OT:RR:CTF:CPMM H305268 RRB
TARIFF NO: 3206.49.6050
Port Director
U.S. Customs and Border Protection
Port of Cleveland
6747 Engle Road
Middleburg Heights, OH 44130
Re: Application for Further Review of Protest No. 4101-18-100059; tariff classification of pearlescent pigments
Dear Port Director,
The following is our decision regarding the Application for Further Review (“AFR”) of Protest Number 4101-18-100059, timely filed on September 14, 2018, on behalf of Kuncai Americas LLC (“Protestant”). This AFR concerns U.S. Customs and Border Protection’s (“CBP”) classification, under the Harmonized Tariff Schedule of the United States (“HTSUS”), of pearlescent pigments.
FACTS:
The protested merchandise consists of various pearlescent pigments made up of platelets having a synthetic mica substrate coated with a thin film or layer of either titanium oxide, iron oxide, or a mixture of the two. Pearlescent pigments deliver superior brilliance, luster, and unique optical effects ranging from a fine-grained luster to bold silver white sparkles. Pearlescent pigments are used in a variety of products including cosmetics, plastics and coatings, precisely because of these extraordinary optical effects. The pearlescent pigments at issue in the Protest consist of the following: 1) mica substrate coated with titanium oxide; 2) mica substrate coated with iron oxide; and 3) mica substrate coated with a mixture of titanium oxide and iron oxide. Pearlescent pigments consisting of a mica substrate coated with titanium oxide produce colors ranging from various silvery white effects while pearlescent pigments coated with iron oxide produce colors ranging from brown to different shades of red.
Included with the protest documentation are various Material Safety Data Sheets (MSDS) consisting of specifications for each pearlescent pigment at issue in this protest. We sent these MSDS to CBP’s Laboratories and Scientific Services Division (“LSSD”) for analysis. In an email to our office, dated September 25, 2020, LSSD explained that “[t]he colors in pearlescent pigments are caused by interference in thin layers of one material on another.” They also confirmed that each of the pearlescent pigments are mica-based pigments coated with titanium or iron oxide.
The protested merchandise consists of one (1) entry that was entered under subheading 3206.40.60, HTSUS, at the Port of Cleveland (“Port”) on August 9, 2017. On June 28, 2018, CBP issued a Notice of Action (“CBP Form 29”), stating that “[p]igments based on titanium oxide should be classified as HTS 3206.19.0000/6% and pigments based on iron oxide should be classified as HTS 3206.49.2000/6.5%. Pigments in which mixtures of oxides are used in similar quantities should be classified as HTS 3206.40.6050/3.1%.” The protested merchandise was liquidated on July 6, 2018. The pearlescent pigments consisting of a mica substrate coated with titanium oxide were liquidated under subheading 3206.19.0000, HTSUSA (“Annotated”) (2017), as “Other coloring matter; . . . : Pigments and preparations based on titanium oxide: Other,” at a duty rate of 6% ad valorem. The pearlescent pigments consisting of a mica substrate coated with iron oxide were liquidated under subheading 3206.49.2000, HTSUSA (2017), as “Other coloring matter; . . . : Other coloring matter and other preparations: Other: Preparations based on iron oxides,” at a duty rate of 6.5% ad valorem. The pearlescent pigments consisting of a mica substrate coated with a mixture of titanium oxide and iron oxide were liquidated under subheading 3206.49.6050, HTSUSA (2017), as “Other coloring matter; . . . : Other coloring matter and other preparations: Other: Other: Other,” at a duty rate of 3.1% ad valorem. The Protestant filed this Protest and AFR on September 14, 2018, asserting that all of the subject merchandise is properly classified under the residual tariff provision for other coloring matter and other preparations in subheading 3206.49.6050, HTSUSA (2017), as “Other coloring matter; . . . : Other coloring matter and other preparations: Other: Other: Other.”
ISSUE:
Whether various types of pearlescent pigments are classified under subheading 3206.19.00, HTSUS (2017), as “Other coloring matter; . . . : Pigments and preparations based on titanium oxide: Other;” under subheading 3206.49.20, HTSUS (2017), as “Other coloring matter; . . . : Other coloring matter and other preparations: Other: Preparations based on iron oxides;” or under subheading 3206.49.60, HTSUS (2017), as “Other coloring matter; . . . : Other coloring matter and other preparations: Other: Other: Other.”
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 of the entries. See 19 U.S.C. § 1514(c)(3).
