CLA-2 OT:RR:CTF:TCM H209834 RGR
Port Director
Service Port-Memphis
3150 Tchulahoma Road
Suite 1
Memphis, TN 38118
ATTN: Maria Jackson, Import Specialist
RE: Application for Further Review of Protest No. 2006-12-100024; Tariff classification of conductor paste
Dear Port Director:
The following is our decision regarding the Application for Further Review of Protest No. 2006-12-100024, timely filed on behalf of Heraeus, Inc. (“Protestant”), on January 17, 2012, regarding the classification of conductor paste, under the Harmonized Tariff Schedule of the United States (“HTSUS”).
FACTS:
The protest describes one entry of conductor paste identified as “Product No. C 6011.” The conductor paste is described as a thixotropic paste composed of 56.79% gold, 10.78% platinum, 6.68% palladium, and the remaining 25.75% of other, non-precious metal materials. According to the importer, the article is applied by screen printing on ceramic substrates, then dried and fired. The paste is used in fuel sensor applications within fuel senders, which are devices that measure the amount of fuel in a fuel tank of a motor vehicle. Through heat treatment or a sintering process, the conductor paste hardens to form a wear-resistant, porous layer for creating electrical pathways within a fuel sender.
As imported, the conductor paste is completely wrought and in fully manufactured form. The conductor paste is screen printed onto a non-conductive substrate, which can be of various materials such as ceramic, where it is bonded and hardened on the substrate to create electrical pathways. Such conductor pastes are commonly used in the semi-conductor and automotive industries to produce electronic devices such as fuel senders.
The protested entry of conductor paste was entered on September 27, 2010, under subheading 3207.30.0000, HTSUS, as “[p]repared pigments, prepared opacifiers and prepared colors, vitrifiable enamels and glazes, engobes (slips), liquid lustres and similar preparations, of a kind used in the ceramic, enamelling or glass industry; glass frit and other glass, in the form of powder, granules or flakes: [l]iquid lustres and similar preparations.” CBP issued a Notice of Action on August 15, 2011, informing the Protestant of liquidation of the merchandise in subheading 7115.90.6000, HTSUS, as “[o]ther articles of precious metal or of metal clad with precious metal: [o]ther: [o]ther: [o]ther,” at a 4% ad valorem rate of duty. Protestant filed this Protest and AFR on January 17, 2012, asserting that the conductor paste is properly classified under subheading 3207.30.00, HTSUS, as a preparation similar to a liquid lustre.
ISSUE:
Whether the conductor paste is classified as “[p]repared pigments, prepared opacifiers and prepared colors, vitrifiable enamels and glazes, engobes (slips), liquid lustres and similar preparations, of a kind used in the ceramic, enamelling or glass industry; glass frit and other glass, in the form of powder, granules or flakes: [l]iquid lustres and similar preparations” under heading 3207, HTSUS, or as ““[o]ther articles of precious metal or of metal clad with precious metal: [o]ther: [o]ther: [o]ther” under heading 7115, HTSUS?
LAW AND ANALYSIS:
The protest was properly filed as a decision on classification under 19 U.S.C. § 1514(a)(2). The protest was timely filed within 180 days of liquidation on September 9, 2011. See 19 U.S.C. § 1514(c)(3).
Further Review of Protest No. 2006-12-100024 was properly accorded to Protestant pursuant to 19 C.F.R. § 174.24(c) because the decision against which this protest was filed is alleged to involve matters previously ruled upon by the Commissioner of Customs or his designee or by the Customs courts, but facts are alleged or legal arguments presented which were not considered at the time of the original ruling.
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 GRIs may then be applied. Additional U.S. Rule of Interpretation (“AUSRI”) 1(a) provides that a tariff classification controlled by use (other than actual use) is to be determined in accordance with the use in the United States at, or immediately prior to, the date of importation, of goods of that class or kind to which the imported goods belong, and the controlling use is the principal use.
The HTSUS subheadings under consideration are as follows:
3207 Prepared pigments, prepared opacifiers and prepared colors, vitrifiable enamels
and glazes, engobes (slips), liquid lustres and similar preparations, of a kind used in the ceramic, enameling or glass industry; glass frit and other glass, in the form of powder, granules or flakes:
3207.30.00 Liquid lustres and similar preparations
* * *
7115 Other articles of precious metal or of metal clad with precious metal:
7115.90 Other:
7115.90.60 Other.
* * *
The Legal Notes to Chapter 71, HTSUS, provide the following, pertinent part:
* * *
3. This Chapter does not cover:
* * *
(c) Goods of Chapter 32 (for example, lustres);
* * *
4. (a) The expression “precious metal” means silver, gold and platinum.
