HQ 956655 - Titanium scrap fines; waste and scrap; Note 6(a), Section XV; Additional U.S. Note 2, Section XV; unwrought; sponge; EN 81.08; ASTM specifications; HRL 951568 and 951469; Nippon Kogasku (USA), Inc. v. U.S.; C.J. Tower & Sons v. U.S.; Royal Business Machines, Inc., et al v. U.S. - United States International Trade Commision Rulings

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HQ 956655

November 10, 1994

CLA-2 CO:R:C:M 956655 KCC

CATEGORY: CLASSIFICATION

TARIFF NO.: 8108.10.50

Evelyn M. Suarez, Esq.
Ross & Hardies
888 Sixteenth Street, N.W.
Washington, D.C. 20006-4103

RE: Titanium scrap fines; waste and scrap; Note 6(a), Section XV; Additional U.S. Note 2, Section XV; unwrought; sponge; EN 81.08; ASTM specifications; HRL 951568 and 951469; Nippon Kogasku (USA), Inc. v. U.S.; C.J. Tower & Sons v. U.S.; Royal Business Machines, Inc., et al v. U.S.

Dear Ms. Suarez:

This is in response to your letter dated June 14, 1994, to the Area Director, New York Seaport, on behalf of Specialty Metallurgical Products Co., Inc., regarding the tariff classification of titanium scrap fines under the Harmonized Tariff Schedule of the United States (HTSUS). Information presented at a meeting on September 20, and in an additional submission dated November 3, 1994, was taken into consideration in rendering this decision.

FACTS:

The subject merchandise is described as titanium scrap fines (TSFs) from Russia. The TSFs are imported as minute pieces of powder or residue, referred to as fines, or the fines are compressed into briquettes. The TSFs are used as an alloy in aluminum products primarily sold to the automotive industry. You state that the TSF's are the waste material resultant from the manufacture of titanium sponge.

The production of titanium sponge involves a process of chlorination and reduction of titanium concentrates (ilmenite or rutile). The concentrates react with chlorine gas and coke in a fluidized-bed reactor to form impure titanium tetrachloride, sometimes referred to as "tickle." The titanium tetrachloride is then combined with magnesium, known as the Kroll process, to form titanium sponge and a chloride salt. The salt and residual magnesium or sodium metal must then be separated from the titanium sponge in a purification process.

The titanium assumes the form of cake, which is in the shape of the vessel or crucible in which the reaction took place. The basic Kroll process results in the purest parts forming at the center with a higher concentration of impurities forming near the reactor pot walls. The cake is then divided into fractions. The portion of the cake nearest the walls, which has the highest concentration of impurities is the source of the TSFs.

You state that the TSFs are not classifiable as titanium sponge because they do not meet the American Society for Testing Materials (ASTM) standards (ASTM B-299-92) for titanium sponge and, therefore, the TSFs are not useable as titanium sponge. ASTM titanium sponge is used to produce titanium mill products in jet airframes and engines, ballistic missiles, deep diving undersea vehicles and in chemical processing, waste water treatment and other industrial equipment.

You state that the differences between ASTM titanium sponge and TSFs are as follows:

ASTM Sponge TSFs
purity: 99.3% 99% shape: irregular lumps fines or briquettes size: ò12 mm ó12 mm, often ó2 mm hardness: 90 out of 120 (Brinell) none

Additionally, ASTM titanium sponge has specific requirements for levels of impurities for iron, chlorine, nitrogen, silicon, nickel, carbon and oxygen, and the TSFs have requirements for the level of impurities for iron, oxygen and nitrogen.

The competing subheadings are as follows:

8108 Titanium and articles thereof, including waste and scrap...Unwrought titanium; waste and scrap; powders...

8108.10.10 Waste and scrap.

8108.10.50 Other....

8108.10.5010 Sponge.

ISSUE:

Are the titanium scrape fines classified as titanium waste and scrap under subheading 8108.10.10, HTSUS, or as other unwrought titanium, sponge under subheading 8108.10.50, HTSUS?

LAW AND ANALYSIS:

The classification of merchandise under the HTSUS is governed by the General Rules of Interpretation (GRI's). GRI 1, HTSUS, 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...."

Heading 8108, HTSUS, falls within Section XV, making the Section XV notes applicable to the tariff classification of the TSFs. Note 6, Section XV, HTSUS, states that "[i]n this section, the following expressions have the meanings hereby assigned to them:

(a) Waste and scrap

Metal waste and scrap from the manufacture or mechanical working of metals, and metal goods definitely not usable as such because of breakage, cutting-up, wear or other reasons."

Additional U.S. Note 2, Section XV, HTSUS, states:

For the purposes of this section, the term "unwrought" refers to metal, whether or not refined, in the form of ingots, blocks, lumps, billets, cakes, slabs, pigs, cathodes, anodes, briquettes, cubes, sticks, grains, sponge, pellets, flattened pellets, rounds, rondelles, shot and similar manufactured primary forms....

The TSFs in this case are unwrought titanium because they are either imported in the form of grains or fines, or in briquettes. We must determine whether the TSFs are "waste and scrap" or "sponge" for tariff classification purposes. In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System ENs may be utilized. The ENs, although not dispositive, provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of the HTSUS. See, T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989). EN 81.08 (pgs. 1095-1096), states that:

Titanium is obtained by reduction of the oxide ore rutile and brookite, and from ilmenite (titaniferous iron ore). According to the process used, the metal may be obtained in compact form, as a powder for sintering (as in the case of tungsten), as ferro-titanium (Chapter 72) or as titanium carbide....

