CBP: Embossing Foil Doesn't Constitute Use or Materially Change Merchandise

The unwinding, trimming, embossing and respooling of the rolls of aluminum foil don't use the foil for the purpose it was intended -- wrapping confectionary products for retail sale -- and don't change the use or yield a new and different product, CBP said, allowing for unused merchandise drawback. Nor do the processes materially alter the foil or change its original purpose, so USMCA drawback also is available. Rather, the operations are analagous to labeling, CBP said in HQ H331751, issued Nov. 20.

The ruling was requested by Swiss-Croatian packaging manufacturer Aluflexpack Novi, which plans to import the rolls of aluminum foil into the U.S. and emboss them with candy manufacturer Ferrero Rocher's logo. Then, the imported rolls of aluminum foil will be exported to Ferrero Rocher in Canada for use in wrapping confectionary products sold at retail.

“Given that none of the processing operations to which the aluminum foil will be subjected by Aluflexpack render it used, we find that the foil is eligible for drawback under 19 U.S.C. § 1313(j)(1),” CBP said. Additionally, it determined that the processes rendered to the foil in the U.S. are “labelling” operations and that labeling is “included in the list of permissible operations in 19 C.F.R. § 182.45(b), which do not affect the character of the merchandise,” making the merchandise eligible for drawback under USMCA.

Aluflexpack originally filed the ruling request in April 2023.

To determine drawback eligibility under 19 U.S.C. § 1313(j)(1), CBP analyzed the processes Aluflexpack will conduct in the U.S. It determined that the first three of the four processes the foil will be subjected to, namely trimming, unwinding, respooling and embossing, are encompassed by processes listed in 19 U.S.C. § 1313(j)(3): slitting, unpacking and repacking. “In sum, these three processes are encompassed within the processes statutorily listed as not amounting to manufacture or production for drawback purposes, and thus, do not render the foil used,” CBP said.

The fourth process, embossing, isn't specifically listed in 19 U.S.C. § 1313(j)(3), but it does “not change the character of the good because the processes closely resemble labeling,” which is a listed process. In reaching this determination, CBP cited H292472 and H026642, saying that embossing, “does not amount to a manufacture or production because it does not render the aluminum foil fit for a particular use or yield a new and different article having a distinctive name, character, or use. Additionally, this process does not use the foil for the purpose for which it was manufactured and intended, namely, wrapping confectionary products for retail sale. Embossing solely serves to add a decoration or logo to the foil that further prepares it for retail sale.”

To determine if the rolls were “in the same condition when exported to Canada as when imported into the United States,” and therefore eligible for drawback under USMCA, CBP again found that the first three processes don't materially alter the characteristics of the good as defined in 19 U.S.C. § 1313(j)(3).

To find if embossing constitutes a material change, CBP applied Belcher v. Linn, a U.S. Supreme Court finding that not only “the identity of the article exported [must be] preserved, but that its utility for its original purpose [must be] unchanged.” As in H292472 and H026642, labeling “operations did not alter the character of the promotional items; they merely added a decoration or logo,” and the foil “is exported to Canada in the same condition as when imported into the United States, and eligible for drawback under the USMCA.”