CLA-2 RR:CR:GC 963178 JGB
Mr. Paul S. Anderson
Sonnenberg & Anderson
200 South Wacker Drive
Chicago, IL 60606
RE: Reconsideration and Revocation of NY C85805; Conductive Paste
Dear Mr. Anderson:
On June 4, 1998, Customs issued to you, on behalf of Shoei Electronic Materials, New York Ruling (NY) C85805 concerning the classification under the Harmonized Tariff Schedule of the United States (HTSUS) of a conductive paste. This letter is to inform you that NY C85805 no longer reflects the view of the Customs Service concerning the classification of the conductive paste and that the following reflects our position for this product.
Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. 1625(c)(1)), as amended by section 623 of Title VI, a notice was published on October 13, 1999, in the Customs Bulletin, Volume 33, Number 41, proposing to revoke or modify four ruling letters pertaining to the tariff classification of metallic termination pastes or thick film for printed circuit board manufacture or related electronic applications. Among the four, the notice specifically referred to NY C85805, dated June 4, 1998. Your comment was received in response to the notice.
FACTS:
The products are used in the electronics manufacturing industry and are said to be used as an electrode material in the manufacture of ceramic chip capacitors.
Ruling NY C85805 classified the product in subheading 3824.90.70, HTSUS. The product consists of silver, palladium, ethyl cellulose, octyl alcohol, terpineol and oleic acid. We
presume that the palladium constitutes greater than 2 percent by weight.
ISSUE:
Whether the thick film products are classified in heading 3824, HTSUS, as a chemical product or preparation of the chemical or allied industries, or in heading 7115, HTSUS, as articles of precious metal.
LAW AND ANALYSIS:
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRI). 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 GRI may then be applied. The Explanatory Notes (EN) to the Harmonized Commodity Description and Coding System, which represent the official interpretation of the tariff at the international level, facilitate classification under the HTSUS by offering guidance in understanding the scope of the headings and GRI.
Heading 3824, HTSUS, provides for "...chemical products and preparations of the chemical or allied industries....” Subheading 3824.90.70, HTSUS, specifically provides for “...chemical products and preparations of the chemical or allied industries...: Other: Other: Other: Other: Mixtures of dibromoneopentyl glycol;...;and Electroplating chemicals and electroless plating solutions and other materials for printed circuit boards, plastics and metal finishings.” This is a residual or “basket” provision.
Heading 7115, HTSUS, provides for “Other articles of precious metal or of metal clad with precious metal:.” Note 4 (a-b) to Chapter 71, which includes heading 7115, HTSUS, provides that the expression “precious metal” means silver, gold, and platinum and that the expression “platinum” means platinum, iridium, osmium, palladium, rhodium and ruthenium.” Note 5 to chapter 71 provides as follows:
For the purposes of this chapter, any alloy (including a sintered mixture and an inter-metallic compound) containing precious metal is to be treated as an alloy of precious metal if any one precious metal constitutes as much as 2 percent, by weight, of the alloy. Alloys of precious metal are to be classified according to the following rules:
(a) An alloy containing 2 percent or more, by weight, of platinum is to be treated as an alloy of platinum;
(b) An alloy containing 2 percent or more, by weight, of gold but not platinum, or less than 2 percent, by weight, of platinum, is to be treated as an alloy of gold;
(c) Other alloys containing 2 percent or more, by weight, of silver are to be treated as alloys of silver.
GRI 3(a) provides that “when, by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:”
(a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.
Applying these provisions to the matter at hand, the “articles” provisions for the precious metals describe the goods. The goods consist principally of the named metals and they have been shown to be finished articles, as opposed to unwrought or primary forms of the metals. Each contains a discrete amount of the metal which presumably permits a desired level of electrical conductivity. Therefore, as articles of the named metals, they are completely and more specifically described by the articles provisions, than by the residual provision for chemicals. Accordingly, under GRI 3(a), the articles provisions prevail over the chemical provision.
Your comment asserted the correctness of NY C85805 and argued that heading 3824 is not a true residual or basket provision in that at the 8-digit subheading level, classification is determined by “use.” This “use”, it is argued, must take precedence over the “articles” provision for “[o}ther articles of precision metal” of heading 7115, HTSUS. You further argue that the “articles” provision of heading 7115, HTSUS, is also a residual provision, and that it does not describe the subject merchandise, in part, because it is not described in the EN’s to heading 7115. Additionally, it is argued that the GRI 3(a) may not be used to compare headings 3824 and 7115, in that the terms of the rule prohibit its use when each heading refers to part only of the materials or substances. You claim that in this instance, the headings only refer to part of the product.
You further argue, in the alternative, that the metal portion of the product must be considered as a powder and that under GRI 3(b), classification would be in heading 7106 or 7110, as appropriate. The next alternative offered is that the product should be considered parts of capacitors under heading 8532, HTSUS.
Customs disagrees with all the contentions presented, for the following reasons. Customs maintains that heading 3824 is a residual or “basket” provision for chemicals. Each relevant part of the heading contains language that identifies the heading as residual (with the obvious understanding that the product under consideration is not a prepared binder for foundry molds or cores). The rationale for Customs classification is not that the heading 3824 classification is inherently wrong, but that the products are more specifically provided for in the respective metals provisions for articles. Customs would agree that the subheading in which your client’s product was originally classified is governed by “use”; however, the inclusion of a provision governed by “use” at an 8-digit subheading level will not turn a residual heading into a “use” provision. Moreover, the use of GRI 3(a) is correct in Customs view, in that the products can be described as articles, for tariff purposes, because of their precise, exact, and intentional composition for a specific purpose, and that “[o]ther articles of precious metal” describes the whole product, not just a part of it. By contrast, the phrase “chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included” and “residual products of the chemical or allied industries, not elsewhere specified or included” can only rationally describe the chemical components of the product.
As to the role of the EN’s to heading 7115, there is no question that this product is not described by the EN’s, but it is not excluded either. It is not known whether this product was even considered when the HTSUS and EN language was formulated. However, in the absence of any guidance in the EN’s, Customs remains confident in its understanding that the headings for articles of precious and base metals, as appropriate, describe the product.
As to the classification of the product as a powder, it is not appropriate to consider the pastes and films as powders in that their form as imported is clearly otherwise. The only way that the product would be considered a metal powder for classification purposes would be under a GRI 3(b) analysis in which the classifier would be seeking the essential character of the mixed or composite good. As indicated above, it is not necessary or correct to employ GRI 3(b), when the classification can be settled by GRI 3(a).
HOLDING:
The conductive paste is classified in subheading 7115.90.60, HTSUS, the provision for “Other articles of precious metal or of metal clad with precious metal: Other: Other, Other.”
NY C85805 is hereby revoked.
In accordance with 19 U.S.C.1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.
Sincerely,
John Durant, Director
Commercial Rulings Division