HQ 229216 - Protest 1001-00-104862; Welded Tube Mill, Liquidation, 19 U.S.C.1501 - United States International Trade Commision Rulings

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HQ 229216

May 21, 2002

LIQ-11-RR:CR:DR:RDJ
229216 RDJ

Port Director
U.S. Customs Service
Residual Liquidation & Protest Branch
1210 Corbin Street
Elizabeth, NJ 07201

RE: Protest 1001-00-104862; Welded Tube Mill, Liquidation, 19 U.S.C.1501

Dear Port Director:

This is our decision regarding Protest 1001-00-104862, filed by counsel on behalf of Oto Mills (U.S.A.), Inc. (“protestant”) concerning the classification, under the Harmonized Tariff Schedule of the United States (“HTSUS”), of a tube mill. In addition to the original protest document, we have considered the counsel’s submissions concerning the classification of March 18, 2002 and April 8, 2002, as well as the claims made in a telephone conference of February 28, 2002.

FACTS:

The file reflects the following.

Entry no. 605-XXXX0788 was filed on July 22, 1999. Upon entry, the protestant classified the imported merchandise as duty free under subheading 8455.10.0000 HTSUS. The entry liquidated on July 14, 2000. Under the provisions of section 1501, Customs reliquidated the entry on August 11, 2000 and issued a bill for increased duties. The protestant filed a protest on November 9, 2000. It protested exclusively the classification of the imported articles.

On April 6, 2001, more than 90 days after the reliquidation, OTO Mills submitted a letter to the port addressing the liquidation of the entry as an additional ground for review. In terms of the liquidation, OTO Mills argued that the entry was null and void because the entry should have deemed liquidated by operation of law on July 22, 2000 and not on July 14, 2000. OTO Mills argued that since the auto-liquidation was not done one year from the date of the entry, the liquidation was never appropriately extended and therefore, the reliquidation made on August 11, 2000 was inoperable.

The following goods were imported: 1. pinch roll/flattener; 2. strip joiner with strip welder; 3. edge trimmer; 4. forming section; 5. fin pass section; 6. welding section; 7. sizing section; 8. shaping/straightening section; and 9. the following parts of the decoiler – lower coil opener; decoiler bulkhead; strip-guide assembly; control desk for decoiler (loading side and mill side); electrical cabinet; and hydraulic power unit. A strip accumulator, which is used with the other goods at issue here, was imported separately and is not the subject of this protest.

A letter dated May 1, 2000, from an official of the protestant to a Customs import specialist stated in pertinent part as follows:

A tube mill is typically an integrated system of machines executing a variety of functions. In the tube manufacturing, flat steel strip is bent and welded to a tubular product. The strip is supplied to the mill in large and heavy rolls. Here is a description of the equipment a tube mill is composed of:

The uncoiler (item “OTO 408P Planetary Uncoiler”) receives the coil and unwinds it. This piece of equipment basically delivers at high speed the steel strip to an accumulator . . . [The uncoiler is not at issue in this protest.]

The accumulator (item “OTO Horizontal Steel Strip Accumulator”) help[s] feed at regular speed the downstream tube mill . . . [The accumulator is not at issue in this protest.]

The tube mill (item “Partial Shipment of an Oto Tube Mill”) is the heart of the system. Here the strip is shaped through a series of driven passes up to the point where it is welded in the tubular shape. The tube mill makes use of a number of sets of rolls which depend on the size of the final product. A sizing mill to control the tube roundness is usually supplied downstream . . .

The tube mill was entered under subheading 8455.10.00, HTSUS. The entry was liquidated under subheading 8462.29.80, HTSUS.

ISSUES:

1. Whether OTO Mills’ submission dated April 6, 2001 discussing the issue of liquidation constitutes an untimely amendment to the protest or an additional argument to the protest?

2. What is the classification under the HTSUS of the welded tube mill?

LAW AND ANALYSIS:

We note initially that the protest was timely filed under the statutory and regulatory provisions for protests, 19 U.S.C. 1514(c)(3)(A) and 19 CFR 174.12(e)(1).

ISSUE #1:

According to the protestant, the liquidation that occurred on July 14, 2000 should be considered null and void because the entry “deemed liquidated” as of July 22, 2000 since it was never “extended”. These arguments were submitted to Customs on an April 6, 2001 letter well after the 90-day period allotted for the submission of protests.