Further Review of Protest Number 4101-18-100059 was properly accorded to the Protestant pursuant to 19 C.F.R. § 174.24(a) because the decision against which the protest was filed is alleged to be inconsistent with a ruling of the Commissioner of Customs or his designee, or with a decision made at any port with respect to substantially similar merchandise. Specifically, the Protestant argues that CBP’s liquidation of the protested merchandise is inconsistent with EM Industries v. United States, 22 CIT 156 (1998) (hereinafter “EM Industries”), where the Court of International Trade (“CIT”) held that pearlescent pigments with a mica substrate coated with either titanium dioxide, iron oxide, or a mixture of the two were properly classified under the residual tariff provision for “other coloring matter and other preparations: other: other.” Protestant alleges that the subject pearlescent pigments, which are substantially similar to those in EM Industries, should be similarly classified in subheading 3206.49.60, HTSUS (2017).
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 2 through 6 may then be applied in order.
GRI 6 provides that for legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to the above rules, on the understanding that only subheadings at the same level are comparable. For the purposes of this rule, the relative section and chapter notes also apply, unless the context otherwise requires.
The 2017 provisions under consideration 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:
Pigments and preparations based on titanium dioxide:
3206.19.0000 Other...
Other coloring matter and other preparations:
3206.49 Other:
3206.49.2000 Preparations based on iron oxides...
3206.49.60 Other…
3206.49.6050 Other…
* * * *
The Explanatory Notes (“ENs”) to the Harmonized Commodity Description and Coding System represent the official interpretation of the tariff at the international level. While neither legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings at the international level. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).
The EN to 32.06 states, in pertinent part:
The coloring matter of this heading includes:
(1) Pigments based on titanium dioxide. These include titanium dioxide which is surface-treated or mixed with calcium or barium sulphate or other substances. These also include titanium dioxide to which compounds have been intentionally added during the production process in order to obtain certain physical properties rendering it suitable for use as a pigment. Other specially produced titanium dioxide which is not suitable for use as a pigment because of its particular properties falls under other headings (e.g., headings 38.15, 38.24). Titanium dioxide which is unmixed and not surface-treated is classified in heading 28.23.
(2) Pigments based on chromium compounds. These include yellows consisting of mixtures of lead chromate and other inorganic products such as lead sulphate, and green pigments consisting of chromium oxide mixed with other substances.
(3) Ultramarine. Ultramarine blue is a complex compound formerly obtained from lapis lazuli, but now prepared artificially by treating mixtures of various silicates, aluminates, sodium carbonate, sulphur, etc. Green, pink and violet ultramarines are also covered by this heading, but certain unmixed chromates, sometimes known as yellow ultramarine, are excluded (heading 28.41).
(4) Lithopone and other pigments based on zinc sulphide, such as white pigments consisting of mixtures in varying proportions of zinc sulphide and barium sulphate.
(5) Pigments based on cadmium compounds, e.g., yellow pigments consisting of mixtures of cadmium sulphide and barium sulphate, and cadmium red consisting of a mixture of cadmium sulphide and cadmium selenide.
(6) Prussian blue (Berlin blue) and other pigments based on hexacyanoferrates (ferrocyanides and ferricyanides). Prussian blue consists of a ferric ferrocyanide, not chemically defined. It is obtained by precipitating an alkali ferrocyanide with a ferrous salt and then oxidising with a hypochlorite. It is an amorphous blue solid, used in the preparation of numerous pigments which are also classified in this heading. These include mineral blue (with barium sulphate and kaolin), milori green or English green (with chrome yellow and sometimes also barium sulphate) and zinc green (with zinc chromate), and compounds for coloured inks (with oxalic acid). Turnbull’s blue consists of a ferrous ferricyanide, not chemically defined, alone or in mixtures.
(7) Mineral blacks (other than the blacks included in heading 25.30 or 28.03), for example :
(a) Shale black, a mixture of various silicates and carbon obtained by partial calcination of bituminous shales.
(b) Silica black obtained by calcination of mixtures of coal and kieselguhr.
(c) The product known as “alu black”, a mixture of aluminium oxide and carbon obtained by the calcination of a mixture of bauxite and coal tar pitch or grease.
(8) Coloured earths brightened with very small quantities of synthetic organic dyestuffs. (Coloured earths, whether or not mixed together, but not brightened, generally fall in heading 25.30 - see relative Explanatory Note.)
(9) Soluble Vandyke brown and similar products generally obtained by treatment of the earth colours of heading 25.30 (Vandyke brown, Cologne earth or Cassel earth, etc.) with ammonia or potassium hydroxide solutions.
