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HQ 081550

October 18, 1989

CLA-2 CO:R:CV:G: 081550 JLV

CATEGORY: CLASSIFICATION

TARIFF NO.: 682.60

Paul C. Rosenthal, Esq.
Collier, Shannon, Rill & Scott
1055 Thomas Jefferson Street, N.W.
Washington, D.C. 20007

RE: Silicon electrical steel in toroids; unfinished parts of transformers; 19 U.S.C. 1516

Dear Mr. Rosenthal:

In a petition of January 4, 1988, on behalf of Armco, Inc. and Allegheny-Ludlum Steel Corp., filed pursuant to section 516, Tariff Act of 1930, as amended (19 U.S.C. 1516), you challenged our classification of certain toroids as parts of transformers in item 682.60, Tariff Schedules of the United States (TSUS). The petition was accepted and notice of receipt of the petition was published on July 14, 1988, in the Federal Register (53 FR 26605). Six commentors, including the petitioners, responded to the notice and request for comments. This letter is our decision on the petition.

FACTS:

The articles in issue are called "toroids" and consist of lengths of silicon electrical steel which are wound in a specific manner so as to be layered to produce air gaps at specific distances. The size of the toroid and the number of layers of silicon steel are specific and determine the application of the toroid. The toroids may either be welded or riveted to maintain the shape.

Subsequent processing of a toroid includes forming into a rectangular shape, annealing to remove mechanical stresses, disassembly and reassembly in the same order around a coil, and addition of insulation and binding materials.

In a ruling letter of December 23, 1986 (file 077880), we held that these toroids were unfinished electrical components and classified as parts of transformers in item 682.60, TSUS.

ISSUE:

Are the toroids unfinished parts of transformers and, therefore, classifiable in item 682.60, TSUS, or are they basic shapes (sheets or strip) in coil form, and classifiable in schedule 6, part 2, subpart B, TSUS?

LAW AND ANALYSIS:

Note 1(iv), schedule 6, part 2, TSUS, excludes from that part "(iv) other articles specially provided for elsewhere in the tariff schedules, or parts of articles." The scope of this exclusion has been discussed in many judicial opinions. See, for example, E.R. Hawthorne & Co, Inc. v. United States, 730 F.2d 1490 (Fed. Cir. 1984), and cases cited therein. In this case, if the toroids are recognizable as parts of transformers, then they are precluded from classification in schedule 6, part 2, TSUS, even though they may be unfinished at the time of importation. General Interpretative Rule 10(h), TSUS.

Among the arguments presented by you, the policy consideration (intent of the voluntary restraint arrangements on steel products) and the substantial transformation issue are not relevant to the classification issue challenged by the the petitioners.

Although cutting to length and winding into a specifically layered coil may not constitute high-cost processing operations, the resulting article is recognizable as an unfinished core for a transformer. The relevant specifications, i.e., the inside circumference, the cross sectional area, the location of the joints, and the number of sheets, are specific characteristics of the toroids and limit the use of the toroids as parts of electrical transformers. The toroids have a character and identity that is fixed with certainty. We distinguish these cut and assembled lengths of silicon electrical steel from the material lengths, in coil, of silicon electrical steel. In the latter case, there is no recognizable article and is precluded from classification as a part, even though the material may be dedicated for making the individual articles. Avins Industrial Products Co. v. United States, 515 F.2d 782 (CCPA 1975).

HOLDING:

The toroids are unfinished parts of transformers. We affirm our classification set forth in the ruling letter of December 23, 1986 (file 077880).

Sincerely,

Harvey B. Fox

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