Title 19 U.S.C. 1514(c)(1) provides for the amendment of a timely protest. It provides that:

“[a] ..protest may be amended, under the regulations prescribed by the Secretary, to set forth objections as to a decision or decisions described in subsection (a) of this section which were not the subject of the original protest, in the form and manner prescribed for a protest, any time prior to the expiration of the time in which such protest could have been filed under this section. New grounds in support of objections raised by a valid protest or amendment thereto may be presented for consideration in connection with the review of such protest pursuant to 19 U.S.C. 1515 at any time prior to the disposition of the protest”.

Title 19 C.F.R. 174.14(a) allows a protest to be amended at any time prior to the expiration of the 90-day period within which such protest may be filed according in accordance with section 174.12, (within 90 days of the liquidation of the entry) to include additional claims on the same issue protested or to challenge an additional administrative decision relating to the same category of merchandise which is subject to a protest. Section 174.28 provides that “in determining whether to allow or deny a protest filed within the time allowed, a reviewer officer may consider alternative claims and additional grounds of arguments submitted in writing or orally (if within 60 days from the oral submission). Additional claims must be submitted timely within 90 days of the liquidation of the entry. Thereafter, only additional grounds or arguments in support of a valid protest may be presented.

We find that the April 6, 2001 submission constitutes an untimely amendment to the subject protest. The protestant’s argument relating to the liquidation or reliquidation of the entry is a separate issue altogether from the arguments presented in the protest dated November 9, 2000. The protest contains exclusively those arguments relating to the classification of the merchandise. OTO Mills filed the protest under section 1514(a)(2) protesting “the classification on the ground that the merchandise at issue is properly classifiable as a complete tube mill under heading 8455.10.000 HTSUS”. At no time does the protest refer to the liquidation or deemed liquidation of the entry. Accordingly, the April 6, 2001 submission is untimely since it is not an additional argument in support of the valid protest. The April 6, 2001 submission was filed five months after the 90-day period allotted under section 1514. The liquidation or deemed liquidation of the entry is a new claim which should have been submitted under section 1514(a)(5) within 90 days of the liquidation of the entry, as such, it cannot be entertained under 19 C.F.R. 174.14 and 174.28 (see generally, Fujitsu General America, Inc. v. U.S. 110 F. Supp. 2d 1061 (2000).

Even if the amendment was timely, it would have been denied because there was no deemed liquidation under 19 U.S.C. 1504. There was no “deemed liquidation” because Customs acted on this entry #605-XXXX078-8 by liquidating it as “no change” on July 14, 2000. This action occurred within one year of the date of entry, July 22, 1999. On August 11, 2000, Customs determined that the classification made upon this entry was erroneous and proceeded to reliquidate the entry for an increase in duties. The reliquidation came within the 90-day period allotted under 19 U.S.C. 1501.

The issue of liquidation was discussed in L.G. Electronics v United States (21 C.I.T. 1421, 991 F.Supp. 668 (1997). Liquidation is considered the final computation or ascertainment of duties accruing on an entry. Upon review of ACS (Automatic Commercial System) records on this entry we find that the liquidation involved was an “automatic liquidation”. “Automatic liquidations” occur in instances when Customs’ ACS program automatically liquidates an entry which is neither suspended or extended. ACS is programmed to liquidate entries on the 50th week (see generally, L.G Electronics v. U.S.). The automatic liquidation procedures “orders” liquidation and issues a notice of liquidation at the duty rate deposited upon entry. By liquidating automatically, Customs avoids the “deemed liquidation” procedures and preserves the possibility of executing reliquidation procedures under section 1501. In accordance to section 1501, Customs voluntarily reliquidated this entry within the 90-day period allowed by the statute. The automatic liquidation precluded the entry from liquidating by operation of law. A liquidation made in accordance to section 1500 may be reliquidated under section 1501 if done within 90 days from the original liquidation. We find no basis to the protestant’s argument that the entry should be considered “deemed liquidated” as of July 22, 2000 because Customs did not issue an extension.

Issue # 2:

Classification under the HTSUS is made in accordance with the General Rules of Interpretation (“GRI’s”). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative Section or Chapter Notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRI’s may then be applied. GRI 2(a) provides in pertinent part that “[a]ny reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article.”

The Harmonized Commodity Description and Coding System Explanatory Notes (“EN’s”) constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the EN’s 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.

The primary HTSUS provisions under consideration are as follows:

8455 Metal-rolling mills and rolls therefor; parts thereof:

8455.10.00 Tube mills

8462 . . . machine tools (including presses) for working metal by bending, folding, straightening, flattening, shearing, punching or notching . . .