* * *
5. 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:
An alloy containing 2 percent or more, by weight, of platinum is to be treated as an alloy of platinum;
An alloy containing 2 percent or more, by weight, of gold but no platinum, or less than 2 percent, by weight, of platinum is to be treated as an alloy of gold;
Other alloys containing 2 percent or more, by weight, of silver are to be treated as alloys of silver.
* * *
In understanding the language of the HTSUS, the Explanatory Notes (“ENs”) of the Harmonized Commodity Description and Coding System may be utilized. The ENs, although not dispositive or legally binding, provide a commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUS. See T.D. 89-80, 54 Fed. Reg. 35127 (August 23, 1989).
The EN 32.07 states the following, in relevant part:
This heading covers a range of preparations used in the ceramic industry (china,
earthenware, etc.), in the glass industry or for colouring or finishing metal articles.
Prepared pigments, prepared opacifiers and prepared colours are dry mixtures formed by the heat treatment of oxides (of antimony, silver, arsenic, copper, chromium, cobalt, etc.) or salts (fluorides, phosphates, etc.) with or without fluxes or other substances, and are fired at high temperatures, generally above 300° C, after application. The goods are used to produce a coloured or opaque surface in the course of ceramic firing. They may be incorporated in the glass or enamel, or be applied as a coating before glazing.
Vitrifiable enamels and glazes are mixtures of silica with other products (feldspar, kaolin, alkalies, sodium carbonate, alkaline-earth metal compounds, lead oxide, boric acid, etc.) giving a smooth surface, either matt or glossy, by vitrification under heat. In most cases some of the constituents have been fused together in a preliminary process and are present in the mixture in the form of powdered frit (see below).
* * *
Engobes (slips) are semi-fluid pastes with a basis of clay, whether or not coloured, used to coat ceramic ware, either completely or in the form of a pattern. They are applied either before firing or after a preliminary first firing.
Liquid lustres are solutions or suspensions of metal compounds in spirits of turpentine or other organic solvents, used for decorating ceramics or glassware. The most widely used are gold, silver, aluminum or chromium lustres.
Glass frit and all other varieties of glass (including vitrite and glass obtained from fused quarts or other fused silica) in the form of powder, granules or flakes, whether or not coloured or silvered.
* * *
(Emphases in original).
The EN 71.15 states the following, in relevant part:
This heading covers all articles wholly or partly of precious metal or metal clad with precious metal not constituting jewellery, unfinished or incomplete articles of jewellery or parts of jewellery (heading 71.13) or goldsmiths’ or silversmiths’ wares, unfinished or incomplete articles of goldsmiths’ or silversmiths’ wares or parts thereof (heading 71.14), and not excluded under the provisions of Note 2(A) or 3 to this Chapter.
* * *
(Emphases in original).
First, we note that Note 3(c) to Chapter 71 states that the chapter does not cover goods of Chapter 32. Thus, if the conductor paste is classifiable under heading 3207, HTSUS, it cannot be classified in heading 7115, HTSUS. Accordingly, we begin by examining whether the conductor paste is classified in heading 3207.
The Protestant’s primary argument is that the conductor paste meets the description of heading 3207, HTSUS, because it is a preparation that is similar to the specific types of preparations named in the heading under the principle of ejusdem generis. In addition, the Protestant argues that since the conductor paste is applied to ceramic substrates, it is of a kind used in the ceramic industry. Further, the Protestant asserts that the conductor paste shares physical similarities with liquid lustres and should be classified under subheading 3207.30, HTSUS.
In tariff classification cases, ejusdem generis requires that the merchandise possess the same essential characteristics or purposes that unite the listed examples preceding the general term or phrase. Avenues in Leather, Inc. v. United States, 178 F.3d 1241, 1244 (Fed. Cir. 1999) (citing Totes, Inc. v. United States, 69 F.3d 495, 498 (Fed. Cir. 1995). Further, “classification. . . is appropriate only if the imported merchandise shares the characteristics or purpose and does not have a more specific primary purpose that is inconsistent with the listed exemplars.” Id.
Accordingly, the conductor paste must possess the same essential characteristics or purposes that unite the exemplars preceding “similar preparations,” which consist of “prepared pigments, prepared opacifiers and prepared colors, vitrifiable enamels and glazes, engobes (slips), and liquid lustres.” These specific examples are further listed in the subheadings, followed by the phrase “and similar preparations” at the subheading level.
