CLA-2 RR:CR:TE 962603 RH
TARIFF NOS.: 4909.00.4020; 4911.91.2040; 4911.91.3000; 4911.91.4040
Harvey B. Fox, Esq.
Gregory C. Anthes, Esq.
Adducci, Mastriani & Schaumberg, LLP
1200 Seventeenth Street, N.W.
Washington, D.C. 20036
RE: Classification of Greeting Cards and Greeting Card Sheets;
Heading 4409; Heading 4817; Heading 4911; Essential Character; Country of Origin; NAFTA
Dear Mr. Fox and Mr. Anthes:
This is in reply to your letters of February 17, 1999, November 1, 1999, June 12, 2001, and January 25, 2002, on behalf of your client, Hallmark Cards, Inc., requesting a tariff classification ruling for greeting cards and greeting card sheets, which will be imported into the United States from Canada. Additionally, you request a country of origin marking determination under the North American Free Trade Agreement (NAFTA) for this merchandise. Members of my staff met with you and your client on March 30, 2001, to discuss the issues in this case.
We grant your request for confidential treatment of the cost information and exhibits 5 and 6 of your February 17, 1999 submission. It has long been the position of the Customs Service that a section 177.2(b)(7) grant of confidentiality is coterminous with Exemption 4 of the Freedom of Information Act (5 U.S.C. 552(b)(4)). Exemption 4 was enacted to protect from disclosure information such as customer lists, costs, identities of suppliers, quantities of merchandise, formulas, assets, profits, losses, market shares, and similar information, the disclosure of which would enure to the competitive disadvantage of the party providing the information.
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FACTS:
Hallmark prints greeting card sheets in the United States, either by lithography, thermography or screen printing operations. The greeting card sheets generally range in size from 28 inches by 20 inches to 60 inches by 43 inches. Each sheet bears different numbers and styles of cards. A greeting card sheet may contain several different greeting cards that are printed with a picture or image and may also have a printed written sentiment on the front, inside page, or both. You refer to this type of greeting card as a “traditional greeting card.” The greeting card sheet may also contain several different greeting cards that do not possess a written sentiment. You refer to these as “blank greeting cards.” Finally, a greeting card sheet may contain any combination of “traditional” and “blank” greeting cards. We also note that prior to exportation to Canada, each card on the greeting card sheet is delineated with “tick” marks that define where each card will be cut to form an individual card. Regardless of the type of printing process utilized, the paperboard and materials used to produce the greeting card sheets are of U.S. origin.
The printed sheets are exported to Canada for further processing. In Canada, some of the sheets are die cut, separated into individual cards, folded and packaged, and some of the cards remain in sheet form for further processing. Some cards may undergo operations such as embossing (a process in which a design is pressed into a greeting card sheet), flocking (a decorative process by which adhesive and small rayon fibers are applied to the card by a screen print process to create a fuzzy texture), and “flittering” (a decorative process in which glass, metal or plastic particles are applied using an adhesive). Additionally, some greeting cards may undergo a secondary printing process, such as thermography or screen printing, to add highlights, design or lettering to the card, or to add information on the back of the card. We are informed that the materials used in embossing, flocking and flittering are of Canadian origin.
After processing in Canada, the greeting cards and greeting card sheets are imported into the United States in one of the following conditions:
Finished and containing some written text, referred to as “traditional cards”;
Finished and not containing any text, referred to as “blank” cards;
Greeting card sheets containing any combination of “traditional” and “blank” greeting cards.
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In your opinion, all of the subject merchandise is classified in heading 4909 of the Harmonized Tariff Schedule of the United States (HTSUS), which provides for, among other things, printed cards, bearing personal greetings, whether or not illustrated, with or without envelopes or trimmings. In support of this claim, you make the following main arguments:
Classification in heading 4909, HTSUS, is appropriate pursuant to
GRI 1;
In the alternative, classification of this merchandise is based on the “same class or kind” of merchandise as found in heading 4909, HTSUS;
The subject merchandise does not meet the description of any of the items provided for under heading 4817, HTSUS.
ISSUES:
What is the proper classification of the “traditional cards” imported from Canada?
What is the proper classification of the “blank cards” imported from Canada?
What is the proper classification of the greeting card sheets imported from Canada?
What is the country of origin of the greeting cards and greeting card sheets upon importation into the United States from Canada?