Bending, folding, straightening or flattening machines (including presses):

8462.21 Numerically controlled:

8462.21.80 Other

8462.29 Other:

8462.29.80 Other

Note 4 to Section XVI, HTSUS (which includes Chapters 84 and 85, HTSUS) provides as follows:

Where a machine (including a combination of machines) consists of individual components (whether separate or interconnected by piping, by transmission devices, by electric cables or other devices) intended to contribute together to a clearly defined function covered by one of the headings in chapter 84 or chapter 85, then the whole falls to be classified in the heading appropriate to that function.

EN 84.55 provides in pertinent part as follows:

Rolling mills are metal working machines consisting essentially of a system of rollers between which the metal is passed; the metal is rolled out or shaped by the pressure exerted by the rollers, and at the same time the rolling modifies the structure of the metal and improves its quality . . .

. . . Other roller machines (e.g., for gumming metal foil on to a paper support) (heading 84.20), bending, folding, straightening or flattening machines (heading 84.62) are not regarded as rolling mills in the sense described above and are therefore excluded from this heading.

Rolling mills are of various types according to the particular rolling operations for which they are designed, viz. :

(A) Rolling out to reduce the thickness with a corresponding increase in length (e.g., in the rolling of ingots into blooms, billets or slabs; rolling of slabs into sheet, strip, etc.).

(B) Rolling of blooms, billets, etc., to form a particular cross-section (e.g., in the production of bars, rods, angles, shapes, sections, girders, railway rails).

(C) Rolling tubes.

(D) Rolling of wheel blanks or wheel rim blanks (e.g., to shape the flanges of railway wheels). [All emphasis in original.]

EN 84.62 provides in pertinent part as follows:

The heading covers certain machine tools, listed in the heading text, which work by changing the shape or form of metal or metal carbides. . . .
The heading includes:
. . .
(2) Bending machines. These include machines for working flat products (sheets, plates and strips) which, by passing the products through three or four sets of rollers, give them a cylindrical curve . . . or else a conical shape . . . ; machines for working non-flat products (bars, rods, angles, shapes, sections, tubes). These machines work either by means of forming rollers, by press bending, or, for tubes (and, in particular, oil pipes), by drawing their ends while the main section is held by a fixed cylinder. [Emphasis in original.]

Protestant’s Claims

The protestant states that the Oto 1305 tube mill was a complete tube mill as imported, despite the fact that it was shipped without parts of the uncoiler and the accumulator. It asserts that the tube mill is classifiable under subheading 8455.10.00, HTSUS, the eo nomine provision for tube mills. The protestant claims that the goods at issue in HSC decision NC0319E1 are not similar to the OTO tube mill. Alternatively, it contends that the goods in the shipment should be classified in subheading 8455.10.00, HTSUS, pursuant to GRI 2(a).

HSC Decision

In HSC NC0319E1 (See Annex H/11 to Doc. NC0340E2; HSC/26/Nov. 2000), the Harmonized System Committee “agreed unanimously with the conclusions of the United States and of the Secretariat to classify the machinery [tube mill machinery, described below] at issue in heading 84.62, rather than in heading 84.55.” In the Compendium of Classification Opinions (p. 34E), the HSC classified the following machinery in subheading 8462.21 or 8462.29 (depending upon whether or not it is numerically controlled):

Welded tube mill machinery presented without welding equipment, used to process coiled metal strip into tubular forms. The machinery consists of the following components: an edge trimmer; breakdown and forming rolls; idler vertical closing rolls and fin pass rolls. [Emphasis in original.]

As we stated in T.D. 89-80, decisions in the Compendium of Classification Opinions should be treated in the same manner as the EN’s, i.e., while neither legally binding nor dispositive, they provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. T.D. 89-80 further states that EN’s and decisions in the Compendium of Classification Opinions “should receive considerable weight.”

The operation of the good in the HSC decision is described in the Note from the U.S. Administration as follows:

Coiled metal strip material is fed into an edge trimmer (if necessary) to establish the desired width for the tubular form and ensure that the edge is made smooth and clean for good welding. The coiled metal strip is then fed into the first of three types of rolls to progressively form the flat steel into the tubular form prior to welding. The breakdown rolls provide the initial circular arc shaping of the strip of steel towards the round form. These rolls are followed or interspersed by idler rolls, which further close and guide the strip of steel into the fin pass rolls. The fin pass rolls press together the top portions of both sides into a tubular configuration. It then provides perfect guidance into the welding section and in addition coins the strip edges to provide the precise circumference.

The question before the HSC was “whether this machinery presented without welding equipment falls within the scope of heading 84.55, which provides for metal rolling mills and rolls therefor, or within the scope of heading 84.62, which provides for machine tools for bending metals.”

