Amcor Flexibles Singen GMBH v. United States

425 F.Supp.3d 1287

AMCOR FLEXIBLES SINGEN GMBH, Plaintiff,

v.UNITED STATES, Defendant.

Slip Op. 20-1

Court No. 15-00240

United States Court of International Trade.

Dated: January 3, 2020

Wm. Randolph Rucker, Drinker Biddle & Reath LLP argued for Plaintiff Amcor Flexibles Singen Gmbh.

Jamie L. Shookman, Trial Attorney, Civil Division, Commercial Litigation Branch, U.S. Department of Justice and Aimee Lee, Senior Trial Counsel argued for Defendant United States. With them on the brief was Joseph H. Hunt, Assistant Attorney General and Amy M. Rubin, Assistant Director, International Trade Field Office. Of Counsel was Paula S. Smith, Office of the Assistant Chief Counsel, International Trade Litigation, U.S. Customs and Border Protection.

OPINION

Timothy M. Reif, Judge

"Louis, I think this is the beginning of a beautiful friendship."¹ When the aluminum layer of Formpack Coldform Laminate ("Formpack") is merged with multiple layers of plastic, the foil and plastics commence a symbiotic relationship that endures far beyond the moment of importation.

At issue in this case is the tariff classification of this flexible packaging material commercially known as Formpack. Plaintiff Amcor Flexibles Singen Gmbh ("Amcor") challenges a decision by United States Customs and Border Protection ("Defendant") to classify Formpack under Heading 3921 in the Harmonized Tariff Schedule of the United States (HTSUS), which covers plastics and carries a 4.2% ad valorem duty. Plaintiff argues that the product is correctly classified under Heading 7607, which covers aluminum and is duty free, while Defendant seeks to sustain Customs' plastics classification. The question presented is whether Formpack is properly classified under Heading 3921 of the HTSUS as plastic or under Heading 7607 as aluminum.

Plaintiff filed suit challenging the decision by Customs and Border Protection denying Plaintiff's protests of Customs' classification under the HTSUS of Plaintiff's packaging material. The parties filed cross-motions for summary judgment addressing the proper classification of the imported flexible packaging material. See Pl.'s Mem. in Supp. Of Pl. Mot. for Summ. J., ECF No. 50 ("Pl. Br."); Mem. in Opp. to Pl.'s Mot. For Summ. J. and in Supp. of Def. Cross-Mot. for Summ. J., ECF No. 58 ("Def. Br."). See Summons, ECF No. 1; Compl., ECF No. 15. The court has subject matter jurisdiction pursuant to 28 U.S.C. 1581(a) (2012). For the following reasons, the court determines that Formpack is correctly classified under the aluminum heading.

BACKGROUND

I. The Imported Merchandise

From 2007 to 2014, the aluminum company Amcor imported 46 entries of the subject merchandise into the United States through six different ports. The Amcor Flexibles division of the company manufactures seven different configurations of the merchandise at its factory in Germany, Pl.'s Statement of Material Facts Not In Issue ¶ 12, ECF No. 50 ("Pl. Stmt. Facts"); Def.'s Resp. to Pl.'s Statement of Material Facts Not In Issue ¶ 12 (Def. Resp. Pl. Stmt.), and markets, advertises and sells Formpack as a flexible packaging material that can be used to create an "aluminum blister pack." Pl. Stmt. Facts ¶ 24; Def. Resp. Pl. Stmt. ¶ 24.² All seven configurations of the merchandise are used to form the base material of cavities that are part of "blister packs," which vary based on the needs of the customer.

Despite the differing variations of Formpack, all configurations share a common structure consisting of multiple layers of plastics combined with a single layer of aluminum foil sandwiched in between the plastic layers. Pl. Ex. 1 at 3-4. The basic structure is: (1) a layer of oriented polyamide (oPA) film; (2) a layer of aluminum foil; and (3) a plastic sealant layer, comprised of polypropylene (PP), polyvinyl chloride (PVC) or polyethylene (PE) plastic film. Id. Adhesives and primer facilitate merging the different layers together. Pl. Stmt. Facts ¶ 15; Def. Resp. Pl. Stmt. ¶ 15. Amcor manufactures the aluminum foil at a rolling mill, then laminates the aluminum and plastic films together at a converting facility, creating Formpack. Pl. Stmt. Facts ¶ 20; Def. Resp. Pl. Stmt. ¶ 20. At the time of importation, the Formpack arrives in a standard, uniform condition: on rolls as a flat material in slit reel or coil form. Pl. Stmt. Facts ¶ 23; Def. Resp. Pl. Stmt. ¶ 23.

Each of Formpack's three layers imparts different properties. One plastic layer, oPA film, is puncture-resistant and elastic. Def. Ex. 1 at 12; see also Pl. Ex. 8 at 10-12. Its strength and elasticity aid in preventing the aluminum foil layer from cracking during cold-forming, which is the process by which a customer creates cavities in Formpack by stretching it into the desired shape. Def. Ex. 1 at 12. The middle layer, aluminum foil, serves as the barrier layer. The foil acts as a barrier to prevent moisture, light, oxygen and other gases from penetrating the inside of the package. Pl. Stmt. Facts ¶ 29; Def. Resp. Pl. Stmt. ¶ 29.