LAW AND ANALYSIS:
Classification of goods under the HTSUS is governed by the General Rules of Interpretation (GRI's). GRI 1 provides that classification shall be determined according to the terms of the headings and any relative section or chapter notes. Merchandise that cannot be classified in accordance with GRI 1 is to be classified in accordance with subsequent GRI's taken in order.
Additionally, the Explanatory Notes (EN’s) to the Harmonized Commodity Description and Coding System constitute the official interpretation of the nomenclature at the international level. The EN’s are not legally binding. However, they do represent the considered views of classification experts of the Harmonized System Committee. It has therefore been the practice of the Customs Service to follow, whenever possible, the terms of the EN’s when interpreting the HTSUS.
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Heading 4909, HTSUS, provides for “Printed or illustrated postcards; printed cards bearing personal greetings, messages or announcements, whether or not illustrated, with or without envelopes or trimmings.”
We agree with you that the “traditional” greeting cards are classifiable in heading 4909, HTSUS, as they bear a written greeting, message or announcement. The question is whether the “blank” cards satisfy the terms of heading 4909, HTSUS.
In that regard, you argue that heading 4909, HTSUS, is not limited to printed cards bearing personal greetings in the form of editorial content, but includes printed cards bearing “messages.” You cite several dictionary definitions of “message”:
“An underlying theme or idea.” Merriam Webster’s Collegiate Dictionary (10th edition);
“The basic theme or significance of something.” American Heritage Dictionary of the English Language (1981);
“A message, moral or important idea that somebody wants to communicate.” Encarta World English Dictionary (1999 edition).
You state that Customs should classify illustrated “blank” greeting cards under heading 4909, HTSUS, because the illustrations contained on “blank” greeting cards convey underlying themes or ideas. You further state that:
Greeting cards are “social expression” products that help consumers express a greeting, message or announcement to others. Some consumers look for a card where the words expressing that message have already been written and they need only sign their name, or add some additional thoughts. Many consumers, however, would like the words to be entirely their own. Unlike traditional stationery and note cards, they wish to find a blank card that expresses an individual message through the illustration or design. The use of such a card, while allowing a more personalized written greeting, still conveys the sense that the sender went to the effort to select a card that communicated a message specific to the recipient.
Additionally, you state that the cliché “a picture is worth a thousand words” only has meaning by accepting the fact that illustrations convey messages to the viewer, which invoke unique feelings and convey his/her sentiment. We examined Exhibits 1 through 18 in your June 12, 2001 submission, and agree with you that each card conveys a different message to the sender and recipient by way of illustration, i.e., birthday, wedding, get-well, sympathy, new baby, etc.
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While we agree with you that, as a practical matter, a message may be conveyed through illustrations, for legal purposes we are bound by the terms of heading 4909, HTSUS, and the notes to Chapter 49, HTSUS. The nomenclature in heading 4909, HTSUS, and the Chapter 49 notes make a distinction between printed material in the form of literary text and printed material in the form of illustrations. For example, heading 4909, HTSUS, is divided into two parts, separated by a semicolon. The first part of the heading provides for “printed or illustrated postcards.” Emphasis added. The second part of the heading covers “printed cards bearing personal greetings, messages or announcements, whether or not illustrated, with or without envelopes or trimmings.” Emphasis added. Based on the terms of the heading, the phrase “bearing personal greetings, messages or announcements” clearly requires some form of literary text. Simply stated, cards of heading 4909, HTSUS, may consist of plain cards printed with a greeting, message or announcement, or cards with a printed greeting, message or announcement that are also decorated. The heading does not cover cards that are printed only with illustrations.
In addition to the language of heading 4909, Note 4 to Chapter 49, HTSUS, further demonstrates the distinction between literary and illustrated material for the purposes of that chapter. While the first part of that note addresses heading 4901, HTSUS (“Printed books, brochures, leaflets and similar printed matter, whether or not in single sheets”), the last sentence is relevant in this case. It states that “printed pictures or illustrations not bearing a text, whether in the form of signatures or separate sheets, fall in heading 4911.” Emphasis supplied.
Heading 4911, HTSUS, provides for “other printed matter including printed pictures and photographs.
Accordingly, we find that Hallmark’s greeting cards “not bearing a text” (i.e., Hallmark’s “blank” cards) do not satisfy the terms of heading 4909, HTSUS, and are classifiable in heading 4911, HTSUS, as other printed matter.
