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HQ 965873




December 9, 2002

CLA-2: RR:CR:TE 965873 ASM

CATEGORY: CLASSIFICATION

TARIFF NO.: 4819.20.0020

Ms. Robyn Dessaure
Port Director
U.S. Customs Service
610 S. Canal St.
Chicago, Illinois 60607-4523

RE: Decision on Application for Further Review of Protest No. 3901-01-101074, concerning the classification of flat pieces of paperboard; cut to shape; folded

Dear Ms. Dessaure:

This is in reply to Protest No. 3901-01-101074 that you forwarded to our office for review. The law firm of Kirkland & Ellis timely filed a protest on behalf of the importer, Tetra Rex Inc. (protestant), against Customs liquidation of paperboard containers under the HTSUSA. Samples have been submitted and examined by this office.

FACTS:

This office has received three sample articles that are representative of the merchandise which is the subject of this ruling. The subject merchandise has been imported in an “unfinished” and “unassembled” condition as flat pieces of folded paperboard, cut to shape, and sealed along one edge. These articles are designed to hold liquids (juices, milk, etc.) once they are fully assembled. Two of the sample articles are approximately 5.5 inches wide x 12 inches long in the unfolded condition with one having a printed exterior and one that has not been printed. The third container has no printing on the exterior and measures approximately 5.5 inches wide x 7.5 inches long, and has an interior, which bears a silver color. All three containers have various indentations so that the flat paperboard can be folded to create a three dimensional container with a “gable top” and flat base. According to the importer, the outer and inner layers are comprised of Low Density Polyethylene (“LDPE”), while paperboard comprises the middle layer. Thicker LDPE is used for some models to protect the integrity of more aggressive products, such as fruit juices high in acid content. The top contains a round opening of approximately 1.5 inches in diameter, which is intended to be fitted with a pour spout with plastic screw top. These articles have been sterilized by way of specialized technology.

The Customs Chicago Port has asserted that the protest should be denied and the merchandise at issue must remain classified, as entered by the importer under the 2000 HTSUSA, in subheading 4811.31.2010, HTSUSA, which provided for “Paper and paperboard, coated, impregnated or covered with plastics (excluding adhesives): Bleached, weighing more than 150 g/m2: 0.3 mm or more in thickness, Base stock for milk cartons and other beverage containers.” In the 2002 HTSUSA, this provision is now contained at subheading 4811.51.2010, HTSUSA, wherein additional language has been added that specifically describes the product as being in the form of strips or rolls, as follows: “Paper and paperboard, coated, impregnated or covered with plastics (excluding adhesives): Bleached, weighing more than 150 g/m2 : In strips or rolls of a width exceeding 15 cm or in rectangular (including square) sheets with one side exceeding 36 cm and the other side exceeding 15 cm in the unfolded state: 0.3 mm or more in thickness, Base stock for milk cartons and other beverage containers” [emphasis supplied].

For the reasons set forth below, we now find that the subject merchandise is properly classified under subheading 4819.20, HTSUSA, which provides for “Folding cartons, boxes and cases, of non-corrugated paper or paperboard.” At the time the subject merchandise was liquidated, goods entered under subheading 4819.20, HTSUSA, were on the list of products subject to increased duties (up to 100 percent ad valorem) imposed on a list of products of certain member states of the European Community (EC) as a result of the EC’s failure to implement the recommendations and ruling of the World Trade Organization (WTO) Dispute Settlement Body concerning the EC’s regime for the importation, sale and distribution of bananas. The termination of the increased duties was effective, with respect to articles entered or withdrawn from warehouse, for consumption, on or after July 1, 2001, except that the termination of increased duties on subheading 4911.91.2020, HTSUSA, is effective with respect to articles entered, or withdrawn from warehouse, for consumption, on or after March 3, 1999, for which unliquidated entries or entries subject to timely protest are pending before Customs. A copy of the Federal Register notice is attached.

The protestant now claims that the merchandise at issue should be classified in subheading 4819.50.2000, HTSUSA, which provides for “Cartons, boxes, cases, bags and other packing containers, of paper, paperboard, cellulose wadding or webs of cellulose fibers; box files, letter trays and similar articles, of paper or paperboard of a kind used in offices, shops or the like: Other packing containers, including record sleeves: Sanitary food and beverage containers”.

ISSUE:

What is the proper classification for the merchandise?

LAW AND ANALYSIS:

Classification under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA) 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 heading and legal notes do not otherwise require, the remaining GRI may then be applied. The Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”) constitute the official interpretation of the Harmonized System 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. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).

Customs begins by noting that, in fact, the merchandise is being imported in an unfinished and unassembled condition. Accordingly, classification should proceed pursuant to GRI 2(a), which provides, in relevant part, as follows:

Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article.

