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HQ 965429




September 23, 2002

CLA2 RR:CR:TE 965429 SG

CATEGORY: CLASSIFICATION

TARIFF NO.: 4202.92.9060

Port Director
U.S. Customs Service
610 S. Canal Street
Chicago, Illinois 60607

RE: Application for Further Review of Protest No. 3901-00-101572; Classification of pen gift boxes; Heading 4202; paper coated with a sheeting of plastic; subheading 4202.92; “outer surface of”; “sheeting of plastics”; Sarne Handbags Corp. v. United States

Dear Sir:

This is in reply to your request for further review of Protest No. 3901-00-101572, timely filed on December 12, 2000, by Middleton & Shrull, on behalf of their client, The Gillette Company, against the classification and liquidation of boxes manufactured by IPD Packaging, LTD., Thailand, which were liquidated on September 15, 2000, September 29, 2000, and November 17, 2000. The boxes are used to package Waterman writing instruments which are manufactured by The Gillette Company.

When entered the boxes were classified as articles of plastic with an outer surface of paper in subheading 4202.99.1000, Harmonized Tariff Schedule of the United States Annotated (HTSUSA). After examination of the samples taken from the shipments, the merchandise was liquidated in subheading 4202.92.9060, HTSUSA. The rate was advanced.

The importer has protested the classification and claims that the proper classification of these boxes is under subheading 4202.99.1000, HTSUSA, as a plastic box covered with paper.

FACTS:

The submitted sample is identified as the "Waterman" Gift Box, reference number 71105W. It is a lidded container of the kind normally given to the purchasers of a pen gift set upon purchase of the set. It is similar to a jewelry box of the kind normally given to purchasers of a bracelet or a watch. The "Waterman" gift box is manufactured of a hard plastic shell that is wholly covered with a plastic coated paper identified as "CoverLuxe Lite®". The interior is lined with a satin fabric and is fitted to hold the writing instrument. The case is suitable for long term use

The exterior of the box is covered with a thin-coated paper measuring approximately 10 Mil. It is a composite of three layers of materials. The base, also known as the substrate, is of cellulose fiber (paper) which has been saturated with acrylic latex. The outer surface consists of two layers of plastics material of the polyacrylate type. We are advised that the plastic coating is less than 50 percent of the total thickness. A sample of the finished product was provided. We note that in response to a Customs CF 28, Request for Information, the importer stated that the outer surface of the box is a "vinyl wrap".

The pen gift box was classified by Customs in subheading 4202.92.9060 of the HTSUSA, which provides for “Trunks, suitcases. . .and similar containers; traveling bags. . . jewelry boxes. . . and similar containers, of leather or of composition leather, of sheeting of plastics, of textile materials, of vulcanized fiber, or of paperboard, or wholly or mainly covered with such materials or with paper: Other: With outer surface of sheeting of plastic or of textile materials: Other: Other: Other: Other”.

It is protestant's view that Customs erroneously classified the item as having an outer surface of plastic sheeting in subheading 4202.92, HTSUS. Protestant seeks to have the merchandise classified within subheading 4202.99.10, HTSUS, the provision covering other jewelry boxes: of materials (other than leather, composition leather, sheeting of plastics, textile materials, vulcanized fiber or paperboard) wholly or mainly covered with paper: of plastics. This provision allows goods from Thailand eligible under the Generalized System of Preferences to qualify for duty free entry.

ISSUE:

What is the correct classification of the subject pen gift box?

LAW AND ANALYSIS:

Classification of goods under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA) is governed by the General Rules of Interpretation (GRIs), taken in order. GRI 1 provides that classification shall be determined according to the terms of the headings 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 Harmonized Commodity Description and Coding System Explanatory Notes (EN) represent the official interpretation of the Harmonized System at the international level (for the 4 digit headings and the 6 digit subheadings) and facilitate classification under the HTSUSA by offering guidance in understanding the scope of the headings and GRI. The Explanatory Notes, although not dispositive or legally binding, provide a commentary on the scope of each heading of the HTSUSA, and are generally indicative of the proper interpretation of these headings.

Heading 4202, provides for:

Trunks, suitcases. . .and similar containers; traveling bags. . . jewelry boxes . . . and similar containers, of leather or of composition leather, of sheeting of plastics, of textile materials, of vulcanized fiber, or of paperboard, or wholly or mainly covered with such materials or with paper. (Emphasis added).

The ENs to heading 4202, HTSUSA, state that articles covered by the second part of the heading must be only “of” the materials specified therein or must be “wholly or mainly covered with such materials or with paper.” Protestant agrees that the pen gift box is “covered with paper” and, therefore, meets the criteria in the heading which are repeated in the ENs for classification within heading 4202.

