboard, or wholly or mainly covered with such materials or with paper: Other: With outer surface of sheeting of plastic or of textile materials: Other: Other, Other”. The subject entries were liquidated between September 28, 2007 and December 21, 2007. ISSUE: Whether the instant jewelry boxes are classified under subheading 4202.92, HTSUS, with merchandise featuring an “outer surface of sheeting of plastics”, or under subheading 4202.99, HTSUS, with merchandise featuring an outer surface other than sheeting of plastic? 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 February 1, 2008, within 180 days of the above referenced liquidations, pursuant to 19 U.S.C. §1514(c)(3). Further review is justified pursuant to Section 174.24(a) of the CBP Regulations (19 C.F.R. § 174.24(a)). Specifically, Protestant cites District Director Ruling Letter (DD) 801460, dated September 18, 1994, and DD 899041, dated July 13, 1994, both of which were issued to Impenco and classify certain jewelry boxes under subheading 4202.99, HTSUS. 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 relevant HTSUS provisions under consideration are as follows: 4202 Trunks, suitcases, vanity cases, attaché cases, briefcases, school satchels, spectacle cases, binocular cases, camera cases, musical instrument cases, gun cases, holsters and similar containers; traveling bags, insulated food or beverage bags, toiletry bags, knapsacks and backpacks, handbags, shopping bags, wallets, purses, map cases, cigarette cases, tobacco pouches, tool bags, sports bags, bottle cases, jewelry boxes, powder cases, cutlery cases and similar containers, of leather or of composition leather, of sheeting of plastics, of textile materials, of vulcanized fiber or of paperboard, or wholly or mainly covered with such materials or with paper: Other: 4202.92 With outer surface of sheeting of plastic or of textile materials: Other: 4202.92.90 Other… * * * 4202.99 Other: Of material other than leather, composition leather, sheeting of plastics, textile materials, vulcanized fiber or paperboard wholly or mainly covered with paper: 4202.99.10 Other… Because the issue before us occurs at the sixth digit of the HTSUS, GRI 6 is implicated. GRI 6 states the following: For legal purposes, the classification of goods in the subheading of a heading shall be determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to the above rules, on the understanding that only subheadings at the same level are comparable. For the purposes of this rule, the relative section, chapter and subchapter notes also apply, unless the context otherwise requires. At the four-digit level, heading 4202, HTSUSA, requires that a good be “of or “wholly or mainly covered with” a specified material. However, at the six-digit level, the nomenclature classifies goods by the material which comprises the “outer surface.” In classifying goods such as these, we must distinguish between the requirements of the four and six-digit headings, since they dictate different criteria for classifying goods. This distinction was also discussed in Headquarters Ruling Letter (HQ) 954021, dated November 1, 1993, wherein Customs, noting HQ 087760, dated October 31, 1991, stated: “Evident in the above are two important distinctions: (1) a covering vs. an outer surface, and (2) classification at the four-digit (or heading) level vs. classification at the six-digit (or subheading) level.” See HQ 963618, dated August 2, 2002 (citing HQ 087760, dated October 31, 1991). According to the CBP laboratory reports analyzing the subject merchandise, the jewelry boxes at issue here are covered with paper coated on its outer surface. Thus, at the four-digit level, the boxes are considered to be “wholly or mainly covered” with paper. However, classification at the six-digit level requires consideration of the material that constitutes the outer surface. The “outer surface” is that which is both visible and tactile. See HQ 086775, dated July 9, 1990; see also HQ 954021, supra. In a number of rulings, CBP has addressed the issue of whether jewelry box frames, which were made of plastic or metal and were covered with paper backings to which textile materials had been applied, had an outer surface of textiles or paper. Additional Note 2 of Chapter 42, HTSUS, is instructive in this regard, providing that: For the purposes of classifying articles under subheadings 4202.12, 4202.22, 4202.32, and 4202.92, articles of textile fabric impregnated, coated, covered or laminated with plastics (whether compact or cellular) shall be regarded as having an outer surface of the textile material or of plastic sheeting, depending upon whether and the extent to which the textile constituent or the plastic constituent makes up the exterior surface of the article. The note, and its expression of the concept of “outer surface” by use of the term “exterior surface,” serves as guidance when classifying