OT:RR:CTF:FTM H302201 TSM
Mr. William R. Rucker
Drinker Biddle & Reath LLP
191 N. Wacker Dr., Ste. 3700
Chicago, Illinois 60606-1698
RE: Country of origin of certain aluminum foil
Dear Mr. Rucker:
This is in reference to your letters, dated May 30, 2018, October 23, 2018, July 8, 2019, and January 21, 2020, filed on behalf of your client, Amcor Flexibles Singen GmbH (“Amcor”), requesting a ruling concerning the country of origin of certain aluminum foil. Pursuant to a request from Amcor, a meeting was held with Amcor’s representatives and members of my staff on December 13, 2019.
You have asked that certain information submitted in connection with this request be treated as confidential. Inasmuch as this request conforms to the requirements of 19 C.F.R. § 177.2(b)(7), the request for confidentiality is approved. The information contained within brackets in the submissions and exhibits that you forwarded to our office will not be released to the public and will be withheld from published versions of this ruling.
FACTS:
The merchandise at issue consists of aluminum foil. Amcor plans to import certain aluminum foil from Germany. After importation into the United States, the aluminum foil is used as packaging for food, pharmaceutical, or technical products. For example, these aluminum foil materials may be used to create blister packages (base or lidding) or pouches.
The imported aluminum foil will be in various thicknesses from 20 µm to 90 µm and may be coated or lacquered, laminated, or bare (no coating or lamination). The subject aluminum foil will be rolled to the desired thickness in Germany from Chinese origin foilstock. Any converting processes (e.g., coating or laminating) will also take place in Germany. The manufacturing process for the subject aluminum foil is described in detail below.
Amcor imports Chinese origin aluminum foilstock into Germany, which it uses to produce aluminum foil. You state that foilstock is the raw material used for the production of aluminum foil and is not suitable to be directly used for consumer products without further processing. When the foilstock material arrives at the plant in Germany, an intermediate annealing process is carried out, if necessary. This simple annealing process is intended to get the material completely soft for the rolling operation. In some cases, this step is carried out by the supplier of the foilstock. Once the material is soft-annealed, the foilstock is worked in a rolling mill where pressure is applied to it as it is passed through metal rolls called work rolls. This is a cold rolling process. As the aluminum foil reaches thinner gauges (thickness), the material becomes more fragile and is double-rolled to avoid breakage. The double-rolling process involves stacking two sheets of aluminum foil on top of each other and passing them through the work rolls together. In other words, Amcor feeds two coils of the metal into the mill and they are passed through the work rollers at the same time. After the double-rolling process, the aluminum foil is wound into two coils with two layers of foil each. Due to the size and weight of the resulting two layer coils, they each have to be split apart into single layer coils. This is done by a separating process where the two layer coils are separated into four single layer coils (or more depending on the customer requirements).
The aluminum foil becomes work hardened during the rolling process and must be annealed to soften the material for further use and processing. In addition to softening the metal, the annealing process also has the benefit of removing lubricating oils left on the foil as a result of the rolling process (which assists in the adhesion of coatings and laminations during any subsequent conversion process). In your letter, dated July 8, 2019, you state that aluminum foil production through rolling and heat treatment (annealing) is a thermo-mechanical process, and therefore, does not affect the chemical composition of the metal/alloy. While the overall chemical composition of the foilstock material remains unchanged during the foil rolling process, you state that depending on the consumer product and customer requirements, the microstructure of the aluminum foil is significantly changed through rolling and annealing processes. The cold rolling flattens the grains (i.e. forms a typical dislocation/sub-grain structure), generates the specific rolling texture and further crushes and aligns the grain particles. Annealing that follows the rolling process involves heating the rolled material to a temperature that facilitates recrystallization of the deformed/modified grain structure, thereby restoring the softness and ductility of the material, without affecting the chemical composition. Additional to the alloy composition, the microstructure elements of grains (size, substructure and texture) and particles (constituents and dispersoids) are the principal factors controlling material performance. This finished bare aluminum foil may be shipped to the United States or further processed (converted) by coating, lacquering, or laminating.
ISSUE:
What is the country of origin of the aluminum foil at issue for marking purposes?
LAW AND ANALYSIS:
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. Congressional intent in enacting 19 U.S.C. § 1304 was “that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will.” See United States v. Friedlander & Co., 27 C.C.P.A. 297, 302 (1940).