The “Discussion and Analysis” section of the “Note from the U.S. Administration” provided in pertinent part as follows:

. . . The processes described perform a further working of a solid billet by heating it and rolling it. The end result is that the cross-section dimension of the billet is changed. By contrast, the bending process performed on this merchandise does not further work the steel nor change the cross-section dimension of the coiled metal strip. It is not similar to those described in the Explanatory Note [EN 84.55.] Therefore, we conclude that welded tube mill machinery is precluded from being classified as a metal rolling mill of heading 84.55.

. . . the Explanatory Note to heading 84.62 . . . describes bending machines as “[m]achines for working flat products (sheets, plates and strips) which, by passing the products through three or four sets of rollers, give them a cylindrical curve (for this the rollers are parallel as with tube forming machines) or else a conical shape (in which the rollers are not parallel) . . .” As the attached schematic [not available] shows, coiled metal strip steel passes through three sets of rollers. After passing through each set of rollers, the steel coil is slowly bent, forming a steel tube ready for welding. Because the welded tube machinery meets the description in the EN to heading 84.62, we conclude that it is classifiable under heading 84.62.

Classification Determinations

The subject good is not a complete tube mill of heading 8455, HTSUS. Various equipment essential to the operation of the tube mill is not included in the subject protest, i.e., the tube welder, cut-off and run-out table, part of the planetary uncoiler, and accumulator. Further, the good at issue in this protest is not one machine – it includes physically separate portions of a tube mill.

A welded tube mill essentially takes coiled metal strip, passes it through a series of bending rolls which gradually form it into a cylindrical tube, welds the seam to close the tube, sizes the welded tube, and cuts it off to the desired length. The merchandise at issue here is an incomplete or unfinished welded tube mill. See GRI 2(a), excerpted above. It has the essential character of a complete or finished welded tube mill – it contains the large majority of items that would comprise a complete welded tube mill and it contains what we believe is the integral section of a welded tube mill, i.e., the forming section.

With respect to the applicability of heading 8455, HTSUS, we note the exclusion from heading 8455, HTSUS, in EN 84.55, excerpted above - “ . . . bending, folding, straightening and flattening machines (heading 84.62) are not regarded as rolling mills in the sense described above and are therefore excluded from this heading.” [All emphasis in original.] The subject welded tube mill is essentially a metal forming or bending machine which would exclude it from heading 8455, HTSUS. Further, we find that the welded tube mill is not a rolling mill described in EN 84.55, excerpted above (see (A) through (D)). Additionally, EN 84.55 provides several specific examples (not excerpted above)) of the rolling mills of the type referred to in (C) and (D). Welded tube mills are not included in these specific examples.

We find that the incomplete or unfinished welded tube mill at issue here consists of several components which are intended to contribute together to the clearly defined function of forming the metal. The components are either separate or interconnected by devices within the meaning of Note 4 to Section XVI, HTSUS. Therefore, by Note 4 to Section XVI, HTSUS, we conclude that the function of the welded tube mill is essentially a metal forming operation which involves a bending of the metal so as to impart a cylindrical curve to the metal sheet to form a tube. Accordingly, we find that the incomplete or unfinished welded tube mill is described in heading 8462, HTSUS. See EN 84.62, excerpted above. We believe the tube mill is not numerically controlled. At GRI 2(a), we find that the incomplete or unfinished welded tube mill, which has the essential character of a complete or finished welded tube mill, is classified in subheading 8462.29.80, HTSUS, as: “. . . machine tools (including presses) for working metal by bending, folding, straightening, flattening, shearing, punching or notching . . .: Bending, folding, straightening or flattening machines (including presses): . . . Other: . . . Other.” In the event that it is numerically controlled, it would be classified in subheading 8462.21.80, HTSUS, which carries the same rate of duty as subheading 8462.29.80, HTSUS.

Our determination here is consistent with the HSC decision described above in that the forming section involved in the HSC decision is essentially the same as the forming part of the tube mill here. We are not persuaded by the protestant’s claim that the HSC decision is not of great relevance here because the good involved in the HSC decision lacked sizing and straightening sections. As stated above, we believe the forming section is the integral component of the subject good. We believe the sizing and straightening sections are essentially finishing operations.

HOLDINGS:

Issue #1: Customs reliquidated this entry in accordance to law.

Issue #2: The welded tube mill is classified in subheading 8462.29.80, HTSUS, as: “. . . machine tools (including presses) for working metal by bending, folding, straightening, flattening, shearing, punching or notching . . .: Bending, folding, straightening or flattening machines (including presses): . . . Other: . . . Other.”

You are instructed to DENY the protest.

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 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 make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.treas.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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