Oak Laminates Div. of Oak Materials Group v. US, Court No. 81-8-01084.

• Decision Date: 25 September 1984
• Docket Number: Court No. 81-8-01084.
• Citation: 628 F. Supp. 1577,8 CIT 175
• Parties: OAK LAMINATES DIVISION of OAK MATERIALS GROUP, Plaintiff, v. The UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

628 F. Supp. 1577

8 CIT 175

OAK LAMINATES DIVISION of OAK MATERIALS GROUP, Plaintiff, v. The UNITED STATES, Defendant.

Court No. 81-8-01084.

United States Court of International Trade.

September 25, 1984.

Barnes, Richardson & Colburn (David O. Elliott and Richard Haroian, New York City, at the trial and on brief), for plaintiff.

Richard K. Willard, Acting Asst. Atty. Gen., Washington, D.C., Joseph I. Liebman, Atty. in Charge, Intern. Trade Field Office, Commercial Litigation Branch, New York City (Deborah E. Rand, Washington, D.C., at the trial and on brief), for defendant.

RE, Chief Judge:

The question presented in this case pertains to the proper classification, for customs duty purposes, of certain merchandise imported from Taiwan, and described on the customs invoice as "copper clad laminates."

The imported copper clad laminates are used to manufacture printed circuit boards, and consist of two types: (1) FR 4, comprised of eight plies of woven fiberglass fabric impregnated by epoxy resin, and (2) Oak 910, comprised of three plies of non-woven fiberglass fabric placed between two plies of woven fiberglass fabric, and impregnated by epoxy resin. In addition, copper foil is added on both sides of the FR 4 and Oak 910 laminate sheets.

The merchandise was classified by the Customs Service as "articles not specially provided for, of rubber or plastics ... other," under item 774.55 of the Tariff Schedules of the United States (TSUS). Therefore, it was assessed with duty at the rate of 8.5% ad valorem.

Plaintiff protests this classification and contends that the merchandise is properly classifiable under item 770.05, TSUS, as "articles not specially provided for wholly or almost wholly of reinforced or laminated plastics," duty-free under the Generalized System of Preferences.

The pertinent statutory provisions of the tariff schedules are as follows:

                    Classified Under
                      Schedule 7, Part 12, Subpart D
                    Articles not specially provided for, of rubber or plastics
                                               . . 
                    774.55                 other ........................... 8.5% ad valorem
                

                    Claimed Under
                      Schedule 7, Part 12, Subpart A
                    Articles not specially provided for wholly or almost wholly of reinforced or laminated
                    plastics:
                        Laminated:
                    770.05          Plates or Sheets ................................... Free
                                    (under the Generalized System of Preferences)
                

Specifically, therefore, the question presented is whether the imported merchandise consists of "articles not specially provided for, of rubber or plastics ... other," as classified by Customs, with a duty rate of 8.5% ad valorem, or plates or sheets "almost wholly of reinforced or laminated plastics," duty-free under the Generalized System of Preferences.

After careful examination of the imported merchandise, the testimony of the witnesses, and the entire record, it is the determination of the court that the plaintiff has not overcome the presumption of correctness which attaches to the Customs Service's classification of the imported merchandise. Jarvis Clark Co. v. United States, 733 F.2d 873, 878, reh'g denied, 739 F.2d 628 (Fed.Cir.1984); E.R. Hawthorne & Co. v. United States, 730 F.2d 1490 (Fed.Cir.1984).

At trial, plaintiff called two witnesses familiar with the manufacture of laminates for the printed circuit board industry. Plaintiff's first witness, Dr. Jiri Konicek, holds a Ph.D. in Thermal Chemistry and a M.S. in Physical Chemistry. He has substantial experience in the printed circuit board industry, holds several patents that relate to printed circuit board technology, and is currently Vice President of Research and Product Engineering at plaintiff's company, Oak Materials Group.

In his testimony, Dr. Konicek traced the evolution of electric circuit technology, and highlighted the role copper has played in that evolution. In earlier times, according to Dr. Konicek, copper served two purposes: (1) to provide the transfer of current from component to component, and (2) to provide a strong bond or good adhesion between the conductive lines and the laminate core. As electric circuit technology developed, a process was created to produce conductive patterns on both sides of a laminate core, and to connect them by plating. This process, as stated by Dr. Konicek, entailed placing copper foil on both sides of a plastic laminate sheet. In addition, in order to connect the circuit patterns on either side of the sheet, it was necessary to drill holes through the board, and deposit an electrical conductor in those holes where no copper was present. The depositing of copper in the holes necessarily involved adding copper to the surface of the copper foil already present. Dr. Konicek stated that, since the total current transfer can be accomplished by the plated-on copper, it is his belief that the conductive property of the original copper foil is no longer necessary. Therefore, he stated that since it is no longer necessary to have the copper foil provide a current transfer function, it is the laminate core that is indispensable in the manufacture of printed circuit boards.

