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HQ 958704




APRIL 23, 1996

CLA-2 RR:TC:MM 958704 JAS

CATEGORY: CLASSIFICATION

TARIFF NO.: 7116.20.50/9907.71.01

Frederick L. Ikenson, Esq.
1621 New Hampshire Avenue, N.W.
Washington, D.C. 20009

RE: HQ 081535 Modified; Diamond Drill Blanks; Polycrystalline Diamond Fragments
Bonded to Tungsten Carbide Substrate, Tips for Cutting Tools; Drilling or Boring
Tools, Subheading 8207.12.60; Articles of Synthetic, Precious or Semiprecious Stones, Heading 7116, Essential Character, GRI 3(b)

Dear Mr. Ikenson:

In HQ 081535, issued to you on June 21, 1989, on behalf of General Electric Company, we held that certain diamond drill blanks, among other articles, were classifiable in subheading 8207.12.60, Harmonized Tariff Schedule of the United States (HTSUS). Articles so classified were eligible for duty-free treatment under subheading 9902.71.04, HTSUS, a provision that no longer exists.

Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. 1625(c)(1)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act, Pub. L. 103-182, 107 Stat. 2057, 2186 (1993), notice of the proposed modification of HQ 081535 was published on March 20, 1996, in the Customs Bulletin, Volume 30, Number 12.

FACTS:

HQ 081535 addressed the tariff status of diamond drill blanks, also referred to as polycrystalline diamond compact (PDC) blanks, among other articles. PDC blanks consist of a layer of randomly oriented synthetic industrial diamond crystals bonded to a tungsten carbide substrate. They are used in the manufacture of drill bits for oil, gas and mineral exploration or for other mining applications. HQ 081535 held that the PDCs were classifiable in subheading 8207.12.60 (now 8207.19.60), HTSUS, as other rock drilling or earth boring tools.

The provisions under consideration are as follows:

7116 Articles of natural or cultured pearls, precious or semiprecious stones (natural, synthetic or reconstructed):

7116.20 Of precious or semiprecious stones (natural, synthetic or reconstructed):

Other:

7116.20.50 Other...4 percent ad valorem/Free under subheading 9907.71.01, as tool blanks and drill
blanks, of industrial diamonds (provided for in subheading
7116.20.50).

8207 Interchangeable tools for hand tools *** or for machine tools; base metal parts thereof:

Rock drilling or earth boring tools, and parts thereof:

8207.19 Other, including parts:

8207.19.60
Other...3.4 percent

ISSUE:

Whether the PDC blanks are cutting tools of heading 8207.

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. GRI 3(b) states in part that composite goods consisting of different materials or made up of different components which cannot be classified by reference to Rule 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criteria is applicable.

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 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 ENs should always be consulted. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).

As to the applicability of heading 8207, relevant ENs state, at. p. 1110, that the interchangeable tools of that heading may be either one-piece or composite articles. Composite tools consist of one or more working parts of base metal, of metal carbides or of cermets, of diamond or of other precious or semi-precious stones, attached to a base metal support, either permanently, by welding or insetting, or as detachable parts. In the latter case, the tools consist of a base metal body and one or more working parts (blade, plate, point) locked to the body by a device comprising, for example, a bridge plate, a clamping screw or a spring cotter-pin with, where appropriate, a chip-breaking lip. Throughout the schedule, the expression "base metals" means tungsten (wolfram), among others. Section XV, Note 3, HTSUS. The PDCs in HQ 081535 are composite tools consisting of synthetic diamonds bonded together under high temperature and pressure, and mounted on a substrate of tungsten carbide. Tungsten carbide is a man-made, inorganic compound, not a base metal. For this reason, the PDCs are not within the scope of the cited ENs and are not provided for in heading 8207.

In accordance with GRI 3, the PDC blanks are composite goods that are prima facie classifiable in the following headings:

Heading 2849, Carbides, whether or not chemically defined;

Heading 7102, Diamonds, whether or not worked, but not mounted or set;

Heading 7104, Synthetic or reconstructed precious or semi-precious stones, whether or not worked or graded but not strung,
mounted or set; and,

Heading 7116, Articles of precious or semiprecious stones (natural, synthetic or reconstructed).

Each of these headings describes part only of the PDC blanks. There is no single heading that provides a specific description for these PDC blanks, in accordance with GRI 3(a). In accordance with Rule 3(b), they must be classified as if consisting of the material or component that gives them their essential character, insofar as this criteria - 4 -
is applicable. The RULE 3(b) ENs, at p. 4, state the factor which determines essential character will vary as between different kinds of goods. It may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods. In this case, the tungsten carbide provides the substrate on which the bonded diamond crystals are mounted and which permits attachment to the shank of the core bit. Its bulk and weight are clearly superior to the bonded diamond crystals. However, while cost or value information has not been provided, we are advised that the diamonds clearly predominate in value. Moreover, the synthetic crystalline diamonds provide the cutting surface of the core bit. They are more thermally stable than irregular small, mined diamonds which they were developed to replace. We conclude it is the diamond that imparts the essential character to the whole so that the PDCs must be classified as if consisting only of diamonds. Heading 7102 provides for diamonds while heading 7104 provides for synthetic precious or semi-precious stones. However, in this case, individual diamond crystals have been bonded together under heat and pressure into a cutting element, which is an "article" of diamond. We conclude that from among the competing provisions, heading 7116 provides the most specific description for the PDCs.

HOLDING:

Under the authority of GRI 3(b), the diamond drill blanks or PDCs are provided for in heading 7116. They are classifiable in subheading 7116.20.50, HTSUS. Articles classifiable in this provision are eligible for duty-free entry under subheading 9907.71.01, HTSUS, through the close of December 31, 2004.

HQ 081535, dated June 21, 1989, is hereby modified with respect to drill blanks of synthetic industrial diamond crystals bonded to a tungsten carbide substrate. In accordance with 19 U.S.C. 1625(c)(1), this ruling will become effective 60 days after its publication in the Customs Bulletin. Publication of rulings or decisions pursuant to 19 U.S.C. 1625(c)(1) does not constitute a change of practice or position in accordance with section 177.10(c)(1), Customs Regulations (19 CFR 177.10(c)(1)).

Sincerely,

John Durant, Director
Tariff Classification


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