(10) Pigments based on cobalt compounds, e.g., cerulean blue.
(11) Pigments consisting of finely ground ores, e.g., ilmenite.
(12) Zinc grey (very impure zinc oxide).
(13) Synthetic nacreous (pearl) pigments, i.e., inorganic pearlescent pigments, such as :
(a) bismuth chloride oxide, with the addition of a small quantity of an organic surface-active agent;
(b) mica coated with bismuth chloride oxide, titanium dioxide or titanium dioxide and ferric oxide.
These products are used in the manufacture of various cosmetic preparations.
* * * *
There is no dispute at the four-digit level that the protested merchandise is classified in heading 3206, HTSUS, as “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.” There is also no dispute that the pearlescent pigments on a mica substrate that are coated with a mixture of titanium oxide and iron oxide are classified in subheading 3206.49.60, HTSUS as “other coloring matter and other preparations: other: other.” In regards to the pearlescent pigments on a mica substrate with a titanium oxide coating, the dispute arises at the six-digit level as to whether they are “pigments and preparations based on titanium dioxide: other” of subheading 3206.19.00, HTSUS, or “other coloring matter and other preparations: other: other” of subheading 3206.49.60, HTSUS. In regards to the pearlescent pigments on a mica substrate with an iron oxide coating, the dispute arises at the eight-digit level as to whether they are “other coloring matter and other preparations: other: preparations based on iron oxides” of subheading 3206.49.20, HTSUS, or “other coloring matter and other preparations: other: other” of subheading 3206.49.60, HTSUS.
The Protestant asserts that as mica-based pearlescent pigments coated with either titanium oxide, iron oxide, or a mixture of the two, which produce color by constructive interference, the subject merchandise are a separate category of coloring matter that are classified in the residual provision of heading 3206, specifically in subheading 3206.49.60, HTSUS. However, CBP liquidated the subject merchandise as pigments based on metal oxides in subheadings 3206.19.00, 3206.49.20, and 3206.49.60, HTSUS, relying on Headquarters Ruling Letter (“HQ”) 952785, dated July 19, 1994, and New York Ruling Letter (“NY”) 800133, dated August, 11, 1994, in support of its classification.
The Protestant asserts that classification in subheadings 3206.19.00 and 3206.49.20, HTSUS, was improper because EM Industries revoked HQ 952785 and NY 800133. In EM Industries, the CIT examined the classification of two types of pearlescent pigments: mica-based pearlescent pigments coated with titanium dioxide and mica-based pearlescent pigments coated with iron oxide. The CIT held that mica-based pearlescent pigments coated with titanium or iron oxide are classified as a separate class of coloring materials from those intended to be classified in 3206.10.00 and 3206.49.20, HTSUS. EM Industries, 22 CIT at 166. The CIT explained that “[u]nlike pigment grade or ‘pigmentary’ titanium dioxide and iron oxide, the physical properties of pearlescent pigment particles are based on the platy shape of the mica substrate.” Id. at 158. The CIT further explained that “[t]he pigmentary forms of the metal oxides produce color by absorption while pearlescent pigments produce color by constructive interference.” Id. at 159. Moreover, the CIT concluded that “pearlescent pigments are physically and functionally a different category of pigments than the absorption pigments,” and that “[b]ecause of their special optical or functional properties, metal oxide coated mica pearlescent pigments are regarded by the pigment industry as a separate category of inorganic pigments different from conventional light absorbing pigments, the most common category of pigments.” Id. at 160.
We agree with the Protestant that CBP’s reliance on HQ 952785 and NY 800133 was improper because those rulings were revoked by EM Industries. In HQ 952785, the manufacturing process is described as follows: “[b]y coating minuscule mica particles with varying quantities of titanium dioxide, we obtain interference colors ranging from silver, through yellow, red, and blue, to green.” Similarly, the merchandise in NY 800133 are described as pearlescent pigments that consist of mica powders which have been coated with titanium dioxide. The merchandise in both of these rulings are substantially similar to the mica-based pearlescent pigments coated with metal oxides in EM Industries. Accordingly, we find that HQ 952785 and NY 800133 were revoked by EM Industries and should not have been relied upon in the instant matter.
