OT:RR:CTF:VS H276413 AJR
Port Director
U.S. Customs and Border Protection
P.O. Box 3130
Laredo, TX 78044-3130
RE: Application for Further Review of Protest No. 2304-15-100089
Dear Port Director:
This is in response to the Application for Further Review (“AFR”) of Protest No. 2304-15-100089, filed by counsel on behalf of BIC USA Inc. (“BIC”), concerning the eligibility of certain correction tape imports for preferential tariff treatment under the North American Free Trade Agreement (“NAFTA”), and their classification upon entry.
FACTS:
The products at issue concern five entries of certain correction tape in plastic dispensers (“correction tape(s)”) imported from Mexico through the Port of Laredo, Texas between February 21, 2014, and February 27, 2014. Entry documentation, including commercial invoices and bills of lading, identify the products at issue as “correction tapes” or “CONCENTRATD DISPERS OF PIG” (i.e., concentrated dispensers of pigment), and classify the products under subheading 3206.49.10, Harmonized Tariff Schedule of the United States (“HTSUS”), per New York Ruling Letter (“NY”) D80494, dated September 29, 1998. No NAFTA claim was made at the time of entry by placing the MX prefix on the entry line corresponding to the correction tapes in the entry documentation.
BIC states that the only non-originating component used to manufacture the imported correction tapes are jumbo rolls of film (“jumbo rolls”), imported into Mexico from Japan. According to BIC, before importation into the United States, the Japanese-origin jumbo rolls are “cut to size, rolled into a tape dispenser ribbon spool, and then with other Mexican origin plastic components, assembled into correction tape dispensers containing the correction tape” in Mexico.
The entries at issue all liquidated on January 9, 2015, under subheading 3206.49.10, HTSUS. Additionally, U.S. Customs and Border Protection (“CBP”) found that the Japanese-origin jumbo rolls did not meet the requisite tariff shift to consider the correction tapes originating.
On July 8, 2015, BIC protested CBP’s determination that the correction tapes are products of Japan and not eligible for preferential tariff treatment under the NAFTA. BIC asserts that CBP improperly classified the Japanese jumbo rolls under subheading 3824.90.92, HTSUS. BIC claims that the jumbo rolls were properly classified under subheading 3920.62, HTSUS, as imported from Japan to Mexico, and as classified by the Mexican Customs authorities. BIC argues that the jumbo rolls, when classified under 3920.62, HTSUS, would result in the correction tapes being considered products of Mexico and originating for NAFTA purposes.
Additionally, BIC protested the determination to liquidate the entries under subheading 3206.49.10, HTSUS. BIC argues that the correction tapes should have been properly classified under subheading 3824.90.92, HTSUS, based on NY N256830, dated September 30, 2014. To this extent, BIC asserts that, even if CBP does not grant NAFTA-originating status to the correction tapes, CBP should refund the amount it overpaid from liquidating the correction tapes under subheading 3206.49.10, HTSUS, with a 5.9% rate of duty, rather than under subheading 3824.90.92, HTSUS, with a 5.0% rate of duty.
ISSUES:
Whether the protest against the denial of preferential tariff treatment under the NAFTA constitutes a valid post-importation claim for NAFTA preference per 19 U.S.C. § 1520(d)?
Whether the subject correction tape is an article of subheading 3824.90.92, HTSUS, or of subheading 3206.49.10, HTSUS?
LAW AND ANALYSIS:
NAFTA
A claim for preferential tariff treatment under the NAFTA may only be made either at (1) the time of filing the entry as per 19 C.F.R. § 181.21, or (2) after the filing of the entry, as a post- importation claim pursuant to 19 U.S.C. § 1520(d).
Per 19 C.F.R. § 181.21(a):
In connection with a claim for preferential tariff treatment for a good under the NAFTA, the U.S. importer shall make a written declaration that the good qualifies for such treatment. The written declaration may be made by including on the entry summary, or equivalent documentation, the symbol “CA” for a good of Canada, or the symbol “MX” for a good of Mexico, as a prefix to the subheading of the HTSUS under which each qualifying good is classified. . . . .
