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HQ 088116


February 27, 1991

CLA-2 CO:R:CV:G 088116 JLV

CATEGORY: CLASSIFICATION

TARIFF NO.: 7218.90.00

District Director of Customs
40 South Gay Street
Baltimore, Maryland 21202

RE: Internal Advice 62/90; sheet bar; semifinished; primary hot-rolling; rough appearance; flat-rolled; stainless; continuous cast slab

Dear Mr. Beikirch:

In a memorandum of August 30, 1990, you forwarded a request for internal advice that was submitted by counsel for Avesta, Inc., New Castle, Indiana, concerning the classification of certain hot-rolled stainless steel products. This ruling is our decision on the classification issue.

FACTS:

The merchandise consists of flat-rolled stainless steel products that have been hot-rolled from continuous cast slab. The processing operations performed prior to importation are described as follows: 1) continuous cast slab, measuring 50 inches wide and 5.5 to 8 inches thick as cast, is cut to specified lengths, such as 98.5 inches; 2) the lengths of slab are heated to approximately 2300oF; and 3) they are then longitudinally hot-rolled (reduced) to thicknesses of 0.750 to 2.00 inches in such a manner that the width of the slabs becomes the length. The hot-rolled products are called "sheet bars" and are described as having "rough surfaces" and rounded ends and rounded edges, and as having only been longitudinally rolled. They are not rolled to any tolerances established by the importer other than the approximate thickness, (e.g., one inch).

After importation, the sheet bar is cut, heated to hot working temperature, hot-rolled to final gauges ranging from 0.187 to 1.00 inch, and edge worked. The plate or sheet products are then annealed, shot blasted to remove scale, roller or roller and stretcher flattened, cut to size, pickled, and ground.

ISSUE:

Are the hot-rolled stainless steel products considered to be "semifinished products" and, therefore, classifiable as semifinished products of stainless steel in subheading 7218.90.00, Harmonized Tariff Schedule of the United States (HTSUSA), or are they "flat-rolled products" classifiable as flat-rolled products of stainless steel, of a width of 600 mm or more, not further worked than hot-rolled, not in coils, of a thickness exceeding 10 mm, in subheading 7219.21.00, HTSUSA?

LAW AND ANALYSIS:

Legal note 1(ij), Chapter 72, HTSUSA, defines "semifinished products" as follows:

1. In this chapter * * * the following expressions have the meanings hereby assigned to them:

(ij) Semifinished products

Continuous cast products of solid section, whether or not subjected to primary hot-rolling
[emphasis added]; and

Other products of solid section, which have not been further worked than subjected to primary hot-rolling or rough shaped by forging, including blanks for angles, shapes or sections.

These products are not presented in coils.

Semifinished products of stainless steel fall within heading 7218, HTSUSA.

Legal note 1(k), Chapter 72, HTSUSA, defines "flat-rolled products," in pertinent part, as the following:

(k) Flat-rolled products

Rolled products of solid rectangular (other than square) cross section, which do not conform to the definition at
(ij) above in the form of:

- straight lengths, which if of a thickness less than 4.75 mm are of a width measuring at least 10 times the thickness or if of a thickness of 4.75 mm or more are of a width which exceeds 150 mm and measures at least twice the thickness.

Flat-rolled products of stainless steel, of a width of 600 mm or more, fall in heading 7219, HTSUSA.

The hot-rolled stainless steel is not in coils, measures more than 10 mm in thickness and 600 mm in width, and has not been further worked than hot-rolled. The definitions for "semifinished" and "flat-rolled" do not define the terms "primary hot-rolling" and "rolling" which are used to describe the condition of the steel products that result from those processes. The Explanatory Notes (EN) to the Harmonized System, however, do provide some guidance for the construction and scope of these terms. The EN to headings 7218 and 7219 refer to the EN found at headings 7207 and 7208, pages 991 to 995, Explanatory Notes to the Harmonized Commodity Description and Coding System, Supp. 1 to 5 (1990), mutatis mutandis. The EN to heading 7207 states the following:

* * * For purposes of this Note, the expression "subjected to primary hot- rolling" applies to products which have been subjected to a rolling operation which has given them a rough appearance.

The heading covers * * * sheet bars * *
* and all products obtained by continuous casting.

(A) BLOOMS, BILLETS, ROUNDS, SLABS,
AND SHEET BARS

All these products are obtained by hot-rolling or forging the ingots, puddled bars or pilings classified in heading 72.06. They are semi-finished products intended for further hot-rolling or forging. They are therefore not required to be made exactly to size; the edges are not accurate and the surfaces are often convex or concave and may retain marks cause during the manufacturing processes (e.g., roller marks).

Slabs and sheet bars are also rectangular * * * in section * * * have widths considerably greater than their thicknesses, slabs being thicker than sheet bars. Slabs are therefore usually re-rolled to plates, while sheet bars are normally used to produce sheets or strip. * * * With regard to the distinction between slabs and sheet bars and certain plates, see the
Explanatory Note to heading 72.08 below.

(D) SEMI-FINISHED PRODUCTS
OBTAINED BY CONTINUOUS CASTING

This group covers all semi-finished products of iron or non-alloy steel, under any form, obtained by continuous casting.

