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HQ 950322




JANUARY 7, 1992

CLA-2:CO:R:C:M 950322 JAS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8207.12.60, HTSUS

District Director of Customs
477 Michigan Avenue
Detroit, Michigan 48226

RE: Drill Bits, Corebits; Mine Cutting Tools; Used Drill Bits, Scrap Diamond Drill Bits;
PRD 3801-90-002018

Dear Sir:

This is our decision on Application for Further Review of Protest No. 3801-90-002018, dated May 7, 1990, filed on behalf of National Research Co., Fraser, Michigan.

FACTS:

The merchandise is certain worn or used diamond drill bits containing synthetic diamond fragments impregnated in sintered metal (copper, cobalt and nickel) heads or crowns. The crowns in turn, are welded or brazed to steel shanks. The bits are imported from Canada expressly for the recovery of the diamond fragments. After importation, the shank portions are cut off and sold to scrap dealers for remelt. The sintered heads are soaked in acid to dissolve the metal, leaving the diamond fragments. These are recovered by various filtering methods and reused. Typically, from 1 to 3 carats are recovered from each bit, valued at approximately $1 p/carat. The metal residue from the crowns has no recoverable (1 cent/lb.) value.

The worn bits were entered under the duty-free provision for other ferrous waste and scrap, in subheading 7204.49.00, Harmonized Tariff Schedule of the United States (HTSUS). You rejected this classification because the bits were entered for recovery of the diamonds, not the metal. The entries were liquidated under the provision for other rock drilling or earth boring tools, and parts thereof, in subheading 8207.12.60, HTSUS, dutiable at the rate of 3.7 percent ad valorem. - 2 -

ISSUE:

Whether the drill bits qualify as ferrous waste and scrap for tariff purposes; whether heading 8207 describes the bits in their condition as imported.

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 Customs Cooperation Council's official interpretation of the Harmonized System. While not legally binding on the contracting parties, and therefore not dispositive, the ENs 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.

As to the first issue, the term Waste and scrap is defined as 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. Section XV, Note 6(a), HTSUS.

Relevant ENs at pp. 987 and 988 indicate that heading 7204 includes metal goods that are articles of iron or steel as defined in note 6(a), and that waste and scrap is generally used for the recovery of metal by remelting or for the manufacture of chemicals. The ENs state that heading 7204 excludes articles which, with or without repair or renovation, can be reused for their former purposes or can be adapted for other uses. It also excludes articles which can be refashioned into other goods without first being recovered as metal.

Initially, the worn bits in issue here are not articles of iron or steel; they are composite articles consisting of metal and diamond fragments. Moreover, they are used both for the recovery of the diamonds and the metal content. Also, the diamond fragments can be reused for their former purposes or can be fashioned into other goods. For these reasons, we conclude that the merchandise is not provided for in heading 7204. - 3 -

Concerning the second issue, there is no indication that the drill bits had lost their identifying characteristics as drill bits, or had been transformed into something else; only that they were worn or no longer commercially useful as drill bits. Their inferior condition affected their quality not their essence. Despite their condition as imported, they remained rock drilling or earth boring tools of heading 8207. Provisions designating articles or classes of articles by name or specific function cover those articles even though damaged. H.A. Johnson Co. v. United States, 21 Cust. Ct. 56, C.D. 1127 (1948), C.J. Tower & Sons v.United States, 24 Cust. Ct. 39, C.D. 1204 (1950), and related cases.

HOLDING:

Under the authority of GRI 1, HTSUS, the worn drill bits in issue are provided for in heading 8207, interchangeable tools for handtools, or for machine-tools, including rock drilling or earth boring tools. Actual classification is in subheading 8207.12.60, HTSUS, as liquidated.

The protest should be denied. A copy of this decision should be attached to the Customs Form 19 and mailed to the protestant as part of the notice of action on the protest.

Sincerely,

John Durant, Director
Commercial Rulings Division

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