Signature Foils; Application for Further Review of Protest Number 1512-13-100092.

HQ H251042 March 6, 2017 CLA-2 OT:RR:CTF:TCM H251042 SKK CATEGORY: Classification TARIFF NO.: 3212.10.00 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: Signature Foils; Application for Further Review of Protest Number 1512-13-100092. Dear Port Director: This is in response to an Application for Further Review (AFR) of Protest No. 1512-13-100092, dated December 9, 2013, submitted by counsel on behalf of Kurz Transfer Products, L.P. (Protestant). The Protest and AFR concern the classification under the Harmonized Tariff Schedule of the United States (HTSUS) of “Signature Foils.” On February 26, 2015, Protestant met with U.S. Customs and Border Protection’s (CBP’s) Office of Trade, Regulations and Rulings, Tariff Classification and Marking Branch, to discuss the classification of the Signature Foils at issue, as well as related foil products currently the subject of other pending protests at the port of Charlotte for which the Protestant seeks AFR. Protestant also submitted a supplemental letter to CBP in support of the subject protest and AFR on March 16, 2015. FACTS: The subject Signature Foils were entered at the Port of Charlotte on January 23, 2013, and liquidated on December 6, 2013, under heading 3212, HTSUS, which provides for “stamping foils.” The Protestant timely filed this Protest and AFR on December 9, 2013, and argues that the subject merchandise is properly classified in heading 4908, HTSUS, which provides for “transfers (decalcomanias).” The AFR was forwarded for our consideration. The subject foils are applied to plastic credit and loyalty cards after importation as signature panels, and are intended to help prevent fraud and identity theft. The subject articles are also referred to as “signierfolie,” “signature panel foils,” “signature decoration foils,” and were invoiced as “signature panels.” Protestant describes the subject Signature Foils as bearing images, designs and patterns at the time of importation, and states that no engraved dies are used to stamp these designs onto the foil. In Protestant’s original submission in support of this protest, Protestant states that as the Signature Foils do not contain metal powders or pigments. In a supplemental correspondence to CBP Headquarters, dated March 16, 2015, Protestant amended this statement and acknowledged that the subject signature foils contain trace elements of metal. The Signature Foils are comprised of seven layers: 1. Polyethylene terephthalate (PET) film; 2. Release coat; 3. Print layer; 4. Ink receptive coat; 5. Tamper evident layer; 6. Tie coat layer; and 7. Adhesive sizing coat layer (used to bind the foil to the substrate). The print layer contains a logo or image that is imprinted onto the foil prior to importation. These images or logos are customized for the Protestant’s customers and are printed as continuous patterns. The Signature Foils are applied to the plastic card substrate by using a stamping machine to apply heat and pressure to the foil. Protestant states that the stamping machine uses a non-engraved die that does not impart any design elements, marks, or images onto the foil. Either a roll on or a vertical stamping method may be used. Upon application of the foil to the plastic substrate, the PET carrier layer and release coat are removed and discarded from the foil, while the image remains on the surface of the plastic substrate. The tamper-evident layer provides another image layer to make mechanical or liquid tampering of the ink layer visible. The ink-receptive coat allows for the ink from the cardholder’s pen to adhere to the foil. A sample identified as “Signierfolie M 990231 G” was analyzed by CBP Laboratories and Scientific Services and found to contain titanium dioxide, an inorganic metal pigment. Information on the subject Signature Foils can be found on the importer’s website at www.kurzusa.com and on the manufacturer’s website at www.kurz.de/en/. The manufacturer’s website describes KURZ’ Signature Foil as a “hot stamping foil.” ISSUE: Whether the subject Signature Foils are classified under subheading 3212, HTSUS, as stamping foils, or under heading 4908, HTSUS, as transfers? LAW AND ANALYSIS: This 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 December 9, 2013, within 180 days of liquidation, pursuant to 19 U.S.C. §1514(c)(3). Further review of Protest 1512-13-100092 was properly accorded to Protestant pursuant to 19 C.F.R. §174.24. Pursuant to §174.25(b), Protestant alleges that this protest involves a question of law that CBP has never ruled upon. Classification under the HTSUS is in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods will 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 will 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; dies 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.” As EN 49.08 excludes “stamping foils” of heading 3212, and such exclusion is consistent with the heading text, we must first determine whether the instant Signature Foils are classifiable in heading 3212, HTSUS, before we can consider whether they meet the terms of heading 4908, HTSUS. As noted above, the subject merchandise contains a metal pigment (titanium dioxide) that is stamped on plastic substrates using conventional printing methods which utilize pressure and heat to print the intended foil design onto the substrate in accordance with Note 6 to Chapter 32 and EN 32.12. As such, the Signature Foils are completely described by heading 3212, HTSUS as stamping foils. In support of its assertion that the Signature Foils are classifiable in heading 4908, HTSUS, Protestant cites to the following rulings: New York Ruling Letter (NY) A86366, dated August 20, 1996, in which CBP classified a heat transfer label consisting of clear plastic film containing product logos; NY N173535, dated July 14, 2011, in which CBP classified a face tattoo; NY 865307, dated September 5, 1991, in which CBP classified a heat transfer plastic film used to decorate plastic and wood surfaces wherein CBP Laboratory Analysis did not detect the presence of metal; and NY 808304, dated March 30, 1995, issued to the Protestant’s former corporate entity (Kurz-Hastings), in which CBP held that a transfer product with images printed on the surface before importation was classified in heading 4908, HTSUS. CBP notes that the products classified in the aforementioned rulings are distinguishable from the instant merchandise in that they did not contain metal and are therefore not classifiable as stamping foils. By application of GRI 1, the subject Signature Foils are classified as “stamping foils” in heading 3212, HTSUS, specifically subheading 3212.10, HTSUS (2012), as “Pigments…; stamping foils; dies 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 subject merchandise is classifiable pursuant to GRI 3. HOLDING: By application of GRI 1, the subject Signature Foils are classified as “stamping foils” in heading 3212, HTSUS, specifically subheading 3212.10, HTSUS (2013), as “[P]igments…; stamping foils; dies 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