CLA-2 OT:RR:CTF:CPMM H292437 CkG
TARIFF NO: 3824.99.92
Center Director
Consumer Products & Mass Merchandising
Center of Excellence and Expertise
U.S. Customs and Border Protection
157 Tradeport Dr
Atlanta, GA 30354
RE: Request for Internal Advice; Classification and NAFTA eligibility of correction tape
Dear Center Director,
This letter is in reply to your request of November 27, 2017, on behalf of BIC
USA, Inc. (“Requestor”) for the opinion of this branch on the tariff classification and eligibility of rolls of plastic film coated in white pigment under the North American Free Trade Agreement (NAFTA).
FACTS:
The instant merchandise consists of jumbo rolls of polyethylene plastic film, coated with a white pigment composed of titanium dioxide, magnesite and silicon dioxide, for use as correction tape. The bulk tape with pigment is made in Japan and then imported into Mexico, where it is cut to size, rolled into a tape dispenser ribbon spool, and then assembled into correction tape dispensers (with other plastic components of Mexican origin). The pigment preparation is applied to paper to correct typographical or handwritten errors by positioning the tip or roller of the dispenser, pressing firmly, and rolling over the surface to be covered.
The instant merchandise was entered into Mexico in heading 3921, HTSUS, as other sheets or films, of cellular plastics. The Mexican Customs authority liquidated the merchandise in heading 3920, HTSUS, as other, noncellular, sheets or films of plastics.
ISSUE:
The proper tariff classification of the subject correction tape prior to assembly in Mexico
The proper tariff classification of the correction tape at the time of importation into the United States
Whether the correction tape is eligible for preferential tariff treatment under NAFTA.
LAW AND ANALYSIS:
Merchandise imported into the United States is classified under the HTSUS. Tariff classification is governed by the principals set forth in the General Rules of Interpretation (GRIs) and, in the absence of special language or context with requires otherwise, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law for all purposes.
GRI 1 requires that classification be determine first according to the terms of the headings of the tariff schedule and any relative section or chapter notes and, unless otherwise required, according to the remaining GRIs taken in their appropriate order.
The HTSUS provisions under consideration are as follows:
3206: Other coloring matter; preparations as specified in note 3 to this chapter, other than those of heading 3203, 3204 or 3205; inorganic products of a kind used as luminophores, whether or not chemically defined:
3206.49: Other:
3206.49.10: Concentrated dispersions of pigments in plastics materials
3824: Prepared binders for foundry molds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included:
Other:
3824.99: Other:
3920: Other plates, sheets, film, foil and strip, of plastics, noncellular and not reinforced,
laminated, supported or similarly combined with other materials:
Of polycarbonates, alkyd resins, polyallyl esters or other polyesters:
3920.62.00: Of poly(ethylene terephthalate)…
* * * *
Note 3 to Chapter 32 provides as follows:
3. Headings 32.03, 32.04, 32.05 and 32.06 apply also to preparations based on colouring matter (including, in the case of heading 32.06, colouring pigments of heading 25.30 or Chapter 28, metal flakes and metal powders), of a kind used for colouring any material or used as ingredients in the manufacture of colouring preparations. The headings do not apply, however, to pigments dispersed in non-aqueous media, in liquid or paste form, of a kind used in the manufacture of paints, including enamels (heading 32.12), or to other preparations of heading 32.07, 32.08, 32.09, 32.10, 32.12, 32.13 or 32.15
Note 3 to Chapter 38 provides, in pertinent part, as follows:
3. Heading 3824 includes the following goods which are not to be classified in any
other heading of the tariff schedule:
…
(d) Stencil correctors, other correcting fluids and correction tapes (other than those of heading 9612), put up in packings for retail sale…
* * * *
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System at the international level. While not legally binding, the ENs provide a commentary on the scope of each heading of the HS and are thus useful in ascertaining the proper classification of merchandise. It is CBP’s practice to follow, whenever possible, the terms of the ENs when interpreting the HTSUS. See T.D. 89-90, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
EN 32.06 provides, in pertinent part, as follows:
This heading further includes preparations based on the colouring matters referred to above, and also the colouring pigments of heading 25.30 or of Chapter 28 and metallic flakes and powders, of a kind used for colouring any material or used as ingredients in the manufacture of colouring preparations in the form of :
Concentrated dispersions in plastics, natural rubber, synthetic rubbers, plasticisers or other media. These dispersions are used as raw materials for colouring plastics, rubber, etc., in the mass.