The issue raised in the application for further review concerns the subheading under which to classify the gift box containers. At the six-digit level, the nomenclature classifies the majority of goods in Chapter 42 by the material that comprises the "outer surface." See Headquarters Ruling Letter (HQ) 954021, dated November 1, 1993, citing HQ 087760, dated October 31, 1991, and HQ 087640, dated November 8, 1990. When classifying goods in heading 4202, HTSUSA, it is problematic when the material that comprises the outer layer is a composite material, e.g., the outer layer is composed of a base material of paper that is coated with plastic. Customs addressed this issue in HQ 963618, dated August 2, 2002, wherein Customs explained:

At the four-digit level, heading 4202, HTSUSA, requires that a good be "of" or "wholly or mainly covered with" a specified material. However, at the six-digit level, the nomenclature classifies goods by the material which comprises the "outer surface." . . . In classifying goods such as these, we must distinguish between the requirements of the four- and six-digit headings, since they dictate different criteria for classifying goods.

This distinction was further discussed in HQ 954021, wherein Customs, noting HQ 087760, stated: "Evident in the above are two important distinctions: (1) a covering vs. an outer surface, and (2) classification at the four-digit (or heading) level vs. classification at the six-digit (or subheading) level."

The pen gift box is covered with plastic coated paper. Thus, at the four digit, or heading level, the box is considered to be "wholly or mainly covered" with paper. However, classification at the six-digit level requires consideration of what material constitutes the outer surface.

Except as noted below, the term “outer surface of” is not defined in Chapter 42, nor anywhere else in the HTSUSA. In HQ 086775, dated July 9, 1990, Customs stated that the outer surface “is that which is both visible and tactile.” Also see, HQ 954021, and the cases cited therein. “Tactile” is defined as follows: “1. Perceptible to the touch: TANGIBLE.” “Tangible” is defined as follows: “1a. Discernible by the touch or capable of being touched.” Webster’s II New Riverside University Dictionary (1984), at 1178 and 1182, respectively. Moreover, for purposes of heading 4202, Customs resolved the issue of what is the “outer surface of” articles made with composite materials. Specifically, we have addressed in a number of rulings whether jewelry box frames, which were made of plastic or metal and were covered with paper backings to which textile materials had been applied, had an outer surface of textiles or paper. See HQ 954021, dated November 1, 1993. In reaching our conclusion in that ruling, we said that Additional U.S. Note 2 of Chapter 42 is instructive in understanding the meaning of “outer surface of” when applied to composite materials (not specifically listed in that note).

Customs interpretation of the term "outer surface of" is consistent with Additional U.S. Note 2 of Chapter 42, HTSUSA, which provides that:

For purposes of classifying articles under subheadings 4202.12, 4202.22, 4202.32, and 4202.92, articles of textile fabric impregnated, coated, covered or laminated with plastics (whether compact or cellular) shall be regarded as having an outer surface of textile material or of plastic sheeting, depending upon whether and the extent to which the textile constituent or the plastic constituent makes up the exterior surface of the article.

Thus, this note explicitly provides the mechanism for making an "outer surface" determination where a textile is impregnated, coated, covered or laminated with plastic. The note expresses the concept of "outer surface" by use of the term "exterior surface." The note is useful in understanding the term "outer surface" when applied to other composite materials. Customs has relied upon this note as guidance when classifying other articles in heading 4202 that are composed of composite materials. Customs application of the note is consistent with the Court of International Trade’s decision in Sarne Handbags Corp. v. United States, 100 F. Supp. 2d 1126; 2000 Ct. Int’l. Trade 51 (2000), wherein the court, applying the note, found that a handbag made of plastic coated textile was classified as having an outer surface of sheeting of plastic.

When applying the definition of "visible and tactile" to goods of heading 4202, HTSUSA, Customs has consistently classified the goods according to the outer-most substance of the composite material at issue. For instance, Customs addressed this same issue as it pertained to jewelry box cases that were covered with a flock-coated paper. Customs concluded, based on the fact that it was the textile flock that was visible and tactile, the jewelry cases had an outer surface of textile materials. See HQ 954021, supra, and HQ 961175, dated July 21, 1998. Similarly, Customs has classified jewelry boxes, a coupon holder, and a "Vanity Train Case" covered with paper that had been coated with sheeting of plastic, as cases having an outer surface of sheeting of plastic. See HQ 960454, dated December 9, 1997 (jewelry box); HQ 961175, supra, (jewelry box); HQ 960990, dated February 3, 1998 (coupon holder); and HQ 960462, dated December 16, 1997 (Vanity Train Case). See also, HQ 086983, dated June 14, 1990 (classifying a jewelry organizer that was covered with a floral textile material that was covered with clear plastic sheeting as having an outer surface of sheeting of plastic).

Moreover, Customs has recently ruled that articles composed of plastic coated leather are considered to have an outer surface of sheeting of plastic. See, HQ 963618, dated August 2, 2002 (classifying a handbag constructed of a combination of split leather covered with a layer of plastic and plastic sheeting backed with textile [imitation leather], as having an outer surface of sheeting of plastic); HQ 960344, dated April 19, 2000 (classifying an attaché case composed of three layers, an outer layer of plastic, a middle layer of composition leather and an inner layer of textile material, as having an outer surface of sheeting of plastic); HQ 960002, dated October 24, 1997 (classifying a tote bag featuring front and back panels manufactured from a composite material of plastic covered layers of leather and composition leather as having an outer surface of sheeting of plastic); and HQ 955515, dated May 5, 1994 (holding that if the leather portions of the bag have a coating of plastic, then the outer surface is of sheeting of plastic).