The representative entry summaries contain no written declaration that the correction tapes qualify for preferential tariff treatment because there is no symbol “MX” preceding the classification nor any other written indication that a claim for preference under the NAFTA is made with respect to the correction tapes. See generally, Headquarters Ruling Letter (“HQ”) W231582, dated December 19, 2011.
Even if an importer fails to make a NAFTA claim at the time of entry, it may claim NAFTA preference by filing a request under 19 U.S.C. § 1520(d), as follows:
Notwithstanding the fact that a valid protest was not filed, the Customs Service may […] reliquidate an entry to refund any excess duties paid on a good qualifying under the rules of origin set out in section 3332 of this title [NAFTA] for which no claim for preferential tariff treatment was made at the time of importation if the importer, within 1 year after the date of importation, files, in accordance with those regulations, a claim that includes–
(1) a written declaration that the good qualified under those rules at the time of importation;
(2) copies of all applicable NAFTA Certificates of Origin (as defined in section 1508(b)(1) of this title); and
(3) such other documentation relating to the importation of the goods as the Customs Service may require.
(Emphasis added). In this case, BIC did not make a claim for NAFTA preference until the protest was filed on July 8, 2015. The five entries under protest were imported between February 21, 2014, and February 27, 2014, meaning the claim was filed 503 days after the earliest date of importation and 497 days after the latest date of importation. Accordingly, the claims for NAFTA preference made by BIC on July 8, 2015, were filed more than one year from the date of importation, and therefore were untimely.
Classification
While the claims for NAFTA preference with respect to the correction tapes were untimely, the protest was timely filed within 180 days of the January 9, 2015, liquidation of the subject entries per 19 U.S.C. § 1514(c)(3)(A). To this extent, the issue is whether the subject correction tapes should have been liquidated under subheading 3824.90.92, HTSUS, per NY N256830, rather than 3206.49.10, HTSUS, per NY D80494.
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (“GRIs”). 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 2 through 6 may then be applied in order.
The 2014 HTSUS provisions under consideration in this case 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:
Other coloring matter and other preparations:
3206.49 Other:
3206.49.10 Concentrated dispersions of pigments in plastic 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:
3824.90 Other:
3824.90.92 Other………
Note 3 to Chapter 32, HTSUS, states the following:
Headings 3203, 3204, 3205 and 3206 apply also to preparations based on coloring matter (including, in the case of heading 3206, coloring pigments of heading 2530 or chapter 28, metal flakes and metal powders), of a kind used for coloring any material or used as ingredients in the manufacture of coloring preparations. The headings do not apply, however, to pigments dispersed in nonaqueous media, in liquid or paste form, of a kind used in the manufacture of paints, including enamels (heading 3212), or to other preparations of heading 3207, 3208, 3209, 3210, 3212, 3213 or 3215.
Note 5 to Chapter 32, HTSUS, states the following:
The expression “coloring matter” in this chapter does not include products of a kind as used as extenders in oil plants, whether or not they are also suitable for coloring distempers.
Note 3 to Chapter 38, HTSUS, states, in pertinent part, as follows:
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 scope of Note 3 to Chapter 38, HTSUS, was broadened as a result of the 2012 HTSUS changes to include “correction tapes” within its language. Prior to 2012, “correction tapes” were not referenced in this note. Moreover, when NY D80494 was issued in 1998, Chapter 38, HTSUS, did not have a “Note 3” within its chapter notes. The broader scope of heading 3824, HTSUS, affects the classification of “correction tapes” in that the scope of subheading 3206.49.10, HTSUS, as it relates to “[c]oncentrated dispersions of pigments in plastic materials” became narrower. Accordingly, as a result of the broader scope of heading 3824, HTSUS, the products described in NY D80494 would not be considered “correction tapes” of heading 3206, HTSUS, and NY D80494 was revoked by operation of law in 2012.