The EN to 32.07 describes the purposes of the exemplars as follows: to produce a colored or opaque surface, to produce a smooth matte or glossy surface, to coat a ceramic ware completely or in the form of a pattern, and for decorating ceramics of glassware. Based on these descriptions, the essential characteristic or purpose that unites the goods listed in heading 3207, HTSUS, is to alter the appearance of a ceramic, glassware, or metal article. In contrast, the primary purpose of the conductor paste at issue in this AFR is for use in fuel senders that measure the amount of fuel in a fuel tank of a motor vehicle through hardening on a non-conductive substrate to create electrical pathways. In particular, a fuel-level indicator in a motor vehicle fuel tank includes a movable transmitter arm carrying a slide contact, which is in sliding engagement with a slide track. The slide track is applied in the form of a paste containing precious metals. Through heat treatment or a sintering process, the conductor paste hardens to form a wear-resistant, porous layer. A conductive paste such as the protested merchandise is designed to the meet the challenges of a fuel sender that must work in aggressive fuels that may contain water, alcohols, organic acids, sulfur compounds and fluorine from tank walls.
The Protestant argues that under the principles of ejusdem generis, the common thread among the exemplars listed at the heading level of heading 3207, HTSUS, is that they are preparations that are applied to other articles externally to alter one or more properties of the surfaces to which they are applied. Specifically, the Protestant asserts that preparations falling under heading 3207, HTSUS, are used for purposes that include adding color, changing opacity, changing texture, joining sections of unfired wares, and adhering objects to unfired wares. Thus, under ejusdem generis, the Protestant asserts that the scope of heading 3207, HTSUS, covers any preparations used in the ceramic industry, which are applied externally to a ceramic substrate to alter one or more of the surface properties of the substrate.
However, the Protestant’s proposed scope of heading 3207, HTSUS, is too broad, which would create the problem of capturing preparations used for purposes beyond the unifying purposes of what the exemplars are listed as performing in the ENs, i.e., altering the appearance of a ceramic, glassware, or metal article. Including all uses that alter a surface property of a ceramic substrate in the scope of heading 3207, HTSUS, is too broad because this would capture uses whose primary purpose is not to change the appearance of a ceramic but to perform some other purpose simply because it is applied to the surface. Such an interpretation would result in a broad application of heading 3207, HTSUS, to any preparation that is applied to a material’s surface. Further, just because something is applied to the surface of a ceramic, glassware, or metal article, does not mean that its primary purpose is to alter the appearance of the surface.
In regard to the subject conductor paste, the Protestant specifically claims that it is most similar to liquid lustres. For an article to be a similar preparation as a liquid lustre, it must be similar in both use and preparation. EN(4) to 32.07 describes liquid lustres as having compositions of metal compounds in spirits of turpentine or other organic solvents that are used for decorating ceramics or glassware. The Merriam-Webster Online Dictionary defines “decorate” as “to furnish with something ornamental,” and it defines “ornament” as “something that lends grace or beauty” or a “a manner or quality that adorns.” Thus, in order for the conductor paste to be considered a similar preparation to a liquid lustre, it must have a composition consisting of metal compounds in an organic solvent and be used for decorating ceramics or glassware. Although the conductor paste has a composition consisting of metal compounds, the paste’s primary purpose is not for decorating a ceramic substrate in such a way that furnishes it with something ornamental that lends it grace or beauty, or through adornment. Rather, the conductor paste’s primary purpose is to create electrical pathways on top of a ceramic substrate through its conductive properties. Thus, under the principles of ejusdem generis, the conductor paste is not classifiable under heading 3207, HTSUS, because it does not fall within the scope of this heading. In addition, the conductor paste is not used for any similar purpose as liquid lustres or as any of the other uses listed among the exemplars enumerated in the heading text.
Next, we examine the Protestant’s argument that the conductor paste is classified under heading 3207, HTSUS, because as an article applied to ceramic substrates, the conductor paste is of a kind used in the ceramics industry as set forth in the heading. Because the Heading 3207, HTSUS, includes the language “of a kind used,” it is a “principal use” provision subject to the requirements of AUSRI 1(a), HTSUS. See HQ H261313 (Apr. 7, 2016). In addition, in HQ 965416, dated July 23, 2002, we determined that heading 3207, HTSUS, is a principal use provision. AUSRI 1(a) requires consideration of the seven Carborundum factors, which include: the general physical characteristics of the merchandise; the channels of trade in which the merchandise moves; the environment of the sale, such as the manner in which the merchandise is advertised and displayed; the expectation of the ultimate purchasers; actual use of the import as compared to use of the merchandise which defines the class; the economic practicality of so using the import; and the recognition in the trade of this use. See Dependable Packaging Solutions, Inc. v. United States, 757 F.3d 1374, 1379-1380 (citing United States v. Carborundum Co., 536 F.2d 373, 377, 63 C.C.P.A. 98 (CCPA 1976)). In applying these factors to the subject conductor paste, we note that the paste has conductivity properties whereby it is bonded to a non-conductive substrate to create electrical pathways. With regard to the channels of trade, environment of the sale, and economic practicality of using the subject merchandise, the conductor paste is used to measure the amount of fuel in a fuel tank of a motor vehicle, and in the semi-conductor and automotive industries. The Protestant’s online advertising materials also demonstrate that the conductor paste is specifically designed to meet the challenges of a fuel sender in aggressive fuels. The Protestant’s website states that because of stricter requirements of some automobile manufactures, the C6011 conductor paste is designed to specifically meet the requirements of these automobile manufacturers. In contrast, heading 3207, HTSUS, makes no mention of the automobile industry and items covered by that heading include those used in the ceramic, enameling, or glass industries. In addition, compared to the merchandise that defines the class in heading 3207, HTSUS, the actual use of the conductor paste is in fuel senders that measure the amount of fuel in a fuel tank of a motor vehicle. Such a use is not within the ceramic, enameling or glass industries as set forth in heading 3207, HTSUS. In sum, the Carborundum factors do not support finding that the subject conductor paste is “of a kind used” in the ceramic, enameling or glass industries as set forth in heading 3207, HTSUS. Therefore, we find that the subject conductor paste is not classified in heading 3207, HTSUS.
Because the conductor paste is not an article of Chapter 32, it is not excluded from Chapter 71 of the HTSUS. Specifically, heading 7115, HTSUS, provides for other articles of precious metal. Pursuant to Note 4(a) of Chapter 71, HTSUS, platinum constitutes a “precious metal” for purposes of Chapter 71. Here, the subject conductor paste is composed of 10.78% platinum. In addition, pursuant to Note 5(a) of Chapter 71, HTSUS, because the conductor paste consists of greater than 2% platinum, it is considered an alloy of platinum. Further, in Headquarters Ruling Letter (“HQ”) 963178, dated November 23, 1999 and New York Ruling Letter (“NY”) F88363, dated June 15, 2000, we addressed the proper classification of similar conductor pastes. In HQ 963178, we classified under subheading 7115.90, HTSUS, a conductor paste made up of greater than 2% palladium, where such paste was used in the electronics manufacturing industry as an electrode material in the manufacture of ceramic chip capacitors. Similarly, in NY F88363, we classified a paste consisting of 16%-18% palladium under subheading 7115.90, HTSUS, where such paste was used as an electrode material for manufacturing ceramic capacitors. Consistent with HQ 963178 and NY F88363, and where the subject conductor paste consists of 10.78% platinum, we find that the subject conductor paste is classified in subheading 7115.90.6000, HTSUS, which provides for “[o]ther articles of precious metal or of metal clad with precious metal: [o]ther: [o]ther: [o]ther.”
Next, we turn to the Protestant’s argument that classification of the conductor paste under heading 3207 is consistent with a classification decision reflected in the Compendium of WCO Opinions, an EC Commission Regulation, and rulings from several other countries interpreting international subheading 3207.30. We note that CBP considers rulings from other countries that classify identical or substantially similar merchandise as instructive, but not determinative, because they do not constitute an official interpretation of the Harmonized Tariff Schedule. See HQ H260568 (Feb. 3, 2016). Further, we find that the EC Commission Regulation and rulings from other countries cited by the Protestant are not persuasive in regard to the classification of the subject conductor paste because none of these include an ejusdem generis analysis that defines the scope of heading 3207. With regard to the classification decision reflected in the Compendium of WCO Opinions, the Compendium describes the following products that were determined to be classifiable in subheading 3207.30 as follows: “[p]reparations consisting of fine dispersions of silver metal obtained by reduction . . . for use on mica or on glass, by spray or through a silk screen, at about 580° C, in the ceramic or electrical industries (e.g., for printed circuits).” However, unlike the products covered in the Compendium of WCO Opinion, which are described as preparations consisting of silver metal for use on mica or glass in the ceramic or electrical industries, the subject conductor paste primarily consists of gold, platinum, and palladium and is used in fuel sensor applications in the semi-conductor and automotive industries. Thus, we do not find reference to this classification in the Compendium of WCO Opinions to be persuasive.
Therefore, we find that the subject conductor paste is classifiable under heading 7115, HTSUS, as “[o]ther articles of precious metal or of metal clad with precious metal.”
HOLDING:
Pursuant to GRI 1, the subject conductor paste is classified in heading 7115, HTSUS, specifically in subheading 7115.90.60, HTSUS, as “[o]ther articles of precious metal or of metal clad with previous metal: [o]ther: [o]ther: [o]ther.” The column one, general rate of duty is 4 percent ad valorem.
The Protest is DENIED.
In accordance with Section 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 in accordance with the decision must be accomplished prior to mailing the decision. Sixty days from the date of this letter, the Office of Trade will make this letter available to CBP personnel and to the public on the CBP Home Page on the World Wide Web at 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