It is protestant's contention that while for purposes of Chapter 42, articles of textile fabric which are “impregnated, coated, covered or laminated with plastics” are considered to have an outer surface of plastic sheeting, similarly treated paper materials are not. It is protestant's view that Customs, therefore, erred in applying Note 2 to treated paper. It is protestant's view that the outer surface of the subject box is not of sheeting of plastic and that there is no evidence in the HTSUS which supports finding that merely because an item is covered with latex treated paper its outer surface is made of plastic sheeting. Protestant argues that the paper covering would be a paper for both heading and subheading level classification (regardless of the external surface). It is protestant's view that the pen gift box is properly classifiable in subheading 4202.99.10, HTSUSA, as a paper covered plastic jewelry box. Protestant states that the ENs to Chapter 48 highlight that treated paper similar to the paper used in the instant merchandise would be properly classifiable in that Chapter as treated paper. It is argued that the covering of the pen box is encompassed by Chapter 48 as a coated paper product. Protestant therefore concludes that the imported box is not covered with sheeting of plastic, and is not covered with a textile material. Consequently, it cannot be classified under subheading 4202.92, HTSUS.

This argument was based on the logic that if the drafters of the Additional U.S. Notes intended that textile and paper combinations be treated in the same way that Additional U.S. Note 2, Chapter 42, treats plastic and textile combinations, they would have so specified. Customs disagreed with that argument and found in HQ 954021, that the absence of a note addressing paper and textile composite materials, or other composite materials (i.e. paper and plastic) did not evidence an intent to interpret the term “outer surface” differently when confronted with other component combinations. Customs held that the composite paper and textile flock material that covered the jewelry box at issue there was a paper for heading level classification (heading 4202) but had an “outer surface of” textile material for subheading level classification (subheading 4202.92).

In Sarne the court cited Pillowtex Corp. v. United States, 171 F.3d 1370, 1374 (Fed. Cir. 1999), which held that a tariff term’s correct meaning is its common meaning. It then held that “'sheeting' is material in the form of or suitable for forming into a broad surface of something that is unusually thin, or is a material in the form of a continuous thin covering or coating.” The court found that the outer surface of the merchandise at issue contained a “plastic” or “plastics” component that was exposed, entirely “covered” the textile component, and was relatively thin in comparison to its breadth, and as such the merchandise was correctly classified under the provision for merchandise with an outer surface of ”sheeting of plastics.” The court in Sarne went on to state:

U.S. Note 2 provides support for the Court’s conclusion. While U.S. Note 2 relates only to specific headings within 4202, HTSUS, and therefore, is not binding for determining prima facie classifiability under heading 4202, HTSUS, it is persuasive as to what Congress intended the phrase “sheeting of plastics” to mean in the context of the statute as a whole. Cf. Productol Chem. Co. v. United States, 74 Cust. Ct. 138, 151 (1975) (when the same word or phrase is used in different parts of the same statute it will be presumed to have the same meaning, unless a contrary intent is indicated). Thus, it appears that when “textile fabric [is] impregnated, coated, covered, or laminated with plastics” and “the plastic constituent makes up the exterior surface of the article”, Congress intended the material on the outer surface of the merchandise to be considered a “sheeting of plastics.” See U.S. Note 2.

In the box before us here, laboratory analysis of the paper which covers the molded plastic box found that it is entirely covered with plastic. The sample is a box whose outer surface contains a plastic or plastics component that is exposed, entirely covers the paper component, and is relatively thin in comparison to its breadth.

Applying the principles set forth in previously cited Headquarters rulings and Sarne, we find that the outer surface of the pen gift box is "plastic sheeting" under subheading 4202.92, HTSUS. Having determined that the box submitted does have an outer surface of plastic sheeting, it is classified under subheading 4202.92, HTSUS, which provides for other articles that have an outer surface of sheeting of plastic or textile materials.

HOLDING:

The "Waterman" pen gift box is classified in subheading 4202.92.9060 of the HTSUSA, which provides for “Trunks, suitcases. . .and similar containers; traveling bags. . . jewelry boxes. . . and similar containers, of leather or of composition leather, of sheeting of plastics, of textile materials, of vulcanized fiber, or of paperboard, or wholly or mainly covered with such materials or with paper: Other: With outer surface of sheeting of plastic or of textile materials: Other: Other: Other: Other” The "Waterman" pen gift box is dutiable at the general column one rate of duty. For merchandise entered in calendar year 1999, the general column one rate of duty was 18.8% ad valorem. For merchandise entered in calendar year 2000, the general column one rat of duty was 18.6% ad valorem.

The protest under consideration should be DENIED.

In accordance with Section 3A (11) (b) of Customs Directive 0993550065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs 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 the decision, the Office of Regulations and Rulings will make this decision available to Customs personnel and to the public on the Customs Home page on the World Wide Web at www.customs. treas.gov, by means of the Freedom of Information Act and other methods of public distribution.

Sincerely,


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