Application for Further Review of Protest No. 3901-05-100117; concentrated pigment preparations with added solvents and binders - HGI-4732 and HGI 4733

HQ W967668 April 17, 2008 CLA-2 OT:RR:CTF:TCM W967668 HkP CATEGORY: Classification TARIFF NO.: 3215.19.00 Port Director Port of Chicago U.S. Customs and Border Protection 610 S. Canal Street Room 306 Chicago, IL 60607 RE: Application for Further Review of Protest No. 3901-05-100117; concentrated pigment preparations with added solvents and binders - HGI-4732 and HGI 4733 Dear Port Director: This is our decision on the Application for Further Review (“AFR”) of Protest No. 3901-05-100117, timely filed by counsel on behalf of Micro Inks Corporation (“Micro Inks”), concerning the classification of concentrated pigment preparations with added solvents and binders under the Harmonized Tariff Schedule of the United States (“HTSUS”). In reaching our decision this office also considered information provided by Micro Inks during a teleconference on February 15, 2006, and in written submissions, dated February 17, 2006, and October 23, 2007. FACTS: The subject merchandise, Micro Ink products “HGI-4732” and “HGI 4733”, is described by Protestant as concentrated, low tack, heat set (or “heat-set” or “heatset”) inks. HGI-4732 and HGI 4733 contain flushed pigment preparations as colorant, as well as some solvents and several binders. We note that on the Micro Inks website, products with the prefix “HF” are flushes while products with the prefix “HGI” are pigments. HGI products are designated as being for “colouration of printing inks” and “HF” products as being “intermediate for printing inks”. However, counsel for Micro Inks has informed CBP that that imported preparations are based on flushed pigments. This decision is therefore based on the assumption that that assertion is correct. According to our research on the Internet, heat-set inks: [A]re used in heat set web offset presses and require the use of an oven and a chill roll sections. The “oven” drives off the fresh ink liquid solvents and the “chill roll section” (a series of cold rolls), solidifies the remaining pigment-in-resin component. The typical heat-set ink is usually made up of hydrocarbon solvents, hard soluble resins, drying oil varnishes and plasticizers along with pigments. As the inks require heat to drive off the solvents, no driers are added like in the sheetfed inks thus they can be left in the ink sump for extended periods of time if needed. Ink, International Paper Company, at http://internationalpaper.com/PDF/ PDFs_for_Papers/Ink.pdf. Ullman’s Encyclopedia of Industrial Chemistry, Sixth ed., vol. 29. further explains: Heatset inks are expected to release their volatile components as quickly as possible and produce high-gloss printed image. For this reason they contain relatively low-boiling mineral oils (bp ca. 200- 300 °C) and gloss producing hard resins. The mineral oils should not, however, evaporate on the printing press itself. Their boiling range must therefore be kept within very narrow limits. Typical formulation for heatset web offset inks: Organic pigments 15-25 wt% Hard resins 25-35 wt % Soft resins + drying oils 5–15 wt% Mineral oils 25–45 wt% (bp ca. 200- 300 °C) Additives 5–10 wt% Because of the process conditions, compositions for these inks are similar to those of sheet-fed offset inks[], although the proportion of oxidatively drying resins and oils is lower, the mineral oils have lower boiling ranges and driers are normally excluded. Low tack press ready ink has a tack of 4.5–6.5, viscosity of 40-80, and a yield value of 1000-2500. Leach and Pierce, Ed., The Printing Ink Manual (5th ed. 1993). According to the submitted information, in its imported condition, HGI-4732 contains, by weight, between 17-19 % pigment, 33 – 36 % resins, and 47 – 51 % oils. As imported, this product has a tack of 5–6, viscosity of 40–80, and a yield value of 1000–2000.  