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 > 1995 HQ Rulings > HQ 955527 - HQ 955749 > HQ 955737

Previous Ruling Next Ruling
HQ 955737




JULY 19, 1995

CLA-2 R:C:M 955737 JAS

CATEGORY: CLASSIFICATION

TARIFF NO.: 7228.50.10

District Director of Customs
610 South Canal Street
Chicago, ILL. 60607

RE: PRD 3901-93-101490; Alloy Tool Steel Bars, Hot Rolled; Peeling, Turning, Machining; Cold Forming, Cold Finishing; Further Working; Mechanical Descaling; Subheading 7228.40.00; NY 847047 Distinguished

Dear District Director:

This is our decision on Protest No. 3901-93-101490, filed against your classification of certain hot rolled alloy steel bars. The entries were liquidated on May 7, 1993, and this protest timely filed on August 5, 1993. The file contains submissions from counsel for protestant, dated October 21 and December 10, 1993, and August 2 and 28, 1994. In addition, counsel made an oral presentation at a meeting in our office on August 3, 1994.

FACTS:

The merchandise under protest is round, rectangular or block-shaped and flat bars of alloy tool steel, either press forged or roll forged from blooms or billets. These bars, designated Thyroplast, Thyrodur and Thyrotherm, are then annealed to improve the steel's mechanical properties, after which the rounds are peeled or turned and the blocks and flats machined or milled. The dimensions of the imported product taken from representative invoices are in 1/8 inch increments, expressed in thousandths or ten thousandths of an inch. These processes effectively remove between 0.01 inch to 0.1 inch of steel from the bars' entire external surface area, representing an approximate 7 to 10 percent reduction by weight.

The bars were entered under the provision for other bars and rods, not further worked than forged, in subheading 7228.40.00, Harmonized Tariff Schedule of the United States (HTSUS). Counsel for protestant maintains that the peeling, turning and machining operations are mechanical descaling processes designed to remove - 2 -
scale and crust which originated during hot rolling or forging. As such, these processes are the equivalent of rough turning which is not regarded for tariff purposes as a finishing operation that would lead to a change in classification. The conclusion is that these processes are not cold forming or cold finishing operations for tariff purposes. Counsel cites as authority a ruling to protestant, NY 847047, dated December 5, 1989, which held in part that round and flat tool steel bars produced by hot-rolling or forging that have been mechanically descaled, are classifiable in subheading 7228.40.00, HTSUS, as other bars and rods, not further worked than forged. The concerned import specialist determined that the processes of machining, peeling and turning, as described, were in fact cold forming or cold finishing operations, and liquidated the entries under subheading 7228.50.10, HTSUS, as bars and rods, not further worked than cold-formed or cold-finished.

The provisions under consideration are as follows:

7228 Other bars and rods of other alloy steel...:

7228.40.00 Other bars and rods, not further worked than forged...6 percent

7228.50 Other bars and rods, not further worked than cold-formed or cold-finished:

7228.50.10 Of tool steel (other than high- speed steel)...10.6 percent

ISSUE:

Whether mechanically removing between 0.01 inch to 0.1 inch from the entire external surface area of alloy tool steel bars constitutes cold forming or cold finishing for tariff purposes.

LAW AND ANALYSIS:

Merchandise is classifiable under the Harmonized Tariff Schedule of the United States (HTSUS) in accordance with the General Rules of Interpretation (GRIs). GRI 1 states in part that for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes, and provided the headings or notes do not require otherwise, according to GRIs 2 through 6.

The Harmonized Commodity Description And Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System. While not legally binding on the contracting parties, and therefore not dispositive, the ENs - 3 -
provide a commentary on the scope of each heading of the Harmonized System and are thus useful in ascertaining the classification of merchandise under the System. Customs believes the notes should always be consulted. See T.D. 89-80. 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).

Initially, the terms cold-formed and cold-finished are not defined either in the text of the HTSUS or in the ENs. The sense in which these terms are understood in the iron and steel industry is therefore useful in understanding their meaning. Additionally, the Chapter 72 General Explanatory Notes, at p. 981, identify types of mechanical working that are considered finishing treatments to which products of that chapter may be subjected. Turning, milling, grinding, perforation or punching, folding, sizing, peeling, etc., are listed examples of such mechanical working. The same notes state that rough turning merely to eliminate the oxidation scale and crust, and rough trimming are not regarded as finishing operations leading to a change in classification. The notes continue by listing certain surface treatments or other operations that improve the properties or appearance of the metal that, except as provided in the text of certain headings, do not affect the heading in which the goods are classified. Annealing and similar heat treatments to improve the mechanical properties of the metal and descaling and similar processes to remove the oxide scale and crust formed during the heating of the metal are among the listed surface treatments and operations. Descaling is a generic term that includes chemical processes such as pickling and mechanical processes such as grit blasting, which are designed to remove oxides and rust from the bars' surface area. It appears from these notes that the iron and steel industry regards turning and rough turning and/or descaling as separate and distinct operations.

The following passage concerning the finishing and shipping of bar products appears in the United States Steel (now USX) Corporation publication The Making, Shaping and Treating of Steel, 10th. ed. (1985), at p. 944:

In the manufacture of bar products, the design and type of rolling mill or the characteristics of the steel frequently preclude the possibility of hot- rolling a round to within precise sectional or out- of-round limitations, or to roll a round with a surface suitable for subsequent fabrication requirements. When such requirements must be met, rounds are further processed in the finishing departments by such operations as sizing, turning, centerless grinding, or by combinations of the latter two. Bars to be processed by any one of these methods are hot-rolled over-size by an amount predetermined by experience.

Current technology does not permit bars to be hot-rolled to precise sectional or out-of-round limitations, or hot-rolled with a surface suitable for subsequent fabrication requirements. Because the surface defects that appear in hot-rolled bar products are at different places on the bars' surface, and often at different depths, it is sometimes necessary to remove so much metal from the bar's entire surface area that a product with cold worked tolerances results. It appears in these circumstances that the turning, peeling and milling or machining, as described, are processes designed not only to improve the bars' surface condition by removing undesirable defects, but also to impart a desired form or shape to the bar, as evidenced by the close dimensional tolerances. These processes are considered cold- forming or cold-finishing operations for tariff purposes.

NY 847047, dated December 5, 1989, dealing with round and flat tool steel bars that have been hot-rolled or forged and mechanically descaled, is distinguished on the facts, and does not cover the merchandise in this protest.

HOLDING:

Under the authority of GRI 1, the bars of other alloy steel, in round, block or rectangular, and flat shapes, that have been peeled, turned or milled, as described, are provided for in heading 7228. They are classifiable in subheading 7228.50.10, HTSUS.

The protest is DENIED. In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you should mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in ACS and to the public via the Diskette Subscription Service, Lexis, the Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director
Commercial Rulings Division


Previous Ruling Next Ruling

See also: