HQ 956892 - Protest 2809-94-101030; Thin Film Substrate; Ceramic Article; Magnetic Head Sliders; Parts of Automatic Data Processing (ADP) machines; 8473.30.40; Legal Note 1 to chapter 69; General EN to chapter 69; Additional U.S. Note 1 to chapter 69; Legal Note 1(b) to chapter 84; General EN (A) to chapter 84; HQs 955270, 951791, 950623, 089869, 086584, 082097 - United States International Trade Commision Rulings

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HQ 956892

April 26, 1995

CLA-2 R:C:M 956892 RFA

CATEGORY: CLASSIFICATION

TARIFF NO.: 6914.90.00

District Director of Customs
33 New Montgomery Street
P.O. Box 2450
San Francisco, CA 94126

RE: Protest 2809-94-101030; Thin Film Substrate; Ceramic Article; Magnetic Head Sliders; Parts of Automatic Data Processing (ADP) machines; 8473.30.40; Legal Note 1 to chapter 69; General EN to chapter 69; Additional U.S. Note 1 to chapter 69; Legal Note 1(b) to chapter 84; General EN (A) to chapter 84; HQs 955270, 951791, 950623, 089869, 086584, 082097

Dear District Director:

The following is our decision regarding Protest 2809-94-101030, which concerns the classification of thin film substrates under the Harmonized Tariff Schedule of the United States (HTSUS).

FACTS:

The subject merchandise is described as thin film substrates, in square or disk shapes. At the time of importation, the subject merchandise is made from an advanced composite material, consisting of aluminum oxide, titanium carbide and magnesium zirconium oxide. The alumina component of the thin film substrate is 60 to 70 percent of the merchandise and the titanium carbide comprises 25 to 35 percent of the thin film substrate. According to the information provided, the titanium carbide accounts for between 50 to 70 percent of the material cost.

Prior to importation, the thin film substrates are manufactured from separate raw material components (alumina, titanium carbide) which are milled/mixed and dried separately. They are then combined and subject to additional milling/mixing and drying. The raw material is then pressed by the simultaneous application of extreme pressure and heat in a hot press to form the thin film substrate according to customer specifications. After hot pressing the outer diameter, the surface and chamfers are machined to customer specifications. Next, the thin film substrate is lapped and polished to the required micron-level thickness and required Angstrom-level surface finish. The thin film substrate is then sputtered with an ultra thin layer of alumina and further lapped and polished to the required thickness and surface finish.

After importation, the thin film substrate is coated with additional thin film layers using photolithography, and machined again to form individual sliders for thin film magnetic read/write heads used in hard disk drives of automatic data processing (ADP) machines. Additional components are then added to the thin film substrate/ slider to create a finished thin film magnetic read/write head. The read/write head applies different levels of voltage to specific areas on a hard disk drive, which results in a negative or positive charge that correlates to the binary code for purposes of recording and receiving information.

The merchandise was entered under subheading 8473.30.40, HTSUS, as parts of automatic data processing machines. The entry was liquidated on April 22, 1994, under subheading 6914.90.00, HTSUS, as other ceramic articles. The protest was timely filed on July 20, 1994.

The subheadings under consideration are as follows:

6914.90.00 Other ceramic articles: [o]ther . . . .

Goods classifiable under this provision have a general, column one rate of duty of 8 percent ad valorem.

8473.30.40: Parts and accessories . . . suitable for use solely or principally with the machines of headings 8469 to 8472: [p]arts and accessories of the machines of heading 8471: [n]ot incorporating a cathode ray tube: [o]ther. . .

Goods classifiable under this provision have a general, column one rate of duty of free.

ISSUE:

Whether the thin film substrate is classifiable as other ceramic articles or as parts of ADP machines under the HTSUS?

LAW AND ANALYSIS:

Classification of merchandise under the HTSUS is in accordance with the General Rules of Interpretation (GRI's). GRI 1 provides that classification shall be determined according to the terms of the headings and any relative section or chapter notes.

To be classified under heading 8473, HTSUS, the thin film substrate must not be excluded by Legal Note 1(b) to chapter 84, HTSUS, which states that chapter 84, HTSUS, does not include: "Appliances or machinery (for example, pumps) or parts thereof, of ceramic material (chapter 69)."