other articles in heading 4202, HTSUS, that are composed of composite materials. The issue of whether the boxes are covered with “sheeting of plastics” was addressed by the Court of International Trade in Sarne Handbags Corp. v. United States, 100 F.Supp. 2d 1126; 2000 CIT 51 (2000), wherein the court, applying Additional U.S. Note 2 to Chapter 42, HTSUS, held that a handbag made of plastic coated textile was classified as having an outer surface of sheeting of plastic. In Sarne, the Court of International Trade articulated the definition of “sheeting” as “material in the form of or suitable for forming into a broad surface of something that is unusually thin, or is a material in the form of a continuous thin covering or coating.” Id. at 1134. Subsequent to Sarne, CBP has consistently ruled jewelry boxes covered in plastic-coated paper are classifiable in subheading 4202.92, HTSUS. See HQ 966090, dated December 22, 2003, HQ 965563, dated September 24, 2002, and HQ 963618, dated August 2, 2002. Impenco presents DD 801460 and DD 899041 as support for the notion that the instant boxes do not feature an outer surface of sheeting of plastic and are thus properly classified under subheading 4202.99, HTSUS. The merchandise subject to DD 801460 was identified as a jewelry box with style number 6015/409/15, and described, in pertinent part, as a “…watch collar box made with plasticized paper covering a molded plastic frame….” In DD 899041, a “watch/jewelry box of paper with a plastic base” identified by style number 6014 was also classified under subheading 4202.99, HTSUS. During our conference and in its written submissions, counsel for Impenco has stated that the outer surface of the instant jewelry boxes is composed in the same manner as was the case with the jewelry boxes subject to DD 801460 and DD 899041. Impenco has presented us with a series of swatches to illustrate the different types of materials that have historically been used to cover their jewelry boxes and has also prepared an Excel spreadsheet diagramming its different various styles of jewelry boxes currently in production and corresponding outer surfaces. Despite this additional information, Impenco has not provided us with the evidence necessary to establish the nexus between the instant merchandise and the merchandise subject to DD 801460 and DD 899041. In administering the HTSUS, CBP has consistently followed the long-standing classification principle articulated by the Supreme Court in United States v. Citroen, 223 U.S. 407, 414-415, 32 S.Ct. 259, 56 L.Ed. 486 (1911) (Citroen), where the Court noted that: [t]he rule is well established that "in order to produce uniformity in the imposition of duties, the dutiable classification of articles must be ascertained by an examination of the imported article itself, in the condition in which it is imported." (cites omitted). As illustrated in HQ 957062, dated April 5, 1995, CBP denied a protest where the subject merchandise was alleged to be water resistant, noting that “…even if a sample were available at this time, [CBP] would not support the testing of the protestant's later sample as [CBP] has no substantive proof that the sample is representative of the initial shipment.” See also HQ 229096, dated August 22, 2002 (where CBP held that purported misclassification of four versions of a “man’s track suit” was not a mistake of fact correctable under 19 U.S.C. §1520(c) because the sample provided was not sufficiently connected to the merchandise subject to the protest). Here, the subject merchandise is even further removed from the rulings on which Impenco relies because the instant jewelry boxes encompass a wide range of style numbers, and a substantial description of manufacturing methods (either with respect to the boxes subject to the cited rulings or the subject merchandise) is lacking. Such corroborating evidence is particularly necessary in light of the fact that Impenco has produced a number of jewelry boxes classified as having an outer surface of plastic sheeting under subheading 4202.92, HTSUS. Furthermore, Impenco has also received rulings classifying different styles of jewelry boxes under subheading 4202.92, HTSUS. See, e.g., DD A83690, dated June 3, 1996, New York Ruling Letter (NY) J81764, dated March 31, 2003 and NY J87894, dated August 13, 2003. As such, we will proceed with our determination based on the evidence as presented herein. In a subsequent conversation with the CBP Chicago Laboratory, this office was advised that the reference to a “plastics material” was intended to describe only the acrylic resin and not the entire material coating the paper on the instant jewelry box. While the resin was detected throughout the coating, the CBP laboratory report did not contain a percentage of acrylic resin in relation to other materials that made up the enamel-type coating. In light of our follow up with the CBP laboratory in