Dr. Konicek also explained how circuit boards can be manufactured from unclad laminates, i.e., laminates which do not contain copper foil. He stated that the unclad laminates must go through a process, either semi-additive or fully additive, which requires the purchasers of unclad laminates to apply the copper. Dr. Konicek concluded his testimony by stating that, since the laminate core contains all the components, and provides all the insulating properties of circuit boards, the laminate core is the essential element of the article.

Plaintiff's second witness was Mr. Herbert Allen, Manager of Research and Development for the Advanced Circuitry Division of Litton Industries in Springfield, Missouri, a company engaged in the manufacture of printed circuit boards for the retail market.

Mr. Allen testified that his company purchases both clad and unclad laminates from the plaintiff. He stated that printed circuit boards manufactured from clad and unclad laminates are commercially interchangeable, and indicated that his company had sold printed circuit boards made from both types of laminates to several customers. Mr. Allen also testified that the purpose of the copper foil is to obtain good adhesion between the plated-on copper and the surface of the laminate core. He stated that this function could be performed by some other materials such as phenolic resin, nickel, aluminum, or silver. In Mr. Allen's opinion, it is the plastic core, not the copper foil, that is indispensable in the manufacture of a printed circuit board.

In this case, the defendant did not merely rely on the statutory presumption of correctness that prevails in customs classification cases. It introduced persuasive expert testimony to refute the testimony of plaintiff's witnesses, and to prove that the merchandise was properly classified by Customs. See Schott Optical Glass, Inc. v. United States, 82 Cust.Ct. 11, 24, 468 F.Supp. 1318, 1326, aff'd 67 CCPA 32, C.A.D. 1239, 612 F.2d 1238 (1979); Ameliotex, Inc. v. United States, 77 Cust.Ct. 72, 84, C.D. 4673, 426 F.Supp. 556, 564 (1976), aff'd, 65 CCPA 22, 565 F.2d 674 (1977).

The defendant called two witnesses familiar with the printed circuit board industry, Dr. Richard J. Jablonski and Dr. Joseph Bucci. Dr. Richard J. Jablonski holds a B.S. in Chemistry and a Ph.D. in Organic Chemistry, and is Manager of Technology Development for the Laminates Division of the General Electric Company. His duties include the development of copper clad laminates, the maintenance of the specifications for raw materials used in the production of laminates, and the resolution of customer problems relating to purchased laminates.

Dr. Jablonski rejected the proposition, offered by plaintiff's witness, that the copper foil is merely an adhesive. He stated that no one in the industry considers this to be the function of the copper. He also stated that the purpose of a printed circuit board is to conduct electricity, and that, of all the raw materials or components present in the laminate, only copper has the ability to conduct electricity. Dr. Jablonski also offered extensive testimony on the importance of copper in the manufacture of the laminates. He stated that, while plaintiff's witness testified that it is theoretically possible to use metals other than copper in electric circuitry, the only other metal used, nickel, is used in negligible amounts. Thus, Dr. Jablonski concluded that copper is the predominant metal used in manufacturing printed circuit boards.

Dr. Jablonski also discussed the other types of boards available, i.e., unclad laminates put through a fully or semi-additive process, but noted that these processes are not uniformly available, since they require the printed circuit board manufacturer to be a licensee of either the Photocircuit or Litton companies. He added that General Electric, which holds a prominent place in the laminates business, terminated its manufacture of other types of circuit boards because they were not profitable, and did not produce circuitry with the same performance level as copper clad laminates.

The defendant's second witness, Dr. Joseph Bucci, holds a Ph.D. in Solid State Physical Chemistry, has extensive experience in the electronics field, and is Manager of Market Development for the Foil Division of Gould, Incorporated. Gould manufactures the copper foil used on copper clad laminates. Dr. Bucci's testimony pertained to the production of copper foil. He stated that numerous precautions are taken to ensure the purity of the copper used to make the foil. For example, foil consistency, strength, and surface smoothness are determined when the copper is in the liquid phase. In addition, different chemical additives are used at a latter stage to achieve the various physical...