In the past, Customs classified illustrated greeting cards which do not bear written text in the form of a greeting, message or announcement in heading 4817, HTSUS, which encompasses “Envelopes, letter cards, plain postcards and correspondence cards, of paper or paperboard; boxes, pouches, wallets and writing compendiums, of paper or paperboard, containing an assortment of paper stationery.” See, NY 957929, dated November 15, 1990; NY D88577, dated March 4, 1999; NY D88582, dated March 5, 1999; NY D88802, dated March 11, 1999; NY D88805, dated March 11, 1999; NY E80406, dated April 22, 1999; NY E80955, dated April 30, 1999; NY E86598, dated September 14, 1999.
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However, as stated above we are now of the opinion that “greeting cards” without literary text are classifiable in heading 4911, HTSUS, and that the terms of heading 4817 do not accurately describe “blank” greeting cards. We are in the process of revoking those rulings and classifying the “blank” greeting cards in heading 4911, HTSUS.
We also note the ruling you cited (HQ 089218, dated September 12, 1991), which classified illustrated greeting cards with or without a written greeting in heading 4909, HTSUS. We are in the process of modifying that ruling and reclassifying the illustrated cards without written text in heading 4911, HTSUS.
The next question is the classification of the greeting card sheets. GRI 2(a) reads:
Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled.
The term “essential character” is not defined in the HTSUS. However, the EN’s provide guidance on the meaning of the term under GRI 3(b), stating, in part that:
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. See, EN’s to GRI 3(b), VIII.
In this case, the printing process, whether lithography, thermography or screen printing, imparts the images, picture and/or text printed on the paperboard sheet and represents the greatest portion of the total cost of producing the finished greeting cards. Moreover, during your meeting with our office, you provided sample sheets which clearly showed “tick” marks, similar to lines of demarcation, which identify the outline of each card on the sheet and where it will be cut into an individual card. Additionally, as established in the February 17 submission, Hallmark is able to break down the cost of each individual card.
In the past, Customs has applied factors such as “irrevocably committed to use” and “identity of an article” to determine essential character under GRI 2(a), HTSUS. These principles evolved under the Tariff Schedule of the United States (TSUS). In Coraggio Design, Inc. v. United States, 12 CIT 143 (1988), the Court of International Trade held that imported rolls or bolts of drapery fabric which had
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a "continental hem" that dedicated its use solely as drapery and made it commercially unsuitable for other uses was, nevertheless, classified as fabric and not an article because the hem did not fix the identity of the drapery with certainty.
The principal that the identity of an article must be fixed with certainty was discussed earlier in the Harding Co. v. United States, 23 CCPA 250, TD 48109 (1936). In that case, brake lining material was imported in 100-foot rolls. It was used for brake lining for automobiles and was not commercially suitable for other
uses. After it was fitted and riveted to a brake shoe, it was cut off at one end. The brake lining material was not marked to indicate where it was to be cut for the reason that, even though used as brake linings for automobiles, it was used in various lengths. The court held that the imported merchandise was material for making automobile brake linings and not parts of automobiles.
Moreover, in Bendix Mouldings, Inc. v. United States, 73 Cust. Ct. 201, 388 F. Supp. 1193 (1974), the court stated that "no matter how close the importation is to the finished article or how dedicated it is to a single use, it remains a material until the identity of actual articles can be seen emerging with certainty from the undifferentiated material." In Bendix, uncut wood moldings dedicated to use as picture frames but not dedicated to the making of any particular frame were not classifiable as unfinished frames but only as the material from which frames were made. See, American Import v. United States, 26 CCPA 72 (1938) (the mere fact that 60 foot lengths of silk fishing-leader gut was exclusively used for fishing leaders did not take it out of material classification).
In this case, the imported greeting card sheets have “tick” marks similar to lines of demarcation, which indicate where each card is to be cut. Moreover, unlike the drapery fabric imported in rolls in Coraggio, the uncut wood picture frames in Bendix, and the brake lining material in Harding, each card on the sheet can be identified with certainty as an independent article and the identity of the individual cards can be seen emerging with certainty before they are cut into individual cards. Therefore, the individual cards on each sheet are classifiable under either heading 4909, HTSUS, if containing written text, or under heading 4911, HTSUS, if “blank.”
