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HQ 960671



November 13, 1997

CLA-2 RR:CR:GC 960671 DWS

CATEGORY: CLASSIFICATION

TARIFF NO.: 6902.90.10

Assistant Manager, Traffic & Administration Pechiney World Trade (U.S.A.), Inc.
500 Plaza Drive
Secaucus, NJ 07096

RE: Reconsideration of NY 877860; Anthracite/Graphite Composite and Graphitic
Cathode Blocks; Chapter 69, Additional U.S. Note 1; Substantially Crystalline;
Eastalco Aluminum v. U.S. (Eastalco I, II, and III); 955718; 8545.90.40

Dear Sir/Madam:

On May 5, 1993, Customs issued NY 877860 to Pechiney World Trade (U.S.A.) Inc., concerning the classification of certain anthracite/graphite composite and graphitic cathode blocks under the Harmonized Tariff Schedule of the United States (HTSUS). We have since had reason to reconsider the holding in NY 877860, and this letter contains our review of that decision.

Pursuant to 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. 103-82, 107 Stat. 2057, 2186 (1993), notice of the proposed modification of NY 877860 was published on September 24, 1997, in the CUSTOMS BULLETIN, Volume 31, Number 39. The only comment received in response to the notice concerned the testing procedure used to ascertain the proper percentage of crystallinity in the samples.

FACTS:

The merchandise which was the subject of NY 877860 consists of cathode blocks (style nos. HC3, HC5, and HC10) made of anthracite/graphite composites and graphite. Representative sizes of the cathode blocks are as follows: 20 in. x 18 in. x 115 in.; 15 in. x 26 in. x 80 in.; and 14 in. x 18 in. x 30 in. The blocks are used to line the bottom of an aluminum reduction cell which produces aluminum metal by electrolysis. Samples of the blocks were forwarded to the U.S. Customs Laboratory, and it was determined that the subject three styles had the following percentages of crystalline composition: HC3 - 52.9% anthracite/graphite; HC5 - 63.3% anthracite/graphite; and HC10 - 93.8% graphite.

ISSUE:

Whether the cathode blocks meet the term "substantially crystalline" for tariff purposes and are classifiable under subheading 6902.90.10, HTSUS, as other refractory bricks, or under subheading 8545.90.40, HTSUS, as other articles of graphite or other carbon, with or without metal, of a kind used for electrical purposes.

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:

6902.90.10: [r]efractory bricks, blocks, tiles and similar refractory ceramic constructional goods, other than those of siliceous fossil meals or similar siliceous earths: [o]ther: [b]ricks.

Goods classifiable under this provision receive duty-free treatment.

8545.90.40: [c]arbon electrodes, carbon brushes, lamp carbons, battery carbons and other articles of graphite or other carbon, with or without metal, of a kind used for electrical purposes: [o]ther:
[o]ther.

The general, column one rate of duty for goods classifiable under this provision is 2 percent ad valorem.

Chapter 69, additional U.S. note 1, HTSUS, states that:

[f]or 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.

Thus, if a cathode block does not possess a substantially crystalline structure, it is not a ceramic article and is precluded from classification in chapter 69, HTSUS. In NY 877860, Customs adopted the standard of "70 percent or more crystalline material present" in a cathode block to meet the definition of "substantially crystalline". Because HC10 was the only block to meet that standard (93.8%), it was classifiable under subheading 6902.90.10, HTSUS, and HC3 and HC5 were held to be classifiable under subheading 8545.90.40, HTSUS.

The three relevant court cases dealing with the classification of cathode blocks are as follows: Eastalco Aluminum Co. v. U.S., 10 CIT 622 (1986) (Eastalco I), Eastalco Aluminum Co. v. U.S., 13 CIT 864 (1989) (Eastalco II), and Eastalco Aluminum Co. v. U.S., 916 F.2d 1568 (1990) (Eastalco III). See HQ 955718, dated October 4, 1994, for an overview of Eastalco I, II, and III.

The standard set in NY 877860 was adopted from Eastalco II, which was cited in the ruling letter. However, such a standard was taken from testimony in the case and was not part of the holding in Eastalco II. Therefore, that standard should not be determinative as to what meets the "substantially crystalline" test.

In Eastalco III , the merchandise at issue was carbon blocks used to line an aluminum reduction cell, and the blocks had a crystalline content of 5%, more or less 1%. The Court did not establish a standard defining "substantially crystalline" but did state that:

[i]n light of the uncontested evidence that the blocks in question have at most a crystalline content of 6% and the admission by Eastalco's expert that this percentage of crystallinity is inconsistent with being labeled "substantially crystalline" in the trade, we cannot find that the court erred . . .

Therefore, even though the Court did not establish a standard, they held that a block having a crystalline content of 6% could not qualify as being "substantially crystalline" for tariff classification purposes.

In HQ 955718, Customs ruled on merchandise which consisted of graphite cathode blocks with a crystalline content between 50% and 70%. In holding that the blocks qualified as "substantially crystalline", we stated that:

[t]he Courts in Eastalco II and Eastalco III determined that a low amount of crystalline content, i.e., 6%, was not enough to meet the requirement of
"substantially crystalline." We are of the opinion that none of the Courts in the
Eastalco cases determined the exact percentage of crystallinity necessary for an article to meet the definition of "ceramic" for tariff classification purposes. . . As the subject graphite cathode blocks are between 50% and 70% crystalline, they are not to be classified as the blocks were in the Eastalco cases. Based on the information before this office, we are of the opinion that the graphite cathode blocks are "substantially crystalline" and, therefore, meet the definition of a ceramic article and are classifiable within Chapter 69, HTSUS.

In HQ 955718, we did not set a standard 50% or above of crystalline content. We merely determined that the merchandise, which had a crystalline content of between 50% and 70%, was distinguishable from the merchandise in the Eastalco cases and qualified as "substantially crystalline".

In Eastalco III, we note that the Court also stated that:

[t]he definition of "ceramic articles" specifically excludes any glass article from its scope. The primary distinction between the ceramic articles . . . and glass articles . . . is that glass is essentially noncrystalline in structure whereas ceramic ware is essentially crystalline.

Therefore, the purpose of the term "substantially crystalline" is to preclude glass from classification in chapter 69, HTSUS.

As the standard in NY 877860 was wrongly applied, and because no other Customs ruling or court case sets a standard for determining what is "substantially crystalline", we must make a decision concerning the application of the term "substantially crystalline". Obviously, because each piece of merchandise may have differing percentages of crystallinity, classification of such products must be decided on a case-by-case basis. For review, the Court in Eastalco III stated that crystallinity of 6% or less is not substantial but did not decide on percentages any higher than 6%, and we have held in HQ 955718 that graphite cathode block with a crystalline content of at least 50% met the "substantial crystalline" test. Therefore, it is our position that cathode block with a crystalline content of 6% percent and under does not meet the "substantially crystalline" test, and cathode block with a crystalline content of 50% or above does meet the "substantially crystalline" test. Classification of cathode block with a crystalline content between 6% and 50% will have to be dealt with on a case-by-case basis utilizing laboratory reports, etc. Such a guideline should be used unless a court rules differently.

Therefore, because styles HC3 and HC5 possess crystallinity percentages above 50%, they are described under subheading 6902.90.10, HTSUS, with style HC10.

We must now determine whether carbon cathode blocks which are used for lining aluminum reduction cells are described under subheading 8545.90.40, HTSUS, as other articles of carbon.

In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes may be utilized. The Explanatory Notes, although not dispositive or legally binding, 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 Fed. Reg. 35127, 35128 (August 23, 1989). In part, Explanatory Note 85.45 (p. 1522) states that:

[t]his heading covers all articles of graphite or other carbon which are recognisable by their shape, dimensions or otherwise, as being for electrical purposes, whether or not they contain metal. . .

In HQ 955718, which dealt with the classification of graphite cathode blocks used to line the bottom of aluminum reduction furnaces, we stated that:

. . . we are of the opinion that the graphite cathode blocks are not principally used for electrical purposes. They are used for electrical purposes during the short start-up period of the furnace or cell. Thereafter and for the greater period of their useful life, they serve predominately as a refractory article. This conclusion is supported by the Court in Eastalco II which stated that the ". . . electrical properties, by themselves, did not make the refractory brick designation inappropriate." Therefore, as the graphite cathode blocks are not principally used for electrical purposes, they are not classified under subheading 8545.90.40, HTSUS.

As with the cathode blocks in HQ 955718, it is our understanding that the subject cathode blocks are not principally used for electrical purposes, but serve predominately as refractory articles. Therefore, the blocks are precluded from classification under subheading 8545.90.40, HTSUS.

Because the cathode blocks are not more specifically provided for in the HTSUS, they are classifiable under subheading 6902.90.10, HTSUS.

HOLDING:

The cathode blocks meet the term "substantially crystalline" for tariff purposes and are classifiable under subheading 6902.90.10, HTSUS, as other refractory bricks.

NY 877860 is modified to reflect the holding of this ruling. 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 Appeals

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