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HQ 960496




August 13, 1997

CLA-2 RR:TC:MM 960496 DWS

CATEGORY: CLASSIFICATION

TARIFF NO.: 7212.50.00

Mr. James Caffentzis
Fitch, King and Caffentzis
116 John Street
New York, NY 10038

RE: Reconsideration of 959101; Perforated Steel Strip Plated with Nickel;
Heraeus-Amersil, Inc. v. U.S.; HQs 081606, 952938, and 956597;
8507.90.80

Dear Mr. Caffentzis:

This is in response to your letter of January 2, 1997, on behalf of Marubeni America Corporation, to the Director, National Commodity Specialist Division of Customs, New York, requesting reconsideration of HQ 959101, dated June 21, 1996, concerning the classification of perforated steel strip plated with nickel under the Harmonized tariff Schedule of the United States (HTSUS). Your letter was referred to this office for a response.

FACTS:

The merchandise consists of a perforated, low carbon steel strip which is plated with nickel. The strip, which you state is dedicated for use in the production of negative electrodes for nickel metal hydride batteries, will be imported into the U.S. in coil form measuring approximately 486 mm in width. In its condition as imported, the strip is perforated with a pattern of holes to meet the specification and design of the particular user.

Upon receipt of the strip at the U.S. battery production facility, the coil is mounted onto a coating machine. A metal hydride alloy paste is introduced into a holding container on the coating machine. The strip is passed through the coating container and coated on both sides. After coating, the strip is heated to remove water and rewound into a coil. The coil is then slit into three smaller width rolls for handling purposes. The slit rolls are sheared into smaller sections, depending upon the battery size being assembled. They are then pressed and trimmed to the actual size needed to make the negative electrode portion of a nickel metal hydride battery.

ISSUE:

Whether the steel strip is classifiable under subheading 7212.50.00, as a flat-rolled product of iron or nonalloy steel, of a width of less than 600 mm, otherwise plated or coated, or under subheading 8507.90.80, HTSUS, as a part of electric storage batteries.

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 is determined according to the terms of the headings and any relative section or chapter notes.

The subheadings under consideration are as follows:

7212.50.00: [f]lat-rolled products of iron or nonalloy steel, of a width of less than 600 mm, clad, plated or coated:
[o]therwise plated or coated.

The general, column one rate of duty for goods classifiable under this provision is 4.6 percent ad valorem.

8507.90.80: [e]lectric storage batteries, including separators therefor, whether or not rectangular (including square); parts thereof: [p]arts: [o]ther.

The general, column one rate of duty for goods classifiable under this provision is 4.1 percent ad valorem.

In HQ 959101, we held that merchandise very similar to the subject steel strip was classifiable under subheading 7212.50.00, HTSUS. In that ruling we stated that the importer did not provide "evidence that, as imported, the nickel plated perforated steel strip in coil has the character of parts or components of nickel cadmium batteries."

You cite several court decisions, including Heraeus-Amersil, Inc. v. U.S., 10 CIT 258, 640 F.Supp. 1331 (1986), for the proposition that, prior to importation into the U.S., the steel strip has been manufactured to the point where it is recognizable as the negative electrode of a battery and is classifiable under subheading 8507.90.80, HTSUS. You state that the exact and tight specifications for the perforations dedicate the product to a single use after importation, and this factor should overcome the deficiency found in HQ 959101.

In HQ 081606, dated August 10, 1988, which involved the classification of perforated steel strip plated with nickel for use in battery cans, we stated that:

[c]ourt cases on the classification of steel strip imported in material lengths indicate that to be classifiable other than as a material the character and identity of individual articles must be fixed with certainty at time of importation. The merchandise must be commercially and practically dedicated to only one use, with no additional post-importation processing required except cutting to length.

The post-importation electromechanical processing represents a significant step in the manufacture of the article and is believed critical to establishing the character of the merchandise. The processing after importation is not mere cutting to length, such as was considered by the court in [Heraeus-
Amersil]. In that case, continuous lengths of metal contact tape were merely cut to length after first being welded to contact springs. The court held that the metal tape was classifiable as parts of electrical relays, rather than as a material
(wire). The imported perforated strip in this case is distinguishable because it is processed beyond mere cutting to length. Therefore, the perforated strip is not classifiable as parts of batteries.

With regard to the subject steel strip, it is our understanding that the post-importation coating process represents a significant step in the manufacture of the negative electrode and is critical in establishing its essential character. The coating material and the steel strip function together as a negative electrode. The coating is the active material which stores energy or electrons; it provides energy to the battery and the steel strip contributes to channeling the energy from the battery to the device utilizing the battery. The coil strip is not identifiable as a negative electrode until after coating, and it is at this point in the processing that the coated coil strip is slit into small widths and then sheared into smaller sections needed to make the negative electrode portion of the battery.

Therefore, because it is our position that the steel strip, in its condition as imported, does not possess the character of a part of electric storage batteries, it is classifiable under subheading 7212.50.00, HTSUS. See also HQ 952938, dated August 4, 1993, and HQ 956597, dated August 10, 1994.

HOLDING:

The steel strip is classifiable under subheading 7212.50.00, HTSUS, as a flat-rolled product of iron or nonalloy steel, of a width of less than 600 mm, otherwise plated or coated.

EFFECT ON OTHER RULINGS:

HQ 959101 is affirmed.

Sincerely,

John Durant, Director
Tariff Classification Appeals

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