The Harmonized Commodity Description and Coding System Explanatory Notes (EN) constitute the Customs Cooperation Council's official interpretation of the HTSUS. While not legally binding, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 FR 35127, 35128 (August 23, 1989). General EN (A) to chapter 84, HTSUS, page 1137, states that:

Since ceramic articles and parts thereof (Chapter 69), laboratory glassware (heading 70.17) and machinery and appliances and parts thereof, of glass (heading 70.19 or 70.20) are excluded from this Chapter, it follows that even if a machine or mechanical appliance is covered, because of its description or nature, by a heading of this Chapter it is not to be classified therein if it has the character of an article of ceramic materials or of glass.

This applies, for example, to machines, mechanical appliances or apparatus of ceramic material or of glass, incorporating components of minor importance of other materials, such as stoppers, joints, taps, etc., clamping or tightening bands or collars or other fixing or supporting devices (stands, tripods, etc.).

On the other hand, the following are, as a rule, to be taken to have lost the character of ceramic articles, laboratory glassware, or machinery or appliances and parts thereof, of ceramic material or of glass:

(i) Combinations of ceramic or glass components with a high proportion of components of other materials (e.g., of metal); also articles consisting of a high proportion of ceramic or glass components incorporated or permanently mounted in frames, cases or the like, of other materials.

(ii) Combinations of static components of ceramic material or glass with mechanical components such as motors, pumps, etc., of other materials (e.g., of metal).

Therefore, to be classified under heading 8473, HTSUS, the thin film substrates must be advanced beyond the type of ceramic material classifiable under chapter 69, HTSUS. Legal Note 1 to chapter 69, HTSUS, state that: "This chapter applies only to ceramic products which have been fired after shaping."

General EN to chapter 69, HTSUS, pages 911-912, describes the manufacturing process of ceramic products, in pertinent part, as follows:

(i) Preparation of the paste (or body).

In some cases (e.g., manufacture of sintered alumina articles) the constituent material is used directly in powder form with the addition of a small amount of lubricant. In most cases, however, it is first made into a paste. This involves measuring and mixing the various constituents and, where necessary, milling, sieving, filter- pressing, kneading, maturing and de-airing. Some refractory products are also made from a blend of graded aggregate and fines, along with a small amount of liquid binder, which may be aqueous (e.g., tar, resin materials, phosphoric acid, lignin liquor).

(ii) Shaping.

The prepared powder or paste is then shaped as nearly as possible to the desired form. This is done by extrusion (through an extrusion die), pressing, moulding, casting or hand-shaping, followed in some cases by some degree of machining.

(iii) Drying the resulting articles.

(iv) Firing.

(v) Finishing.

The finishing processes depend on the intended use of the ceramic product. Sometimes machine finishing to a high degree of precision is necessary. Finishing may also include marking, metallising or impregnation.

The subject thin film substrate is shaped before firing and then subjected to a finishing process. The shaping process involves the application of extreme pressure and heat in a hot press to form the thin film substrate. After hot pressing, the merchandise undergoes finishing processes such as machining the surface and the chamfers, lapping and polishing to the required micron level thickness and required Angstrom-level surface finish. They are then sputtered with an ultra thin layer of alumina and further lapped and polished to the required thickness and surface finish. Therefore, we are of the opinion that this is the type of operation contemplated by Legal Note 1 to chapter 69, HTSUS.

To be excluded from chapter 84, HTSUS, the thin film substrates must be of ceramic material. In HQ 955270 (see attached copy), dated August 5, 1994, Customs determined that magnetic head sliders (i.e., thin film sliders and composite sliders), consisting of ceramic materials (aluminum oxide and titanium carbide), with active sensors or transducer elements deposited onto one end of the slider body using semiconductor manufacturing processes, was a composite good consisting of ceramics and electrical sensors. To determine the essential character of the magnetic head sliders in HQ 955270, Customs stated:

Although not identical to the magnetic head sliders at issue, we note that Headquarters Ruling Letter (HRLs) 082097 dated March 14, 1989, HRL 086584 dated March 1, 1990, and HRL 089869 dated October 16, 1991, which was affirmed in HRL 950623 dated December 23, 1991, dealt with the classification of similar articles. HRL 082097 and HRL 086584 classified "flexure arms" which contained magnetic head sliders under subheading 8473.30.40, HTSUS, and in item 676.54, Tariff Schedules of the United States (TSUS)(the precursor tariff provision to subheading 8473.30.40, HTSUS). HRL 089869, which was affirmed in HRL 950623, classified the ferrite core which is inserted into a composite slider housing under subheading 8543.80.90, HTSUS, as other electrical apparatus, having individual functions not specified or included elsewhere in this chapter. The ferrite core of these rulings is the "C" and "I" shaped bars which are sputtered with metallic material and glass and then bonded in glass so that non-magnetically permeable gaps are created at the contact points between the two bars. As the above rulings do not deal with classification of magnetic head sliders as independent articles, we do not find them persuasive.

