HQ 0223437 - Internal Advice request concerning the same kind and quality of steel products under T.D. 81-74 for same condition substitution drawback purposes. - United States International Trade Commision Rulings

United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org Rulings By Number Rulings By Category Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 1993 HQ Rulings > HQ 0223198 - HQ 0223539 > HQ 0223437

HQ 223437

March 11, 1992

DRA-2-02-CO:R:C:E 223437 TLS

CATEGORY: ENTRY DRAWBACK

Regional Director
U.S. Customs Service
10 Causeway Street Suite 801
Boston, Massachusetts 02222-1056

RE: Internal Advice request concerning the same kind and quality of steel products under T.D. 81-74 for same condition substitution drawback purposes.

Dear Sir:

The above-referenced internal advice request has been forwarded to this office for our consideration. We have considered the points raised by the importer and your office. Our decision follows.

FACTS:

This internal advice request involves the interpretation of same kind and quality steel products eligible for drawback under T.D. 81-74. The requester manufactures various steel parts for three different domestic automobile companies. These companies use the parts to manufacture vehicles in Canada. The two basic categories of steel involved in this case are cold rolled steel and galvanized steel.

The manufacturer contends that all parts manufactured with cold rolled steel are interchangeable for drawback purposes. There are two types of cold rolled steel, drawing quality and commercial quality. The drawing quality steel in this case has different quality numbers assigned to it by ASTM (American Society for Testing and Materials) and SAE (Society for Automotive Engineers) than does the commercial quality steel (ASTM and SAE are two of the organizations that set quality standards for automotive parts made of steel).

While the drawing quality falls under ASTM number A620 and SAE numbers 1006-1008, the commercial quality is assigned ASTM number A366 and SAE numbers 1008-1012. We note that there is some overlap between the two types with SAE number 1008. The manufacturer further argues that a 1954 Customs information letter has recognized that SAE numbers 1006-1012 are interchangeable.

The manufacturer also contends that the variations in thickness with galvanized steel parts are permissible within the SAE 1006-1012 classification range. It argues that the thickness is identical regardless of the coating process used in manufacturing. As with cold rolled steel, the three different types of galvanized steel products at issue here fall under different ASTM numbers. The three types are also processed differently. Zincrometal involves a zinc coating that is painted on, hot dipped galvanized is dipped into molten zinc, and electrolytic galvanized involves a process that applies the zinc coating chemically. The manufacturer states that customer preference does not distinguish the different processes through which galvanized steel is manufactured. It is stated that customer preference goes only to thickness.

ISSUE:

Whether steel parts of different ASTM and SAE specification numbers are of the same kind and quality for the purposes of same condition drawback under T.D. 81-74.

LAW AND ANALYSIS:

T.D. 81-74 provides the basic format for drawback contract involving steel products. The parallel columns on the contract define the following as being of same kind and quality:

Steel of one general class, e.g., an ingot, falling within one SAE, AISI (American Iron and Steel Institute), or ASTM specification, and if the specification contains one or more grades falling within one grade of the specification.

The manufacturer cites to a Customs letter dated September 24, 1954, which states the following:

"two steels in the form of either sheet or strip which fall within the composition requirements for SAE 1009 are merchandise of the same kind and quality, provided they are interchangeable for manufacturing purposes. These facts necessarily mean that steel sheet and strips coming within the composition requirements of SAE 1006, 1008, 1010, and 1012 are considered merchandise of the same kind and quality, if the condition relative to interchangeability is met.

The letter refers to situations where the different steel parts are used interchangeably in the manufacturing context. We note that the 1954 document is an information letter and not a formal Customs or Treasury ruling letter. At any rate, it is not relevant to this case because the subject contract is being considered in accordance with T.D. 81-74.

The manufacturer is currently operating under a general contract published as T.D. 81-74. As noted above, this contract clearly uses ASTM and SAE standards as requirements for same kind and quality specification. We believe the requirements set in 81-74 are clear and need no further interpretation. If a steel strip falls under SAE 1006 it cannot be said to be of same kind and quality with a steel strip falling under SAE 1008 under T.D. 81-74. If two different types of steel strips fall under different grades within SAE 1006, for instance, then they can be (but not necessarily will be) considered of same kind and quality because they are still covered by the plain language of T.D. 81- 74.

Manufacturers who intend to use the general contracts pursuant to subpart D, Part 191, Customs Regulations, must adhere to the terms of the contract as published. Manufacturers who determine that they cannot adhere to the terms of a general contract have the option to seek approval of a specific drawback contract under subparts B and C, Part 191, Customs Regulations. In this situation, the manufacturer selected neither option. Instead, after notifying the Regional Commissioner that it would submit claims in accordance with the terms of T.D. 81-74, the manufacturer has unilaterally attempted to change the terms of T.D. 81-74.

The manufacturer may be able to comply with the specific drawback contract provisions in subparts B and C, Part 191, Customs Regulations. See 19 CFR 191.23(c). Note that in this context, 19 CFR 191.61 requires a claimant to apply for any necessary drawback contract needed within three years after the date exportation of the articles.

HOLDING:

Steel parts subject to drawback under T.D. 81-74 are considered of the same kind and quality only when they fall under the same SAE or ASTM classification number. The Customs Service will consider whether steel outside of the criteria set in T.D. 81-74 as being of the same kind and quality only if submitted as a specific contract under subparts B and C, Part 191, Customs Regulations. In that situation, the question of interchangeability as set in the 1954 letter will be considered.

Sincerely,

John Durant, Director

Previous Ruling Next Ruling