We disagree with you, however, that a “blank” card has the essential character of a greeting card. As stated above, articles of heading 4909, HTSUS, must “bear a personal greeting, message or announcement” and they may or may not be illustrated. Since the cards do not have literary/written text they do not have the essential character of an article of heading 4909, HTSUS. A good example of an “unfinished” greeting card of heading 4909, HTSUS, as shown in some of your samples, is a card with a written sentiment which is exported to Canada for
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further processing/embellishment such as flocking, flittering, etc. Therefore, while each individual card on the “greeting card sheet” has the essential character of a card, the “blank” cards do not have the essential character of a card of heading 4909, HTSUS, as they do not possess all the requirements of that heading.
Finally, the last question we will address is whether the finished greeting cards and the greeting card sheets returned from Canada after minor finishing operations retain their U.S. country of origin, and thus, do not require any country of origin marking. Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. §1304), provides that, unless excepted, every article of foreign origin imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or its container) will permit,
in such a manner as to indicate to the ultimate purchaser in the United States the English name of the country of origin of the article. By enacting 19 U.S.C. §1304, Congress intended to ensure that the ultimate purchaser would be able to know
the country of origin by inspecting the marking on the imported goods. That evident purpose is to mark the goods where produced, and allow the consumer to be able to buy or refuse to buy them, if such marking should influence his will. United States v. Friedlaender & Co., 27 C.C.P.A. 297, 302 C.A.D. 104 (1940).
Section 134.1(b), Customs Regulations (19 CFR §134.1(b)), defines “country of origin” as:
The country of manufacture, production, or growth of any article of foreign origin entering the United States. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the “country of origin” within the meaning of this part; however for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin.
Section 134.1(j), Customs Regulations (19 CFR §134.1(j)), provides that the “NAFTA Marking Rules” are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country. Section 134.1(g), Customs Regulations (19 CFR §1(g)), defines a “good of a NAFTA country” as an article for which the country of origin is Canada, Mexico or the United States as determined under the NAFTA Marking Rules, set forth at 19 CFR Part 102.
Section 102.11(a), Customs Regulations (19 CFR §102.11(a)), sets forth the required hierarchy for determining whether a good is a good of a NAFTA country for marking purposes. This section states that the country of origin of a good is the country in which:
The good is wholly obtained or produced;
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The good is produced exclusively from domestic materials; or
Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section 102.20 and any other applicable requirements of these rules are satisfied.
Section 102.1(e), Customs Regulations (19 CFR §102.1(e)) defines “foreign material” as “a material whose country of origin as determined under these rules is not the same country as the country in which the good is produced.” Because the finished greeting cards to be processed in Canada are made from U.S. materials, they are neither wholly obtained, nor produced exclusively from domestic (i.e., Canadian) materials. Accordingly, origin may not be determined under 19 CFR §102.11(a)(1) or (2), requiring continuation to 19 CFR §102.11(a)(3).
Pursuant to 19 CFR §102.11(a)(3), the country of origin of a good is the country where each foreign material incorporated in that good undergoes an applicable change in tariff classification as set forth in 19 CFR §102.20, which sets forth the specific tariff classification changes and/or other operations that are specifically required to occur in order for country of origin to be determined on the basis of
operations performed on the foreign materials contained in a good.
Classification of the greeting card sheets upon exportation to Canada is as follows:
“Blank” greeting cards are classifiable under heading 4911 both at the time of exportation from the United States and upon importation into the United States after processing in Canada.
Cards exported to Canada with text (bearing a personal greeting, message or announcement) are classifiable under heading 4909 both at the time of exportation from the United States and when imported into the United States after processing in Canada.
Classification of the cards that are “blank” at the time of exportation and are printed with text in Canada changes from heading 4911, HTSUS, to heading 4909, HTSUS, respectively.
Since the “traditional greeting cards” exported blank to Canada and imported into the United States with text are classifiable in heading 4909, HTSUS, the change in tariff classification must be made in accordance with section 102.20(j), Section X: Chapters 47-49, headings 4901-4911, HTSUS, which requires “[a] change to heading 4901-4911 from any other heading, including another heading within that group."
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Assuming that any additional material utilized in embossing, flocking or flittering (e.g., ink, rayon fibers, glass, metal or plastic particles and adhesive) is either of Canadian origin or, if of U.S. origin, is classified in a heading other than 4909, HTSUS, each of the foreign materials incorporated in the finished “traditional greeting cards” will undergo the requisite tariff shift. Consequently, the country of origin of the finished “traditional greeting cards” is Canada, pursuant to NAFTA Marking Rules, and they must be marked accordingly upon importation into the United States.