In understanding the language of the HTSUS, the Explanatory Notes (“ENs”) of the Harmonized Commodity Description and Coding System, which constitute the official interpretation of the Harmonized System at the international level, 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 ENs to heading 3824, HTSUS, state, in pertinent part, the following:
This heading covers:
[…]
(B) CHEMICAL PRODUCTS AND CHEMICAL OR OTHER PREPARATIONS
With only three exceptions (see paragraphs (7), (19) and (32) below), this heading does not apply to separate chemically defined elements or compounds.
The chemical products classified here are therefore products whose composition is not chemically defined, whether they are obtained as by-products of the manufacture of other substances (this applies, for example, to naphthenic acids) or prepared directly.
The chemical or other preparations are either mixtures (of which emulsions and dispersions are special forms) or occasionally solutions. Aqueous solutions of the chemical products of Chapter 28 or 29 remain classified within those Chapters, but solutions of these products in solvents other than water are, apart from a few exceptions, excluded therefrom and accordingly fall to be treated as preparations of this heading.
The preparations classified here may be either wholly or partly of chemical products (this is generally the case) or wholly of natural constituents (see, for example, paragraph (24) below).
[…]
Subject to the above conditions, the preparations and chemical productions 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 typescript, 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.
[…]
In this case, the classification of the correction tapes at issue can be determined in accordance with the terms of the headings of the tariff schedule and any relative section or chapter notes per GRI 1. Here, the Note 3(d) to Chapter 38, HTSUS, specifically identifies “correction tapes.” Furthermore, for purposes of heading 3824, HTSUS, the term “correction tapes” means “rolls of correction ribbons generally presented in a plastic dispenser” where the “correction ribbon is composed of an opaque pigment coating which is applied on the surface of the ribbon.” See EN 38.24(B)(22). BIC describes the correction tapes at issue in this manner, as dispensers of concentrated pigments, where the pigments disperse from the jumbo rolls within the dispenser.
This determination is also consistent with a decision of the World Customs Organization (“WCO”) on correction tapes published in the Compendium of Classification Opinions on the Harmonized Commodity Description and Coding System, where the term “correction tape” is defined as “consisting of a plastic dispenser which contains a roll of correction ribbon” and the “correction ribbon is composed of a white pigment coating film applied on the surface of the ribbon.” See Opinion No. 382490/17 of the WCO’s Compendium of Classification Opinions (October 2008). As stated in T.D. 89-80, decisions in the Compendium of Classification Opinions should be treated in the same manner as the ENs, i.e., while neither legally binding nor dispositive, they provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. T.D. 89-80 further states that ENs and decisions in the Compendium of Classification Opinions “should receive considerable weight.”
Therefore, by application of GRI 1, the correction tapes at issue are classified in subheading 3824.90.92, HTSUS. Accordingly, the port is instructed to reliquidate the entries under 3824.90.92, HTSUS, and the protestant is entitled to a refund of the amount of duties overpaid from having had the subject entries liquidated under subheading 3206.49.10, HTSUS.
HOLDING:
The protest should be denied in part and allowed in part as follows:
With regard to the first issue, the protest against the denial of preferential tariff treatment under the NAFTA does not constitute a valid post-importation claim for NAFTA preference because the claim for NAFTA was not timely filed per 19 U.S.C. § 1520(d). This aspect of the protest, concerning whether the correction tapes originate under the NAFTA, should be denied.
With regard to the second issue, by application of GRI 1, the correction tape is an article of subheading 3824.90.92, HTSUS. Since this classification results in a lower rate of duty than the classification under which the entries were liquidated, the protestant is entitled to a refund for the amount of duties overpaid. This aspect of the protest, concerning the classification, should be allowed.
You are instructed to deny the protest in part (first issue), and allow it in part (second issue), as discussed above. In accordance with the Protest/Petition Processing Handbook (CIS 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 this decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision Regulations and Rulings of the Office of Trade will make the decision 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 & Trade Facilitation Division