The other plastic layer, composed of one of the three materials noted above, provides an airtight closure for "sealing" when Formpack is heat-sealed to another material (the lidding foil) as part of a package. Pl. Ex. 1 at 7-8. Some Formpack models also contain an additional layer of plastic laminated to the standard three-layer construction. Pl. Stmt. Facts ¶ 19; Def. Resp. Pl. Stmt. ¶ 19. The actual structure of Formpack varies, depending on the weight and thickness of each layer in a particular product as well as the number of layers of plastics. Pl. Ex. 1 at 4. Whether the customer selects PP, PVC or PE plastic film as the sealant layer depends on which type of sealing layer the customer intends to use for the lid or what will be stored in the finished blister pack. Pl. Stmt. Facts ¶ 56; Def. Resp. Pl. Stmt. ¶ 56. All the layers are combined through an adhesive lamination process. Pl. Stmt. Facts ¶ 15; Def. Resp. Pl. Stmt. ¶ 15.

After importation, customers use Formpack to create a finished blister pack, which consists of Formpack base material sealed with a lidding material. Customers create blister cavities in Formpack through "cold-forming," whereby Formpack—aluminum foil and the plastic film layers—is molded into the desired shape. This cold forming process contrasts with a heat-formed process, which is used to create blister cavities for a base material comprised solely of plastic. Pl. Stmt. Facts ¶ 33; Def. Resp. Pl. Stmt. ¶ 33.

Cavities are formed in Formpack to conform to the shape of the contents of the package. The "cold-forming" process, also known as "stretch-forming," Pl. Ex. 8 at 42:20-43:13, involves forming Formpack into its desired shape, similar to a stamping process. Id. at 44:3-45:7. The blister packs function as packaging containers for pharmaceutical products including tablets, caplets, gel-caps, powders, medical devices and diagnostics.³ The containers consist of both a base and lid material. Pl. Ex. 1 at 3. The lid is heat-sealed together with the blister pack to enclose the contents within each individual blister. Pl. Ex. 1 at 6-8. The lid material (which is not at issue in this case) is comprised of an easily punctured material to facilitate accessing the package contents.

STANDARD OF REVIEW & LEGAL FRAMEWORK

I. Standard of Review

Customs' protest decisions are reviewed de novo by the court.

28 U.S.C. § 2640(a)(1). USCIT Rule 56 permits summary judgment when "there is no genuine dispute as to any material fact...." USCIT R. 56(a). To raise a genuine issue of material fact, a party cannot rest upon mere allegations or denials and must point to sufficient supporting evidence for the claimed factual dispute to require resolution of the differing version of the truth at trial. See Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248-49, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "[A]ll evidence must be viewed in the light most favorable to the nonmoving party, and all reasonable factual inferences should be drawn in favor of the nonmoving party." Dairyland Power Coop. v. United States , 16 F.3d 1197, 1202 (Fed. Cir. 1994) (citations omitted). "A genuine factual dispute is one potentially affecting the outcome under the governing law." Anderson , 477 U.S. at 248, 106 S.Ct. 2505.

The court reviews classification cases on "the basis of the record made before the court." 28 U.S.C. § 2640(a). The court has "an independent responsibility to decide the legal issue of the proper meaning and scope of HTSUS terms." Warner-Lambert Co. v. United States , 407 F.3d 1207, 1209 (Fed. Cir. 2005) (citing Rocknel Fastener, Inc. v. United States , 267 F.3d 1354, 1358 (Fed. Cir. 2001) ). Customs is afforded a statutory presumption of correctness in classifying merchandise under the HTSUS. See 28 U.S.C. § 2639(a)(1). Plaintiff bears the burden to show that the government's classification is incorrect. Jarvis Clark Co. v. United States , 733 F.2d 873, 878 (Fed. Cir. 1984). If that burden is met, the court then has the responsibility to determine the correct classification. Id.

"The ultimate question in a classification case is whether the merchandise is properly classified under one or another classification heading," which is "a question of law." Bausch & Lomb v. United States , 148 F.3d 1363, 1365 (Fed. Cir. 1998). The determination of whether an imported item has been properly classified involves a two-step analysis. Sports Graphics, Inc. v. United States , 24 F.3d 1390, 1391 (Fed. Cir. 1994) ; see also Cummins Inc. v. United States , 454 F.3d 1361, 1363 (Fed. Cir. 2006). First, the court must construe the proper meaning of specific terms of the tariff provision. See Universal Elecs. Inc. v. United States , 112 F.3d 488, 491 (Fed. Cir. 1997). Second, the court must determine whether the merchandise at issue comes within the description of such terms as properly construed. Id. The first step is a question of law, while the second is one of fact. Pillowtex Corp. v. United States , 171 F.3d 1370, 1373 (Fed....