In EM Industries, the CIT relied extensively on the ENs to 32.06 in its analysis of the proper classification of mica-based pigments coated with metal oxides. The ENs to 32.06 identify thirteen (13) types of coloring matter that fall under heading 3206, HTSUS. The first type are “pigments based on titanium dioxide.” However, mica-based pearlescent pigments, which are described in item No. 13 of the ENs as “synthetic nacreous (pearl) pigments, i.e., inorganic pearlescent pigments, such as. . . (b) mica coated with bismuth chloride oxide, titanium dioxide or titanium dioxide and ferric oxide,” are expressly identified as a separate type of coloring matter from pigments based on metal oxides. As the CIT noted in EM Industries, the language in the ENs, which explicitly lists what type of coloring matter is included within the scope of “pigments based on titanium dioxide” in item No. 1, exactly mirrors the language used in subheading 3206.10.00, HTSUS. Id. at 165. The CIT further explained that the “organizational format of Heading 32.06 listing pigments and/or preparations based on specific compounds (including pigments based on titanium dioxide) closely parallels the HTSUS Heading 3206 organizational breakout of subheadings covering pigments based on specific compounds, including titanium dioxide.” Id. Accordingly, the CIT held the following in regards to the ENs to 32.06 and the classification of mica-based pearlescent pigments coated with metal oxides:
[U]nder Heading 32.06 of the Explanatory Notes mica-coated pearlescent pigments (including those containing titanium dioxide) were differentiated from “pigments based on titanium dioxide” by listing them separately, and therefore, by extension would also be differentiated from preparations based on iron oxide. Ostensibly, then, pearlescent pigments were not recognized as falling in the same category as “pigments based on titanium dioxide,” but rather as warranting separate treatment under Heading 32.06.
Given the exclusion of nacreous pigments from “pigments based on titanium dioxide” (item No. 1) in Heading 32.06 of the Explanatory Notes and their separate treatment under Heading 32.06 (item No. 13), the court agrees with plaintiff that Congress did not intend synthetic nacreous pigments [i.e., mica-based pearlescent pigments] be classified under subheading 3206.10.00 or 3206.49.20. Id.
In sum, the CIT concluded that Congress intended that nacreous, mica-based pearlescent pigments coated with metal oxides, which are separately described in item No. 13(b) of the ENs to 32.06, would be classified under the residual provision for coloring matter in subheading 3206.49.50, HTSUS. Id.
The Protestant cites to the CIT’s arguments in EM Industries in explaining why CBP improperly classified the protested merchandise in subheadings 3206.19.00 and 3206.49.20, HTSUS (2017). We agree with the Protestant that based on the ENs and the arguments cited from EM Industries, the subject mica-based pearlescent pigments coated with metal oxides are distinguished from pigments based on compounds such as metal oxides. This determination is supported by NY N305529, dated August 22, 2019, where we classified “IRIDESIUM 3315” and “IRIDESIUM 3305,” which are mica-based pearlescent pigments that are coated with titanium dioxides, tin dioxides and iron oxides, in subheading 3206.49.6050, HTSUSA. Moreover, as confirmed by LSSD, the protested pearlescent pigments are substantially similar to the pearlescent pigments in EM Industries. Therefore, as a separate category of coloring matter from those intended to be classified under subheadings 3206.19.00 and 3206.40.20, HTSUS, the protested merchandise is properly classified under the residual provision for other coloring matter in subheading 3206.49.60, HTSUS.
We note that CBP’s argument regarding the applicability of the ENs to 32.06 is without merit. Specifically, CBP asserted that the thirteen (13) items set forth in the ENs to 32.06 are based on color, not HTSUS subheadings. Upon examination of the language in the ENs, however, we note that the bolded language in many of the thirteen (13) types of coloring matter, see supra, have nothing to do with color. In fact, much of the bolded language mirrors the HTSUS subheadings of heading 3206, HTSUS. Accordingly, we find that CBP’s arguments regarding the applicability of the ENs in this protest are improper.
HOLDING:
By application of GRIs 1 and 6, the mica-based pearlescent pigments coated with titanium oxide, iron oxide, or a combination of the two, are classified in heading 3206, HTSUS, and specifically in subheading 3206.49.6050, HTSUSA (2017), which provides for “Other coloring matter; . . . : Other coloring matter and other preparations: Other: Other: Other.” The column one, general rate of duty at the time of entry was 3.1% ad valorem.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided at https://hts.usitc.gov/current.
You are instructed to GRANT the protest in full.
In accordance with Sections 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 or entries in accordance with the decision must be accomplished prior to mailing the decision.
Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings, will make the decision available to CBP personnel and to the public on the Customs Rulings Online Search System (“CROSS”), at https://rulings.cbp.gov/, and other methods of public distribution.
Sincerely,
for
Craig T. Clark, Director
Commercial and Trade Facilitation Division