After examining the information present, we are of the opinion that the ceramic slider body does not impart the essential character to the magnetic head sliders. The ceramic used in the magnetic head slider's body is of minor consequences in terms of what performs the magnetic head sliders function and in terms of what gives the magnetic head sliders its identity. The ceramic merely acts as a base unit to support the sensors on an air bearing above the magnetic disk. The essential character of the magnetic head sliders is imparted by the sensors. The sensors are the component entirely responsible for the ability of the magnetic head sliders to perform their sole function of reading and writing information on a magnetic disk.

In HQ 955270, Customs further concluded that the magnetic head sliders had lost the character of a ceramic article because the manufacturing process had also included sputtering, ion milling, precession electroplating, and photolithography, etc. Based upon all of the above information, Customs held that the magnetic head sliders were classifiable under subheading 8473.30.40, HTSUS, as parts of ADP machines.

We find that HQ 955270 is dispositive in determining the classification of the subject thin film substrate. Unlike the magnetic head sliders of HQ 955270, the subject thin film substrate does not contain electrical sensors. According to information provided by the protestant, after importation, the thin film substrates undergo additional manufacturing processing which will include: additional thin film layers using photolithography, machined again to form individual sliders; and, additional components are added to create a finished thin film magnetic read/write head. We find that the thin film substrate, as imported, is not classifiable as a part of an ADP machine under heading 8473, HTSUS, because it has not been manufactured to the point of being a magnetic head slider,

Samples of the subject merchandise was submitted to laboratory analysis. In Customs Laboratory Report Numbers 8-94-20500-001 and 8-94-20081-001, dated May 4, 1994 and November 19, 1993, respectively, the subject merchandise was found to be a ceramic article. Laboratory analysis indicates that the subject merchandise was an inorganic material, composed of aluminum oxide, some titanium carbide and a trace of magnesium zirconium oxide. Based upon this information, we find that it is an article of ceramic. Under the authority of GRI 1, we find that the thin film substrate is classifiable under heading 6914, HTSUS, as an article of ceramic.

The protestant states that the thin film substrate cannot be classified as a ceramic, because it is a composite material with a metallic component (titanium carbide). Citing to the Tariff Classification Study for the predecessor of the HTSUS, the protestant states that the presence of a metallic material removes the subject merchandise from the definition of a "ceramic article" as set forth in chapter 69, HTSUS. Additional U.S. Note 1 to chapter 69, HTSUS, states that:

For the purposes of this chapter, a "ceramic article" is a shaped article having a glazed or unglazed body of crystalline or substantially crystalline structure, the body of which is composed essentially of inorganic nonmetallic substances and is formed and subsequently hardened by such heat treatment that the body, if reheated to pyrometric cone 020, would not become more dense, harder, or less porous, but does not include any glass articles. (emphasis added).

According to the information provided, the thin film substrate, which is composed of an alumina component which comprises 60 to 70 percent of the merchandise and the titanium carbide comprises 25 to 35 percent, is a ceramic article as defined by Additional U.S. Note 1 to chapter 69, HTSUS. We find that the mere presence of metallic substance in an article does not remove an article from classification within chapter 69, HTSUS, so long as the article is composed essentially of inorganic, nonmetallic substances.

The protestant states that the subject merchandise should be classified as a composite good according to GRI 3(b), and that even though the alumina component ranges in the 60 to 70 percent of the merchandise and the titanium carbide comprises 25 to 35 percent of the thin film substrate, the titanium carbide accounts for between 50 to 70 percent of the material cost. The protestant further states that the essential character of the thin film substrate should be based upon the material of chief value.

In HQ 951791, dated August 5, 1992, Customs held that a wafer-ceramic consisting of 60-75% alluminum oxide, 20-40% titanium carbide, and 0-5% other refractory oxides, was classified under subheading 6914.90.00, HTSUS, according to GRI 1. Because the subject merchandise meets the stated definition of "ceramic articles" based upon the principles of GRI 1, and the holding in HQ 951791, we find that the essential character analysis of GRI 3(b) is inapplicable.

HOLDING:

Under the authority of GRI 1, the thin film substrate is classifiable under heading 6914, HTSUS. It is provided for under subheading 6914.90.00, HTSUS, as other ceramic articles.

The protest should be DENIED. In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision, together with the Customs Form 19, should be mailed by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of 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 the public via the Diskette Subscription Service, Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director
Commercial Rulings Division

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