The references to the EN at heading 7208 refer to the following EN:

This heading covers, inter alia, "wide coils", "sheets" and "plates".

Certain "sheets" and "plates" may have dimensions similar to those of slabs and sheet bars. However, they can be distinguished from slabs and sheet bars since:

(1) They are most often cross-rolled
(longitudinally and transversely) and sometimes oblique-rolled whereas slabs and sheet bars are roughly rolled longitudinally only (in the slabbing or roughing mill).

(2) Their edges are normally sheared or flame-cut and show traces of the shears or flame whereas slabs and sheet bars have round edges.

(3) Tolerances as to thickness and surface defects are very strict whereas slabs and sheet bars are not of uniform thickness and show various surface defects.

In summary, we conclude there are general principles which may be drawn from these legal notes and EN. In this respect, the following general principles may be considered in determining whether certain hot-rolled steel products are semifinished or flat-rolled: a primary hot-rolling is a rolling process that (1) reduces the dimensions of an ingot or other primary form or continuous cast product and (2) leaves the resulting product with a rough appearance; a rough appearance (this term is not the same as roughly shaped) is one that is identified by convex or concave surfaces, presence of roller marks and other surface defects, and lack of strict, uniform dimensional tolerances (usually with reference to tolerances for thickness, flatness, or cross-section); products which have been subjected to a primary hot-rolling are usually intended for further hot working and they do not meet the industry tolerances (or comparable end-user dimensional requirements) for flat-rolled products; and hot-rolled flat-rolled products are rolled to tolerances which meet recognizable industry standards or comparable end-user standards for hot-rolled plate, sheet, wide coils, wide flats, and similar finished products.

Applying these principles to the facts in issue, we conclude that the imported stainless steel products are semifinished products and classified as other semifinished products of stainless steel in subheading 7218.90.00, HTSUSA. Counsel and the importer claim that the hot-rolling performed on the slab is a primary hot-rolling because it is used to break down the slab to an intermediate product called "sheet bar," which is a thinner, semifinished material that must be processed by a secondary hot-rolling to make flat-rolled products (plates or sheets). The imported products are said to have a rough appearance which, according to counsel for the importer, is used to describe "the appearance of the imported sheet bars as those which have been 'hot-rolled' only, and which have not been subject to the well-recognized finishing operations." However, we note that, in the terms of the EN to heading 7207, "rough appearance" is more specific and means the following: the products are not rolled "exactly to size" or, in other words, are not rolled to cross-sectional or other dimensional tolerances required for flat-rolled products; the surfaces may be convex or concave; and the surfaces may have obvious roller marks or imperfections which require secondary hot-working to produce flat-rolled products.

Counsel and importer state that the imported hot-rolled products do not meet the industry standards for the close tolerances (gauge) required for flat-rolled products (plate or sheet). It is further stated that the imported hot-rolled products are not rolled, pursuant to requirements established by the importer or a specific end-user, to tolerances which are comparable in accuracy to the industry standards for flat-rolled products. There is no evidence in the file that controverts these statements.

Semifinished products, such as sheet bar, are intended for further hot-working. However, it is the condition of the product at the time of importation that determines whether or not it is that kind of steel product that is "intended for further hot-working" and, therefore, classifiable as semifinished steel products. Classification of semifinished products is not an actual use determination. Therefore, although the actual hot-rolling of a steel product after importation may have some evidentiary value, it is neither conclusive evidence that a steel product is a semifinished product, nor is it conclusive evidence that a steel product is not a flat-rolled product.

Our decision to classify the imported products as semifinished stainless steel products is based on the statements by counsel and the importer that the products were not hot-rolled to either internal or industry specifications which meet or satisfy the criteria for flat-rolled products known as "hot-rolled plate." That is, the products are not rolled with controls for gauge, edge, or surface condition required for plate. The imported product requires further hot-working in order to impart these features. It is on the basis of these statements of fact presented by counsel and the importer that we classify these hot-rolled products as semifinished stainless steel. Any change in the facts as presented (e.g., the existence of production standards for dimensional tolerances equivalent to tolerances for flat- rolled products) may result in a different conclusion.

We note that the fact that the imported product was not surface finished (i.e., still had scale left after the primary hot-rolling and subsequent cooling) and was not edge trimmed (or similar edge control) is not the basis for our decision. Plates may have a hot-rolled finish, which is described in ASTM designation A 480/A480M, section 10.1.1, as "[s]cale not removed, an intermediate finish." We also note that edge trimming may be performed at any time to impart the edge finished on a flat-rolled product, such as plate.

Regarding the applicability of voluntary restraint agreement (VRA) certification requirements, as this program is administered by the U.S. Department of Commerce, we recommend that you contact the Office of Agreements Compliance, International Trade Administration, U.S. Department of Commerce, Washington, D.C., 20230, telephone (202) 377-3793, for the VRA requirements applicable to the imported product.

HOLDING:

The stainless steel products have been reduced from continuous cast slabs by a primary hot-rolling only and are classified as semifinished stainless steel products in subheading 7218.90.00, HTSUSA.

Sincerely,

Harvey B. Fox

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