Thursday, November 27, 2014

Alcan Can't Get Past GRI(1)

I am surprised to learn that I did not cover the Court of International Trade's classification decision in Alcan Food Packaging v. United States, because the Court of Appeals for the Federal Circuit has now affirmed that decision.

Like the last Ruling of the Week, Alcan is an important decision in that it counsels against the desire importers sometime have to jump to "essential character" or "relative specificity" to decide between two possible tariff classifications. You can't do that until you have fully exhausted the text of the headings and any relative chapter and section notes in the Harmonized Tariff Schedule of the United States.

In this case, the product is a packaging film made of a layer of aluminum foil and two or more layers of plastic. There is more plastic than aluminum but both materials are necessary for the material to perform its function. That function includes hermetically sealing U.S. military ready-to-eat meals.

Alcan, the importer, argued that the proper classification is in Chapter 76 as a product of aluminum. Customs and Border Protection disagreed and classified it as a product of plastic in Chapter 39. It got there based on essential character, but did so without ever leaving General Rule of Interpretation 1.

The relevant aluminum heading was 7606, which covers "[a]luminum foil (whether or not printed, or backed with paper, paperboard, plastics or similar backing materials) of a thickness (excluding any backing) not exceeding 0.2 mm: Backed: Other." The plastics heading was 3921, which covers "[o]ther plates, sheets, film, foil and strip, of plastics: Other: Flexible."

The Court acknowledged that the product is a composite consisting of both aluminum foil and plastic sheets. But, the Court found that there was no need to classify it as a composite good or otherwise resort to other classification rules. Rather, GRI 1 was sufficient to do the trick.

Heading 3921 covers plastic products that are backed, so it clearly includes combinations of plastic and other materials. So the combined product is within the scope of 3921. Similarly, Heading 7607 covers aluminum foil backed with, among other things, plastics. So, it appears that Heading 7607 also covers it.

But, Note 1(d) to Heading 7607 applies to aluminum that is coated, provided that the aluminum does not assume the character of an article of another heading, presumably including 3921. According to the Explanatory Notes, coating can include coating with plastic and lamination. That was all the Federal Circuit needed to affirm the decision of the Court of International Trade. The plastic, according to the Court, provides the essential character to the combined material. Consequently, the aluminum has assumed the character of an article of plastic. As such, it is excluded from Heading 7607.


janipani said...

Great article Larry. Basically, the material is plastic because it's primary purpose is to hermetically SEAL the MREs and plastic does that better than aluminum?

Larry said...

Janipani, I would not say it quite like that, but it is close. I would say that because the coated aluminum assumed the character of a product of plastic, it was excluded from classification as aluminum. That at least implies that the plastic provided the essential character. But, as a technical matter, the word "essential" is not part of the legal note.