this case, it is clear that the entire coating in question cannot be characterized as a plastic. Accordingly, we find that jewelry box styles M40, M190, M250, M280, M610, M650, and M750 do not feature an outer surface of plastic sheeting and are thus classified under subheading 4202.99, HTSUS. With respect to the other styles of jewelry box presently at issue, we also note that the CBP lab report for style M250R specifically states that the “…outer surface [of the jewelry box] has an application of a plastic material of the acrylate type”. Impenco does not provide a laboratory report on style M250R to refute this finding. Thus, applying the principals set forth in Additional U.S. Note 2 of Chapter 42, HTSUS, Sarne, and the rulings following Sarne, we conclude that that the outer surfaces of styles M250R features plastic sheeting and is thus classified under subheading 4202.92, HTSUS, which provides for other articles “with outer surface of sheeting of plastic or of textile materials.” In the same vein, Impenco has not supplied the necessary evidence that the exterior surface of the remaining styles of jewelry boxes are of the same composition as style M280. See also Citroen, 223 U.S. at 415, and HQ H025872, dated June 3, 2009 (where CBP denied a protest because the importer failed to substantiate that samples provided were from the entries subject to the instant protest). The scope of review in a protest filed under 19 U.S.C. §1514 is limited to the administrative record. See HQ 962960, dated May 2, 2000. CBP will consider all relevant allegations that are supported by competent evidence. In acting on a protest, however, CBP lacks the legal authority to assume facts and arguments that are not presented and, therefore, not in the official record. See HQ W967259, dated February 28, 2006. In the instant protest, Impenco has failed to provide information with regard to coating on jewelry box styles 890W/C, M60, TA580-1-001, 280-002, 890, 890PLW, 890/22, and 889/22. Accordingly, we find that they are properly classified under subheading 4202.92, HTSUS. Lastly, we note that counsel for Impenco raises a claim of treatment under 19 U.S.C. §1625(c)(2). Title 19 CFR §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: There was an actual determination by a Customs officer regarding the facts and issues involved in the claimed treatment; The Customs officer making the actual determination was responsible for the subject matter on which the determination was made; and 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)(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. 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)(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)(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. Inasmuch as the information provided to us does not sufficiently connect the jewelry boxes at issue to those subject to the rulings on which Impenco relies as a basis for treatment, we find that the requirements for treatment under 19 U.S.C. §1625(c)(2) have not been met. Accordingly, we do not recognize your claim for treatment at this time. HOLDING: By application of GRI 1, the instant Impenco jewelry boxes are classified under heading 4202, HTSUS, as “jewelry boxes”. By application of GRI 6, styles M40, M190, M250, M280, M610, M650, M680, and M750 are specifically provided for under subheading 4202.99.10, HTSUS, which provides for, in pertinent part: “…jewelry boxes… of leather, of sheeting of plastics, of textile materials, of vulcanized fiber, or of paperboard, or wholly or mainly covered with such materials or with paper: Other: Other: Other: Of material other than leather, composition leather, sheeting of plastics, textile materials, vulcanized fiber or paperboard wholly or mainly covered with paper: Of plastics….” The column one, general rate of duty for merchandise of heading 4202.99.10, HTSUS, at the time of entry was 3.4 percent ad valorem. By application of GRI 6, styles M250R, 890W/C, M60, TA580-1-001, 280-002, 890, 890PLW, 890/22, and 889/22 are specifically provided for under subheading 4202.92.90, HTSUS, which provides for, in pertinent part: “[t]runks, suitcases…and similar articles; traveling bags…jewelry boxes…and similar containers, of leather or of composition leather, of sheeting of plastics, of textile materials, of vulcanized fiber, or of paperboard, or wholly or mainly covered with such materials or with paper: Other: With outer surface of sheeting of plastic or of textile materials: Other: Other, Other”. The column one, general rate of duty for merchandise of heading 4202.99.10, HTSUS, at the time of entry was 17.6 percent ad valorem. The protest should accordingly be approved in part and denied in part. 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 in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision Regulations and Rulings of 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