EN 38.24 provides, in pertinent part, as follows:
Subject to the above conditions, the preparations and chemical products falling here include :
(22) Correction tapes put up in packings for retail sale. These are rolls of
correction ribbons generally presented in a plastic dispenser, used for masking writing or typewriting errors or other unwanted marks in typescripts, manuscripts, photocopies, offset printing masters or the like. These products are available in different tape widths and lengths. The correction ribbon is composed of an opaque pigment coating which is applied on the surface of the ribbon. The coating is applied manually by pressing a transfer head on the part to be corrected.
* * * *
At the time of importation into Mexico, the correction tape is not yet assembled into a tape dispenser or otherwise prepared for retail sale. Pursuant to Note 3 to Chapter 38 and EN 38.24, heading 3824, HTSUS, includes correction tapes put up in packings for retail sale. Note 3 to Chapter 38 was modified in 2012 to include the reference to correction tape. EN 38.24 was simultaneously modified to include item 22. Prior to these changes, correction tape and similar articles, whether or not put up in packings for retail sale, were classified in heading 3206, HTSUS, specifically subheading 3206.49.10, HTSUS (“Concentrated dispersions of pigments in plastics materials”). See e.g., HQ 086381, dated April 24, 1990; NY H82372, dated June 28, 2001; NY C82550, dated December 16, 1997; and NY D80494, dated September 29, 1998.
Because Note 3 to Chapter 38 and EN 38.24 specifically reference only correction tape put up in packings for retail sale as within the scope of heading 3824, HTSUS, it is our position that such tapes, when not put up in forms ready for retail sale, are outside the scope of heading 3824, HTSUS.
Pursuant to Note 3 to Chapter 32 and EN 32.06, heading 3206, HTSUS, provides for concentrated dispersions of pigment in plastics. Thus, the correction fluid is classified in heading 3206, HTSUS, as a coloring preparation. The plastic backing, in turn, is classified in heading 3920, HTSUS, as a plastic film, noncellular and not reinforced, supported or combined with other materials.
The instant tape, as a combination of plastic film of heading 3920, HTSUS, and a coloring preparation of heading 3206, HTSUS, is a composite good. As the bulk, pre-assembled tape imported into Mexico is not specifically provided for in the HTSUS at GRI 1, we turn to GRI 3, specifically GRI 3(b), which provides that composite goods made up of different components shall be classified as if they consisted of the component which gives them their essential character. The Explanatory Notes to GRI 3(b) indicate that essential character may 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.
It is our opinion that the pigment dispersion imparts the essential character to the whole. The pigment preparation is the component applied directly to paper to correct errors; the plastic backing merely serves as a carrier for the pigment, and does not directly contribute to the ultimate purpose of the good—i.e., to correct typographical or written errors on paper.
Thus, the bulk, pre-assembled correction tape consisting of a concentrated dispersion of pigment on a plastic backing, not put up in packings for retail sale, is classified in heading 3206, HTSUS, at GRI 3, as a coloring preparation. Contrary to BIC’s position, the bulk correction tape cannot be classified in heading 3920 at GRI 1 or GRI 3, because heading 3920 does not include plastic films reinforced, laminated, supported or similarly combined with other materials at GRI 1, and the plastic film does not impart the essential character to the tape at GRI 3.
Once the correction tape is assembled in Mexico by cutting and incorporating into a tape dispenser, the tape is prepared for retail sale and thus undergoes a change in tariff classification from heading 3206, HTSUS, to heading 3824, HTSUS, specifically subheading 3824.99, HTSUS (2017), which covers correction tapes put up in packings for retail sale.
