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HQ 964189




APRIL 11, 2001

CLA-2 RR:CR:GC 964189 JAS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8108.10.50

Port Director of Customs
300 S. Ferry Street
Terminal Island, CA 90731

RE: Protest 2704-00-101040; Titanium Granules

Dear Port Director:

This is our decision on Protest 2704-00-101040, filed against your classification, under the Harmonized Tariff Schedule of the United States (HTSUS), titanium granules. The entry under protest was liquidated on February 4, 2000, and this protest timely filed on April 18, 2000. Counsel for the protestant presented facts and legal arguments, to include photographs depicting the scrap process, in letters dated April 17, May 11 and July 26, 2000. Additional legal arguments presented at a meeting in our office on February 28, 2001, were confirmed in a letter dated April 4, 2001.

FACTS:

The merchandise at issue is titanium granules, said to be of 98.5% pure titanium. Titanium-containing waste and scrap products such as sheets and plates, bar ends and their clippings, used equipment such as aircraft fuselages, and punched titanium watch bands, are hydried, that is, infused with hydrogen to make them brittle. They are then ground and crushed to uniform, granule-shaped sizes of +60 to -325 mesh, and packed in drums, purportedly for ease of transportation and to reduce shipping costs. The product is also referred to in the protest file as a powder, but we are unable to identify it as such because the referenced mesh size is unclear. The product is priced at $5.15 per lb. or nearly $11.35 per kilogram. Titanium found upon importation to be less than 98.5% pure will be returned to the supplier for credit. In its April 17 letter, counsel states that, as imported, it is believed that the product is compacted into cylinders and added to molten
aluminum as a grain refiner. Titanium is commonly used as an alloying element in the production of aluminum for subsequent use in making aircraft fuselages and jet engine parts, among other uses.

The merchandise was entered under a provision in heading 8108, HTSUS, for titanium waste and scrap. However, the merchandise was subsequently found to be manufactured primary forms of titanium considered as unwrought for tariff purposes, and the entry liquidated under the provision in heading 8108 for unwrought titanium.

Counsel for the protestant supports the entered classification with the following arguments: (1) the product meets both parts of the relevant waste and scrap definition, i.e., it is a byproduct of the manufacture or mechanical working of metals, and it constitutes metal goods definitely not usable as such because of breakage, cutting-up, wear or other reasons; (2) the processing of the titanium into granule-shaped sizes is merely to reduce the volume of the product and, consequently, its transportation costs; (3) the product has chemical specifications that more closely approximate the American Society for Testing and Materials (ASTM) specification A845-85 for titanium waste and scrap, than for specification B299-99 for titanium sponge; (4) the product does not meet any recognized commercial standard for titanium powder or titanium granules; and (5) citing rulings, this product differs dramatically from titanium scrap fines, goods Customs has classified as waste and scrap. Alternatively, counsel makes a claim under subheading 9817.00.90, HTSUS, as articles of metal to be used in remanufacture by melting or to be processed by shredding, shearing, compacting, or similar processing which renders the product fit only for the recovery of the metal content.

The HTSUS provisions under consideration are as follows:

8108 Titanium and articles thereof, including waste and scrap:

8108.10 Unwrought titanium; waste and scrap; powders

8108.10.10 Waste and scrap

8108.10.50 Other

Unwrought metal including remelt scrap ingot...in the form of ingots...which are defective or damaged, or have been produced from melted down metal waste and scrap for convenience in handling and transportation without sweetening, alloying, fluxing or deliberate purifying, and which cannot be commercially used without remanufacture...; Relaying or rerolling rails; articles of metal (...not including unwrought metal provided for in chapters 72-81) to be used in remanufacture by melting...:

9817.00.90 Other

ISSUE:

Whether titanium granules, as described, are waste and scrap of heading 8108; whether they qualify as any of the types of goods described in subheading 9817.

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.

Initially, Section XV, Note 8(a), HTSUS, defines Waste and scrap 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. Also, for purposes of chapters 72 through 83, Section XV, Additional U.S. Note 1, HTSUS, defines the term “unwrought” as refer[ring] to metal, whether or not refined, in the form of ingots, among other similar manufactured primary forms, but [the term] does not cover rolled, forged, drawn or extruded products, tubular products or cast or sintered forms which have been machined or processed otherwise than by simple trimming, scalping or descaling.

Heading 8108 provides for titanium and articles thereof, including waste and scrap. At the subheading level, unwrought titanium and titanium waste and scrap are separated by a semicolon. This is an indication that they are intended for tariff purposes to be separate, distinct classes of merchandise. Thus, if the titanium granules at issue are unwrought forms of titanium, they cannot be considered titanium waste and scrap.

Granules are not among the exemplars listed in Section XV, Additional U.S. Note 1, HTSUS. However, the granules are to be regarded as unwrought forms of titanium if they are manufactured primary forms “similar” to the exemplars listed in Section XV, Additional U.S. Note 1. This issue was addressed in Anval Nyby Powder AB v. United States, Slip Op. 96-80 (Ct. Int’l Trade, decided May 21, 1996). In the context of cobalt alloy powder used in plasma arc welding and thermal spraying or coating applications, the Court concluded that the phrase “manufactured primary forms” in Additional U.S. Note 1 refers to forms that “have undergone some processing but must undergo further processing before they appear in an eventual final product. This definition provides a unifying characteristic for the otherwise disparate enumerated forms.” In concluding that the cobalt alloy powders were manufactured primary forms similar to the ones enumerated in the cited legal note, the Court noted that the cobalt powder used in both applications must first be melted to form a solid mass, either in the shape of the weld (in a plasma arc welding application) or the shape of a valve or other article to be coated (in a thermal spraying application). In neither case was the powder itself a final good. It was later processed so as to become a part of or subsumed into a finished good, and that apart from that finished good, the powder had no apparent utility. In this case, 98.5% pure titanium has undergone some processing - hydrying and crushing - to reach the stage of granules, but must become alloyed with aluminum before it becomes part of an engine or an aircraft fuselage. Like the cobalt powder in Anval Nyby, the titanium granules at issue are not themselves a final product. The titanium granules are manufactured primary forms similar to the exemplars in Section XV, Additional U.S. Note 1, HTSUS. Consequently, they are unwrought for tariff purposes.

As to counsel’s alternative claim, subheading 9817.00.90, HTSUS, provides for the duty-free entry of three types of goods, the only possibly applicable type being the first, unwrought metal including remelt scrap ingot. But, this category is limited in form to pigs, ingots or billets. As the titanium at issue here is in the form of granules, subheading 9817.00.90, HTSUS, does not apply in this case.

HOLDING:

Under the authority of GRI 1, the titanium granules are provided for in heading 8108. They are classifiable in subheading 8108.10.50, HTSUS.

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, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing
the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

John Durant, Director
Commercial Rulings Division


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