In-mold decoration foil; Application for Further Review of Protest Number 1512-14-100028.

HQ H254670 March 6, 2017 CLA-2 OT:RR:CTF:TCM H254670 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: In-mold decoration foil; Application for Further Review of Protest Number 1512-14-100028. Dear Port Director: This is in response to an Application for Further Review (AFR) of Protest No. 1512-14-100028, dated April 10, 2014, submitted by counsel on behalf of Kurz Transfer Products, L.P. (Protestant), in response to your classification of In-Mold Decoration Foil (IMD Eli Lilly) under the Harmonized Tariff Schedule of the United States (HTSUS). On February 26, 2015, Protestant met with U.S. Customs and Border Protection’s Office of Trade, Regulations and Rulings, Tariff Classification and Marking Branch, to discuss the classification of this product as well as related products at issue in pending protests before the Port of Charlotte for which the Protestant is also seeking AFR. Protestant submitted a supplemental letter to CBP in support of the subject protest and AFR on March 16, 2015. FACTS: At issue is the classification under the HTSUS of in-mold decoration foils, identified as “IMD Eli Lilly,” which were entered at the Port of Charlotte on March 14, 2013, and liquidated on January 24, 2014, under heading 3212, HTSUS, which provides for “stamping foils.” The Protestant timely filed this Protest and AFR on April 10, 2014, and argues that the subject merchandise is properly classifiable in heading 4908, HTSUS, which provides for “transfers (decalcomanias).” The AFR was forwarded for our consideration. Protestant describes the subject merchandise (IMD Eli Lilly) as a product that falls within KURZ’s line of In-Mold Decoration products. IMD products are foils printed with customized designs intended for decorative or branding purposes. The images appearing on the subject foils are printed prior to importation, and may constitute either a single discrete image or an unbroken continuous image. The importer designs these foils to be applied to injection-molded plastic objects. During the molding process, a device feeds the IMD Eli Lilly into the mold prior to injecting hot plastic into the same mold. The high temperature of the injection molding process activates the release and sizing layers, melting the image onto the molded product. The polyethylene terephthalate (PET) carrier film is then removed and discarded. The result of the molding process is that the image is transferred to the surface of the newly-molded plastic object. The IMD foils are constructed of five layers: PET film; Release coat; Top coat (comprised of a protective layer of resin); Pigment layer (containing metal); and Adhesive sizing coat. Protestant notes that although some KURZ IMD foils do not contain metal, the IMD Eli Lilly foil at issue does contain a metallized pigment layer. See Protestant’s supplemental letter to CBP dated March 16, 2015, Exhibit 5. Protestant also argues that as the subject molding process does not use a “stamp” of any kind, the subject merchandise may not, by definition, be classified under heading 3212, HTSUS, which is an eo nomine tariff provision specifically limited to “stamping foils.” In this regard it is noted that information on the importer’s IMD foils can be found on their website, which states: “The IMD-technique combines molding and hot stamping into one working operation.   By the complete decoration of plastic parts during the molding operation, the production costs can be reduced considerably: decoration after molding, in-process inventory and additional working steps can be dropped. The IMD-process is a simultaneous decoration during the molding process.   This process is working with a modified hot stamping foil which is being fed through the mold by a transportation unit. After closing the mold, the foil is pressed into the cavity by the injection molding material. Mass temperature ad [sic] molding pressure release the decorative layer from the polyester carrier and combine it with the plastic part, which can be taken from the carrier as soon as the molding material cooled down.” [emphasis added]   ISSUE: Whether the subject in-mold decoration foil (IMD Eli Lilly), is classified under subheading 3212, HTSUS, as stamping foils, or under heading 4908, HTSUS, as transfers (decalcomanias)”? 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 April 10, 2014, within 180 days of liquidation, pursuant to 19 U.S.C. 1514(c)(3). Further review of Protest 1512-14-100028 was properly accorded to Protestant pursuant to 19 CFR 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; 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.” As EN 49.08 excludes “stamping foils” of heading 3212, HTSUS, and such exclusion is consistent with the heading text, the determination must be made whether the subject IMD Eli Lilly foils are classifiable in heading 3212, HTSUS, before classification may be considered under heading 4908, HTSUS. As noted above, and as acknowledged in the importer’s product literature cited above, the subject merchandise contains a metalized layer that is applied to a plastic substrate by using a stamping machine to apply heat and pressure to the foil in accordance with Note 6 to Chapter 32 and EN 32.12. As such, the IMD Eli Lilly foils are completely described by heading 3212, HTSUS as stamping foils. In support of this Protest and AFR, Protestant further notes that CBP’s past treatment of similar products mandates classification under HTSUS 4908.90. In Protestant’s CBP Form 19, Section II, supporting document, labeled “Exhibit 1,” Protestant attaches an email memorialization of a June 7, 2013, telephone discussion between CBP’s Port of Charlotte and Protestant in which CBP agreed to classify two IMD products, identified as “Titansilber” and “Titan II,” under heading 4908, HTSUS. Protestant argues that CBP should classify the instant merchandise consistently with its treatment of the importer’s Titan IMDs. In this regard, it is noted that in “Exhibit 5” to Protestant’s supplemental letter in support of the Protest and AFR, dated March 16, 2015, the IMD products identified as “Titansilber” and “Titan II” are stated not to contain a metalized layer. As such, the “Titansilber” and “Titan II” are not classifiable as stamping foils of heading 3212, HTSUS, and, based on their composition, are not similar to the IMD Eli Lilly foils at issue. In support of its assertion that the IMD Eli Lilly 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 IMD Eli Lilly foils are classified as “stamping foils” under 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 IMD Eli Lilly foils are classifiable pursuant to GRI 3.       HOLDING: By application of GRI 1, the subject in-mold decoration foils (IMD Eli Lilly) are classifiable as “stamping foils” under heading 3212, HTSUS, specifically subheading 3212.10, HTSUS (2012), as “[P]igments…; 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. Sixty days from the date of the decision, CBP will make the decision available to CBP personnel and the public via, the Freedom of Information Act, and other methods of public distribution. Sincerely, Myles Harmon, Director Commercial and Trade Facilitation Division