The EN for GRI 2(a) provides additional guidance by stating that “The first part of Rule 2(a) extends the scope of any heading which refers to a particular article to cover not only the complete article but also that article incomplete or unfinished, provided that, as presented, it has the essential character of the complete or finished article”. Further, the EN states that the provisions of GRI 2(a) also apply to blanks, i.e., “not ready for direct use, having the approximate shape or outline of the finished article or part, and which can only be used, other than in exceptional cases, for completion into the finished article”. With respect to the subject articles, we note that they are imported in both the printed and unprinted form. Further, the plastic pouring spout/screw-cap closure has not yet been fitted into the round opening at the top of these flat paperboard containers. However, the design on all three samples clearly evidences that the essential character of the articles is for use as a container for liquid products. For all practical purposes, these articles are designed for and could only be used as a container for liquid beverages. Therefore, in accordance with GRI 2(a), we would classify the unassembled flat paperboard pieces in the same provision as the finished carton.

At the time of entry, the protestant described the merchandise as “blank milk cartons” and represented that the merchandise was classified in subheading 4811.31.2010, HTSUSA. On March 16, 2001, Customs liquidated the goods, in accordance with protestant’s proposed classification at the time of entry. However, the protestant now asserts that the classification listed on the entry documentation is erroneous, and cites to subheading 4819.50.2000, HTSUSA, which provides for “Other Sanitary food and beverage containers” as being the correct classification for the merchandise.

In order to determine the proper classification for the subject merchandise, we note that heading 4819, HTSUSA, provides as follows:

Cartons, boxes, cases, bags and other packing containers, of paper, paperboard, cellulose wadding or webs of cellulose
fibers; box files, letter trays and similar articles, of paper or paperboard of a kind used in offices, shops or the like

The EN for heading 4819, specifically states that the heading includes “folding cartons” which are defined, in relevant part as, “containers assembled or intended to be assembled by means of glue, staples, etc., on one side only, the construction of the container itself providing the means of forming the other sides, although, where appropriate, additional means of fastening, such as adhesive tape or staples may be used to secure the bottom or lid.” Now that the protestant has provided additional information as to the purpose and construction of the subject merchandise, we concur that it is more properly classifiable in heading 4819, HTSUSA. However, in order to determine the appropriate classification at the eight-digit level, we must consider whether or not there are other provisions, that more specifically describe the merchandise, before classifying these articles in the basket provision suggested by protestant, i.e., subheading 4819.50.2000, HTSUSA, “Other packing containers, including record sleeves: Sanitary food and beverage containers”.

Subheading 4819.20.0020, HTSUSA, provides for “Folding cartons, boxes and cases, of non-corrugated paper or paperboard, Sanitary food and beverage containers”. After careful examination of this merchandise we note that it contains indentations which have been designed to allow the pieces of paperboard to be folded into a finished shape. Although the protestant has suggested that complex processing operations necessary to construct a finished container somehow preclude the articles from classification within subheading 4819.20.0020, HTSUSA, we find that there is nothing in the language of this provision or in the EN’s that would support this assertion. Furthermore, it has been well established in Customs Headquarters Ruling letter (HQ) 963903, dated July 27, 2001, HQ 964009, dated November 29, 2000, that such paperboard containers are properly classified as “Folding cartons of paperboard” within subheading 4819.20.00, HTSUSA. In these rulings, Customs held that certain flat paperboard containers, which have indentations for folding, are not precluded from classification in subheading 4819.20.00, HTSUSA, based on assertions of the “complex construction” of such articles.

In view of the foregoing, we find that the merchandise is properly classified within subheading 4819.20.0020, HTSUSA, as folding sanitary food and beverage containers. In addition, we find that the Customs Chicago Port has incorrectly liquidated the subject merchandise under subheading 4811.31.2010, HTSUSA. The merchandise cannot be classified under that tariff provision because it is not imported on rolls or sheets.

HOLDING:

The subject merchandise is correctly classified in subheading 4819.20.0020 ,HTSUSA, which provides for “Cartons, boxes, cases, bags and other packing containers, of paper, paperboard, cellulose wadding or webs of cellulose fibers; box files, letter trays and similar articles, of paper or paperboard of a kind used in offices, shops or the like: Folding cartons, boxes and cases, of non-corrugated paper or paperboard, Sanitary food and beverage containers.”

Any remaining unliquidated entries of the merchandise or entries reachable under 19 USC 1501, that have not been protested, should be reliquidated and accessed the punitive rate of duty, provided the merchandise was entered or withdrawn from warehouse, for consumption, between April 18, 1999 and July 1, 2001. At the time of importation of the subject merchandise, articles classifiable under that tariff provision were subject to 100 percent duty under subheading 9903.08.10, HTSUSA, in accordance with temporary trade legislation.

Since neither the liquidated classification nor the classification claimed by the protestant are sustainable, and Customs has now independently arrived at a third classification, the protest should be DENIED because the rate of duty under the classification indicated above is more than the liquidated rate. In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, 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.

No later than 60 days from the date of this letter, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.gov, by means of the Freedom of Information Act, and by other methods of public distribution.

Due to the changeable nature of the statistical annotation (the ninth and tenth digits of the classification), you should contact your local Customs office prior to importation of this merchandise to determine the current status of any import restraints or requirements.

Sincerely,

Myles B. Harmon, Acting Director

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