Application for Further Review of Protest no. 3901-05-100154; HGI-4261, Pantone B Micro Reflex Blue

HQ W967669 April 17, 2008 CLA-2 OT:RR:CTF:TCM W967669 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. 3901-05-100154; HGI-4261, Pantone B Micro Reflex Blue Dear Port Director: This is our decision on the Application for Further Review (“AFR”) of Protest No. 3901-05-100154, timely filed by counsel on behalf of Micro Inks Corporation (“Micro Inks”), concerning the classification of “Pantone base ink” 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 a written submission, dated October 23, 2007. FACTS: The merchandise at issue is HGI-4261, Pantone B Micro Reflex Blue, is described by Protestant as sheet-fed Pantone “base ink”. According to the submitted information, Pantone base inks are sold to manufacturers and distributors who use them for color blending purposes. The inks are designed for use in connection with the Pantone Formula Guide, which provides an accurate method for creating inks that meet the requirements of the Pantone Color Matching System, an international ink color standard. Per the Pantone website, “the Pantone Formula Guide, a three-guide set consisting of 1,114 solid PANTONE Colors on coated, uncoated and matte stock, shows corresponding printing ink formulations for each color”. See www.pantone.com, “About Us”. Protestant states that the subject merchandise is used to create Pantone Color 2738C, the formula for which constitutes a mixture of HGI-4261 and HGI-4259 (not at issue). Generally, every printing ink is formulated from three basic components: a colorant, a vehicle system to carry the colorant, and additives such as waxes and driers. Colorants may be dyes or pigment-based and maybe in powder form (dry toner), in concentrated paste known as a flush, or in a liquid dispersion. Vehicles are made up of oils (petroleum or vegetable), solvents, water, or a combination of these. Most vehicles also contain resins, which serve to bind the colorant to the printing surface. Additives can include waxes, driers and other materials that add specific characteristics to an ink or to the dried ink film. Together, these ingredients produce the key properties of ink: visual properties, runnability properties and end-use performance properties. See Printing Ink: A Backgrounder, Flint Group (2006) at www.flintgrp.com/InkBackgrounder.pdf. According to Ink World magazine: Generally speaking, offset inks are oil-based paste inks, are highly viscous, and use varnish systems consisting of resins that dry either by oxidation or heat evaporation. Pigment concentration is relatively high, as the ink is applied in a very thin film of approximately 3 microns. The ink must have some compatibility with water, since water is used to keep the non-image areas of the plate clean. Sheet-fed offset inks dry via oxidation. See www.inkworldmagazine.com/ inkprimer.php. The typical formulation for sheet-fed offset inks is: Organic pigments 12-20 wt % Binders Hard resins 20 -25 wt % Soft resins and drying oil 20-30 wt % Mineral oils 20-30 wt % (bp 250 -300 °C) Additives 5-10 wt % Ullman’s Encyclopedia of Industrial Chemistry, Sixth ed., vol. 29. According to the submitted information, HGI-4261- Pantone–B Micro Reflex Blue contains less than 20 percent pigment, between 73 and 80 percent resins and oils, and less than 4 percent additives. The merchandise was entered on September 10, 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 22, 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 February 9, 2005. ISSUE: What is the correct classification of Micro Inks product HGI-4261? 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 HGI-4261 is a complete printing ink and that the merchandise is commonly and commercially known as ink. As such, Protestant asserts that HGI-4261 is 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. Micro Inks contends that the decision reached by the court in Avecia supports classification of the instant products under heading 3215, HTSUS. Submission dated October 23, 2007. 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 sheet-fed offset 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 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. Counsel argues that the imported merchandise exhibits specific ink properties such as tack, viscosity, yield value, water pick up, flow drying properties and transfer properties. Any post importation processing merely adjusts the characteristics of the product to satisfy specific customer requirements. Further, the product is converted into press-ready ink by simple dilution. As such, counsel contends that the subject merchandise is concentrated ink as described by EN 32.15(A) and should be classified as printing ink under heading 3215. After comparing the properties of the imported product to the typical properties of sheet-fed ink, 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 product HGI-4261 is classified in heading 3215, HTSUS. It is 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