HGI-4733 contains, by weight, between 17-19 % pigment, 36 – 40 % resins, and 44 – 50 % oils, as imported. As imported, this product has a tack of 5–6, viscosity of 45–85, and a yield value of 1250–2500. CBP has been informed that the imported products are approximately 80% of the contents of heat set ink sold by Micro Inks. After importation, more solvents (varnish, oil), binders, wax compound and additives, some of which are comprised in a let down vehicle, are added to the products. The products are not subjected to grinding or milling but are mixed using a turbine/coaxial mixer and undergo filtration. They are then considered to be press-ready inks. The ingredients added post-importation represent approximately 20 percent by weight, 16 percent by value, and 15 percent of the total cost of finished ink. The merchandise was entered on July 13, 2004, and classified in subheading 3215.19.0050, HTSUSA, which provides for: Printing ink, writing or drawing ink and other inks, whether or not concentrated or solid: Printing ink: Other: Offset lithographic.” On November 12, 2004, CBP liquidated the entry under subheading 3204.17.90, HTSUSA, which provides for, inter alia: “preparations as specified in note 3 to this chapter based on synthetic organic coloring matter: Synthetic organic coloring matter and preparations based thereon as specified in note 3 to this chapter: Pigments and preparations based thereon: Other.” The protest was timely filed on January 31, 2005. ISSUE: What is the correct classification of the concentrated pigment preparations? LAW AND ANALYSIS: Initially, we note that the matter protested is protestable under 19 U.S.C. §1514(a)(2) as a decision on classification. The protest was timely filed, within 90 days of liquidation of the first entry for entries made before December 18, 2004, and within 180 days of liquidation of the first entry for entries made on or after December 18, 2004. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, § 2103(2)(B)(ii), (iii) (codified as amended at 19 U.S.C. § 1514(c)(3) (2006)). Further Review of Protest No. 3901-05-100117 was properly accorded to protestant pursuant to 19 C.F.R. § 174.24 because the decision against which the protest was filed involves questions of law and fact that have not been ruled on by the Commissioner of Customs or his designee or by the Customs courts and is inconsistent with a ruling with respect to the same or substantially similar merchandise. Classification under the HTSUS is made in accordance with the General Rules of Interpretation. 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 may then be applied. The HTSUS provisions under consideration are as follows: 3204    Synthetic organic coloring matter, whether or not chemically defined; preparations as specified in note 3 to this chapter based on synthetic organic coloring matter; synthetic organic products of a kind used as fluorescent brightening agents or as luminophores, whether or not chemically defined: Synthetic organic coloring matter and preparations based thereon as specified in note 3 to this chapter: 3204.17           Pigments and preparations based thereon:                                          Other: * * *3204.17.90                     Other ….. 3215    Printing ink, writing or drawing ink and other inks, whether or not concentrated or solid: Printing ink: * * * 3215.19.00           Other ….. Note 3 to Chapter 32, HTSUS, provides, in pertinent part: Headings 3203, 3204, 3205, and 3206 apply also to preparations based on coloring matter … of a kind …used as ingredients in the manufacture of coloring preparations. The headings do not apply, however … to other preparations of heading 3207, 3208, 3209, 3210, 3212, 3213 or 3215. The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the HTSUS. While not 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. EN 32.04(I) states, in part, that heading 3204, HTSUS, includes: Other preparations based on synthetic organic coloring matter of a kind used for colouring any material or used as ingredients in the manufacture of coloring preparations. However, the preparations referred to in the last sentence of the Note 3 to this Chapter are excluded. EN 32.15(A) describes printing inks or colors as: [P]astes of varying consistency, obtained by mixing a finely divided black or coloured pigment with a vehicle. The pigment is usually carbon black for black inks and may be organic or inorganic for coloured inks. The vehicle consists of either natural resins or synthetic polymers, dispersed in oils or dissolved in solvents, and contains a small quantity of additives to impart desired functional properties. EN 32.15 also explains that products of heading 3215, HTSUS, are “generally in the form of liquids or pastes, but they are also included in this heading when concentrated or solid … to be used as inks after simple dilution or dispersion.” It is the position of Micro Inks that the imported products are suitable for use as press-ready inks for web offset heatset printing on uncoated newsprint paper stock. As such, Protestant asserts that they are classifiable as printing ink in heading 3215, HTSUS, and not as pigments or preparations based on pigments of heading 3204. The Court of