The greeting cards and/or greeting cards sheets which retain the same classification both at the time of exportation from the United States and when returned after processing in Canada may not be determined in accordance with section 102.11(a)(3), because they do not undergo a tariff shift.
Where 19 CFR 102.11(a) (incorporating section 102.20), is not determinative of origin, analysis continues to section 102.11(b), Customs Regulations (19 CFR §102.11(b)), which states, in part:
Except for a good that is specifically described in the Harmonized Tariff Schedule as a set, or is classified as a set pursuant to General Rule of Interpretation 3, where the country of origin cannot be determined under paragraph (a), the country of origin of the good:
(1) Is the country or countries of origin of the single material
that imparts the essential character of the good. . . .
In the instance case, the imported merchandise is composed of unfinished printed greeting card sheets of U.S. origin which have undergone additional processing in the form of die cutting, separation into individual cards, folding and packaging in some cases, and in some instances, embossing, flocking and/or flittering utilizing Canadian-origin materials.
When determining the essential character of a good under section 102.11, Customs regulations, section 102.18(b)(2), provides that, “for purposes of applying section 102.11, only domestic and foreign materials (including self-produced materials) that are classified in a tariff provision from which a change in tariff classification is not allowed in the rule for the good set out in section 102.20 shall be taken into consideration in determining the parts or materials that determine the essential character of a good.”
Since the finished greeting cards and greeting card sheets returned to the United States are classifiable under headings 4909 and 4911, HTSUS, the rule used to determine the eligibility of those materials to be used in determining the essential
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character” of the goods is section 102.20(j), Section X: Chapters 47-49, HTSUS, which requires “[a] change to heading 4901-4911 from any other heading, including another heading within that group.” Although the precise tariff classification of the Canadian components used in embossing, flocking and flittering have not been provided, these materials - ink, rayon fibers, adhesive and glass, metal or plastic particles – are not in the same category of goods
covered under heading 4909 and 4911, HTSUS, and are classifiable in other chapters of the HTSUS. Therefore, these materials would meet the applicable
tariff shift rule set forth at 19 CFR §102.20(j) and may not be used in determining the essential character of a good pursuant to 19 CFR §102.18(b)(2). Because the single remaining material – the unfinished printed greeting card sheet – is classifiable in tariff provisions from which a change in tariff classification is not allowed under the applicable rule in 19 CFR §102.20(j), the U.S.-origin greeting card sheet would be the single material which imparts the essential character to the finished good pursuant to section 102.18(b)(iii).
Accordingly, for country of origin marking purposes, the country of origin of the finished “traditional greeting cards”, “blank greeting cards” and greeting card sheets would be the United States. Because the marking requirements of
19 U.S.C. §1304 are applicable only to articles of “foreign origin,” these finished greeting cards would not need to be marked upon entry into the United States.
Finally, the samples you provided to our office for examination will be returned to you under separate cover.
HOLDING:
The country of origin of the “traditional greeting cards”, “blank greeting cards” and greeting card sheets which do not undergo a change in tariff classification in Canada, is the United States. However, pursuant to 19 CFR §102.19(b), the country of origin of these goods for Customs duty purposes is Canada (the last NAFTA country in which the goods were advanced in value or improved in condition before returning to the United States).
The country of origin of the greeting cards that undergo a tariff shift in Canada (i.e., the “blank” greeting cards that have text added in Canada) is Canada.
The “traditional greeting cards”, whether cut into individual cards or on the greeting card sheets as unfinished or incomplete cards, are classified in subheading 4909.00.4020, HTSUS, as printed greeting cards. The applicable special column two rate of duty is "Free."
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The “blank greeting cards”, whether cut into individual cards or on the greeting card sheets as unfinished or incomplete cards, are classified in the following subheadings:
If the merchandise consists of pictures, designs and photographs, printed by lithography on paper or paperboard, not over 0.51 mm in thickness, the merchandise is classified in subheading 4911.91.2040, HTSUS, and the applicable special column two rate is “Free.”
If the merchandise consists of pictures, designs and photographs, printed by lithography on paper or paperboard, over 0.51 mm in thickness, the merchandise is classified in subheading 4911.91.3000, HTSUS, and the applicable special column two rate of duty is “Free.”
If the merchandise consists of pictures, designs and photographs, printed by some other method, other than lithography on paper or paperboard, the merchandise is classified in subheading 4911.91.4040, HTSUS, and the special column two rate of duty is “Free.”
Sincerely,
John Durant, Director
Commercial Rulings Division