Part 134 of the U.S. Customs and Border Protection (“CBP”) Regulations (19 C.F.R. § 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. § 1304. Section 134.1(b), CBP Regulations (19 C.F.R. § 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 [the marking laws and regulations].” A substantial transformation occurs when, as a result of manufacturing process, a new and different article emerges, having a distinct name, character or use, which is different from that originally possessed by the article or material before being subjected to the manufacturing process. See United States v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940); Texas Instruments, Inc. v. United States, 69 C.C.P.A. 142, 681 F.2d 778 (1982).
In Ferrostaal Metals Corp. v. United States, 664 F. Supp. 535 (Ct. Intl. Trade 1987), the Court of International Trade (“CIT”) ruled that the process of annealing steel - whereby the ductility of an article of steel is restored after cold rolling operations by heating the steel to a high temperature, then rapidly cooling the article with water or by other means - substantially transformed articles of cold rolled steel. The annealing relieved the deformation energy in cold rolled steel and made the steel less strong, but more ductile, or formable. Id. at 539. Although the process affected the distribution of carbon and nitrogen in the steel, annealing did not change the actual chemical composition and dimensions of the steel. Id. Nonetheless, the CIT in Ferrostaal found that strength and ductility constituted important characteristics of steel and that annealing significantly affected the character of an article of steel by dedicating the article to uses compatible with the strength and ductility of the steel imparted by the annealing process. Id. at 540. Similarly, the CIT has held that the process of heating and rapidly cooling sheet glass to increase the strength of the glass (a process commonly known as “tempering”) resulted in a new commercial article that was distinct “in name, use, performance characteristics, and tariff classification.” Id. at 540 (citing Guardian Industries Corp. v. United States, 3 CIT 9, 16 (1982)).
In New York Ruling Letter (“NY”) H84171, dated August 10, 2001, at issue was cold-rolled flat-rolled stainless steel, produced from hot-rolled stainless steel coils. The production process included cold-rolling to reduce the thickness of the coil from 3 to 4 mm down to 0.25 to 2 mm, and subsequent annealing to give it the necessary formability. These operations were found to constitute a substantial transformation. In its analysis, CBP relied on Headquarters Ruling Letter (“HQ”) 080277, dated September 21, 1987, and HQ 089538, dated August 7, 1991, in which CBP determined that the cold-rolling process altered the physical and mechanical properties of the cold-rolled flat-rolled steel by significantly reducing the thickness of the steel by 50 to 60 percent and imparting greater tensile strength, thus, meeting the substantial transformation test. Furthermore, in HQ H242034, dated August 12, 2013, CBP found that, in accordance with Ferrostaal, the process of annealing steel – whereby the ductility of an article of steel is restored after cold rolling operations by heating the steel to a high temperature, then rapidly cooling the article, substantially transformed the green pipe into a new article, cold finished stainless steel pipe.
Upon review, we find that the cold rolling reduction and recrystallization annealing processes, performed in this case, are similar to those at issue in HQ 080277, HQ 089538, NY H84171, and HQ H242034. In this instance, the performance of these operations alters the physical and mechanical characteristics of the foilstock, the raw material used to produce aluminum foil, and completely changes it into a different and significantly more expensive product. Specifically, the cold rolling process significantly reduces thickness of the aluminum up to 98 percent, as well as its surface properties, quality, and appearance. Similar to Ferrostaal, annealing that follows the rolling process involves heating the rolled material to a temperature that facilitates recrystallization of the deformed/modified grain structure, thereby restoring the softness and ductility of the material, without affecting the chemical composition. Therefore, the recrystallization annealing process in this case causes a reconfiguration of the atomic structure of the foil, further changing its mechanical properties, and resulting in a product with unique, specifically tailored characteristics. Aluminum foil is several times more valuable than foilstock, and is used for packaging of food, pharmaceutical, or technical products. Accordingly, consistent with the foregoing and based on the evidence presented, we find that the complex, costly, and time-consuming cold rolling and recrystallization annealing operations, performed in Germany, substantially transformed foilstock into aluminum foil - a new, significantly more valuable, product with a different name, character and use. Therefore, for marking purposes, the country of origin of the aluminum foil at issue is Germany.
HOLDING:
The foilstock from China is substantially transformed into aluminum foil in Germany, where the cold rolling and recrystallization annealing processes are performed. Therefore, for marking purposes the country of origin of the aluminum foil is Germany.
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a CBP field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.”
A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Yuliya A. Gulis, Chief
Food, Textiles and Marking Branch