General Note (“GN”) 12, HTSUS, incorporates Article 401 of the NAFTA into the HTSUS. GN 12(a)(ii), HTSUS, provides that goods are eligible for the NAFTA rate of duty if they originate in the territory of a NAFTA party and qualify to be marked as goods of Mexico. GN 12(b), HTSUS, sets forth the various methods for determining whether a good originates in the territory of a NAFTA party. Specifically, these provisions provide, in relevant part, as follows:
Goods originating in the territory of a party to the North American Free Trade
Agreement (NAFTA) are subject to duty as provided herein. For the purposes of this note-- … (ii) Goods that originate in the territory of a NAFTA party under the terms of subdivision (b) of this note and that qualify to be marked as goods of Mexico under the terms of the marking rules set forth in regulations issued by the Secretary of the Treasury (without regard to whether the goods are marked), and goods enumerated in subdivision (u) of this note, when such goods are imported into the customs territory of the United States and are entered under a subheading for which a rate of duty appears in the "Special" subcolumn followed by the symbol "MX" in parentheses, are eligible for such duty rate, in accordance with section 201 of the North American Free Trade Agreement Implementation Act.
For the purposes of this note, goods imported into the customs territory of the United
States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as “goods originating in the territory of a NAFTA party” only if— (ii) they have been transformed in the territory of Canada, Mexico and/or the United States so that—
(A) except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein.
The rules which determine whether non-originating materials have undergone a qualifying change in tariff classification are set forth in General Note 12(t). However, because the NAFTA preference rules of GN 12 have not been updated to reflect changes in the Harmonized System made effective in 2012, there is no rule specifically for subheading 3824.99; GN 12(t) instead refers to subheading 3824.90, which was deleted and replaced with subheading 3824.99 in the 2017 edition of the Harmonized System. The current tariff shift rules thus only reflect the 2007 edition of the HS. Accordingly, because the NAFTA rules of origin have not been updated to reflect the 2012 changes to the HS, the 2007 classifications for the goods at issue must be used in order to ascertain the eligibility under the NAFTA. See e.g., HQ H237563, dated June 30, 2015. As noted above, prior to 2012, correction tapes put up for retail sale were classified in heading 3206, HTSUS, specifically subheading 3206.49.10, HTSUS. Of the 5 rules of origin applicable to pigments of subheading 3206.49, HTSUS, the rule applicable to the instant correction tape is Rule 8A(E), Chapter 32, which provides as follows:
A change to any other good of subheading 3206.49 from any other chapter, except from chapters 28 through 31 or 33 through 38
Following importation into Mexico, the correction tape is cut to size, rolled into a tape dispenser ribbon spool, and then assembled into correction tape dispensers. Based on the tariff classification prior to 2012 of the correction tape assembled into plastic dispensers for retail sale, the correction tape is classified in subheading 3206.49 both before and after the processing undergone in Mexico. The non-originating correction tape therefore does not undergo a qualifying tariff shift in Mexico, does not qualify as a NAFTA originating good, and is not eligible for NAFTA preferential treatment pursuant to rule Rule 8A(E) for Chapter 32.
With respect to the claim put forward by the requestor that CBP owes greater deference to rulings or decisions by other customs administrations when they involve a tariff classification determination by that administration with respect to non-originating components imported into that country, we do not find that these circumstances warrant a change in our longstanding position that we do not defer to rulings from other countries that classify identical or substantially similar merchandise. The country of importation is not a consideration in the legal determination of the correct tariff classification under the HTSUS. Furthermore, we note there is no indication in this instance that the Mexican Customs administration considered the applicability of either headings 3206 or 3824 to the instant merchandise.
HOLDING:
The assembled correction tape, once cut to size and assembled in dispensers in Mexico, is classified in heading 3824, HTSUS, specifically subheading 3824.99.92, which provides for “Prepared binders for foundry molds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included: Other: Other: Other: Other: Other.” The 2018 column one, general rate of duty is 5% ad valorem. The correction tape is not eligible for preferential tariff treatment under NAFTA.
You are to mail this decision, together with the Customs Form 19, to the Internal Advice requestor 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 the Office of Regulations and Rulings will make the decision available to CBP personnel, and to the public online at
http://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