International Trade (“CIT”) recently considered the scope of headings 3204 (more specifically, subheading 3204.19 “solvent dyes and preparations based thereon”) and 3215, HTSUS, in relation to the proper classification of imported ink-jet concentrates consisting of chromophores (water-soluble colorant molecules) in deionized water. Avecia, Inc. v. United States, Slip Op. 06-184, (Dec. 19, 2006). As imported, the products at issue in Avecia had to undergo a finishing process involving reverse osmosis to remove certain inorganic molecules like chlorides and calcium, sulfate ions and cations such as iron. The processing required the addition of new deionized water and incidental displacement of some of the imported water. The liquids were also further processed with additives, as required by buyer specifications. At 10. In a submission dated October 23, 2007, Micro Inks contends that the decision reached by the court in Avecia supports classification of the instant products under heading 3215, HTSUS. After examining the decision in Avecia, we find that it is not dispositive of classification of the merchandise at issue for several reasons. One, the merchandise before the court was ink-jet ink; the merchandise under consideration in this decision is heatset ink. Two, the decision of the court was highly fact specific as it took into account factors such as the methods of manufacture of ink-jet ink versus textile dyes (not at issue here), as well as tests performed by the Plaintiff on the merchandise. Most of the factors examined by the court are not under consideration here. Three, the court was asked to consider whether the merchandise before it was a dye or dye preparation classified under subheading 3204.19, or printing ink of heading 3215. In the instant case, the issue is whether the products at issue are “pigments and preparations based thereon” of subheading 3204.17, HTSUS, or printing inks of heading 3215. Nonetheless, the court considered several factors regarding the scope of headings 3204 and 3215, HTSTS, which may be indicative but not determinative of the classification of the merchandise at issue. Note 3 to Chapter 32 precludes preparations of heading 3215, HTSUS, from classification in heading 3204. The Court of Appeals for the Federal Circuit stated in Ciba-Geigy Corporation v. United States, 223 F.3d 1367 (2000) (citations omitted) that if merchandise is classifiable in both heading 3204 and 3215, it should be properly classified in heading 3215 as the more specific heading. It is appropriate, therefore, to first determine whether the products at issue are provided for in heading 3215. If provided for in heading 3215 then merchandise cannot be classified in heading 3204. The court in Avecia followed this approach. In seeking to understand the scope of heading 3215, the court considered the ordinary dictionary meaning of the terms “ink” and “printing” since these words are not defined in the HTSUS. The definition of “ink” as “a dispersion of a pigment or a solution of a dye in a carrier vehicle, yielding a fluid, paste or powder to be applied to and dried on a substrate” (McGraw-Hill Encyclopedia of Science and Technology 201 (9th ed. 2002)) was agreed to by the parties and adopted by the court. The court also adopted the parties assumed understanding of the term “printing”, based on the Oxford dictionary definition, “an image or likeness of anything” and the description found in Webster’s, “reproduction (as on paper or cloth) of an image from a printing surface made typically by contact impression that causes a transfer of ink.” At 38-39. The court found, as a matter of law, that “printing is a process of image reproduction, and that in order to be classifiable as a ‘printing ink’ of heading 3215 an imported product must be used or intended for use in printing.” At 40. The court enumerated several factors (some of which are specific to the Avecia case and will not be discussed here) which it considered persuasive in reaching its decision on classification. Specifically, the Court noted that: (1) although the imported products were not commercially used as printing inks in their condition as imported, the products were capable of printing in that condition. At 44; (2) it was not shown that OEM-specific additives impacted the printing characteristics or functionality of an “ink system” that otherwise appeared to be classifiable as printing ink of heading 3215 by virtue of the fact that it is capable in its condition as imported after simple dilution. At 45; (3) Printing inks are a type of product that may fall within the exception contemplated by the use of “normally” in the Explanatory Note to GRI 2(a), and, indeed, this court’s precedent compels recognizing the application of GRI 2(a) in the context of an “unfinished ink,”citing BASF Corp. v. United States, 427 F. Supp. 2d 1200, 1208 (2006) (noting government’s argument that product at issue “is classifiable in heading 3811 by operation of GRI 2(a) as ‘an unfinished or incomplete form of a prepared additive for gasoline’”), and Corporacion Sublistatica v. United States, I CIT 120, 511 F. Supp.805 (1981). At 48; (4) even if the imported products are arguendo classifiable as “other” dyes of heading 3204, Note 3 to Chapter 32, HTSUS, precludes classification of printing inks of heading 3215 under heading 3204. Specifically, Note 3 states that heading 3204 does not apply to “other preparations of heading . . . 3215.” The court found that a “preparation” is “a substance specially prepared, or made up for its appropriate use or application, citing Orlando Food Corp. v United States, 140 F. 3d 1437, 1441 (1998); (5) Additives that do not affect functionality do not define the classification of printing inks. At 51; (6) “Only those dyes (and pigments) that have the essential character of printing inks are classifiable as such.” At 63. The first argument made by Counsel is that the pigment content of the subject merchandise is entirely consistent with the range that CBP has said is consistent with classification as ink. The entries at issue have 17-19 % pigment, by weight. Counsel cites NY I86471 (February 14, 2003) in which CBP stated than a pigment content of 8-20 percent was indicative of ink as well as a CBP Laboratory report which found that with respect to HGI-4718 (a product claimed to be substantially similar the subject merchandise), “the percentage of pigment is within the range listed for heat set printing ink.” We do not disagree that the amount of pigment contained in the merchandise at issue may also be found in printing ink. We note, however, that laboratory reports may contain conclusions that do not control tariff classification. The second argument made by Counsel is that in their imported condition, the products at issue include all the necessary additives to impart the desired functional properties of ink. Specifically, it is claimed that each of the products have the same viscosity, tack, and other functional properties listed in the FACTS section above as press-ready ink, the pigment content is within a range consistent with press-ready ink, and that the products’ use in low tack heat set printing is predefined at importation. Further, this application is not altered by the dilution and mixing processes which take place subsequent to importation. The post importation processing merely adjusts the characteristics to satisfy specific customer requirements. According to the submitted information, the only ingredients added subsequent to importation are those that adjust yield and viscosity, that is, a let down vehicle, wax compound additive and ink oils. Based on the foregoing, we find that the products at issue possess the essential character of printing inks of heading 3215 because they are capable of printing in their imported condition and have the same tack, viscosity and yield as press-ready ink. Further, the additives added after importation do not affect the functionality of the products and therefore do not define the classification of printing inks. Accordingly, we find that the products at issue are classified as printing inks of heading 3215, HSTUS. Based on the above analysis, classification in heading 3204 need not be addressed. HOLDING: By application of GRI 1, Micro Inks products HGI-4732 and HGI 4733 are classified in heading 3215, HTSUS. They are specifically provided for in subheading 3215.19.00, which provides for: “Printing ink, writing or drawing ink and other inks, whether or not concentrated or solid: Printing ink: Other.” The 2004 column one general rate of duty is 1.8% ad valorem. Since reclassification of the merchandise as indicated above will result in a lower rate of duty as claimed, you are instructed to allow this protest in full. In accordance with the Protest/Petition Processing Handbook (CIS HB, January 2002, pp. 18 and 21), 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 of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will make the decision available to CBP personnel, and to the public on the Bureau of Customs and Border Protection 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 and Trade Facilitation Division