...the metal is also alloyed with aluminum, copper, nickel, etc.

Titanium is principally used in the aircraft industry, in shipbuilding, for making, e.g., vats, agitators, heat exchangers, valves and pumps for the chemical industry, for the desalination of seawater and for the construction of nuclear power stations.

This heading covers titanium in all forms: in particular sponge, ingots, powder, anodes, bars and rods, sheets and plates, waste and scrap....

EN 81.08 does not provide a more detailed discussion of titanium waste and scrap. We note that other ENs for base metals provide further guidance regarding a description of waste and scrap for those particular headings. Additionally, the ENs often do not repeat the same information for each heading, but they use the term mutatis mutandis to indicate that previous information applies to the heading at issue. EN 81.08 does not use mutatis mutandis to refer back to a previous base metal EN for information regarding the classification of titanium waste and scrap. Without further guidance regarding titanium waste and scrap from the ENs, we apply the definition of waste and scrap in Note 6(a), Section XV, HTSUS.

We are of the opinion that the TSFs are not waste and scrap for tariff classification purposes, but are classified under subheading 8108.10.50, HTSUS, as other unwrought titanium, sponge. Sponge is not defined in the HTSUS or ENs. In the absence of any guidance in the Explanatory Notes, it is proper to use the principal that tariff terms are construed in accordance with their common and commercial meaning. Nippon Kogasku (USA), Inc. v. United States 69 CCPA 89, 673 F.2d 380 (1982). Common and commercial meaning may be determined by consulting dictionaries, lexicons, scientific authorities and other reliable sources. C.J. Tower & Sons v. United States, 69 CCPA 128, 673 F.2d 1268 (1982). As it relates to metals, sponge is defined as:

A form of metal characterized by a porous condition which is the result of the decomposition or reduction of a compound without fusion. The term is applied to forms of iron, the platinum-group metals, titanium and zirconium.

Vol. 1, pg. 35, Metals Handbook, 8th Ed., American Society for Metals (1961). The TSFs conform with this definition of sponge. Sponge has very distinctive characteristics. Therefore, we are of the opinion that upon examination, if it is determined that the product is titanium and has the characteristics of sponge, it will be classified as other unwrought titanium, sponge under subheading 8108.10.50, HTSUS. There is no distinction between ASTM titanium sponge and other unwrought titanium sponge for tariff classification purposes. There is no indication that the tariff intended any other meaning than the ordinary meaning for the term "sponge", and we see no reason to require that titanium sponge conform to a particular industry standard in order for it to be classified in the provision for unwrought titanium, sponge. See also, Headquarters Ruling Letter (HRL) 951568 dated July 27, 1992, which held that molybdenum bars ends were not classified as molybdenum waste and scrap, even though they did not meet the ASTM standards for molybdenum bars.

You contend that the TSFs are the waste product from the manufacture of titanium sponge. We do not agree with his ascertion. Although the TSFs are a by-product from the manufacture of ASTM titanium sponge, we believe that the TSFs are a product in and of itself. This other titanium sponge is in fact a product used in a manner similar to ASTM titanium sponge. Like ASTM titanium sponge, the other titanium sponge is melted and alloyed with other materials. It is used in the aluminum industry, not the aerospace industry. Although ASTM titanium sponge and other titanium sponge are used for different purposes, they are both products derived from the manufacture of titanium as described in EN 81.08. We are of the opinion that the TSFs do not meet the definition of waste and scrape in Note 6(a), Section XV, HTSUS, and, therefore, are classified as other unwrought titanium, sponge under subheading 8108.10.50, HTSUS. See, HRL 951469 dated July 21, 1992, which classified titanium scrap fines in the form of briquettes under subheading 8108.10.50, HTSUS.

The Customs Service is the administrative agency which has been designated to administer the HTSUS. Therefore, the classification of imported merchandise is a matter properly determined by this agency. The determination of whether specific merchandise is subject to antidumping duties is within the purview of the International Trade Administration (ITA), U.S. Department of Commerce. The Court of International Trade has stated:

The Court distinguishes between the authority of the Customs Service to classify according to tariff classifications (19 U.S.C. 1500) and the power of the agencies administering the antidumping law to determine a class or kind of merchandise. The determinations under the antidumping law may properly result in the creation of classes which do not correspond to classification found in the tariff schedules or may define or modify a known classification in a manner not contemplated or desired by the Customs Service.

Royal Business Machines, Inc., et al v. U.S., 1 CIT 80, 87 (1980), 507 F.Supp. 1007, aff'd 669 F.2d 692 (1982). Thus, the Commerce Department's antidumping scope determination applies to the merchandise named in that determination regardless of where Customs classifies that merchandise. Therefore, the rational stated in the final scope ruling excluding certain compacted titanium scrap fines from the Antidumping Duty Order on Titanium Sponge from the U.S.S.R. (A-461-008) is not determinative as to the classification of the TSFs at issue in this case.

HOLDING:

The titanium scrap fines are classified as other unwrought titanium, sponge under subheading 8108.10.50, HTSUS. The corresponding duty rate for articles of this subheading is 15 percent ad valorem.

Sincerely,

John Durant, Director
Commercial Rulings Division

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