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HQ 966457




September 25, 2003

CLA-2 RR:CR:GC 966457 RSD

CATEGORY: CLASSIFICATION

TARIFF No: 7306.30.10

Port Director
U.S. Customs and Border Protection
1 East Bay Street
Savannah, Georgia 31401

RE: Protest No. 1703-03-100063; longitudinally welded steel tubes used for making shipping containers

Dear Port Director:

This is our decision regarding Protest 1703-03-100063, filed on behalf of Greif Bros. Corporation (protestant) concerning the classification, under the Harmonized Tariff Schedule of the United States (HTSUS), of certain welded steel tubes.

FACTS:

The products at issue are longitudinally welded steel tubes. The tubes are made of non-alloy steel and have a diameter that ranges from 21.87 mm to 22.13 mm. The wall thickness of the tubes ranges from 0.84 mm to 1.13 mm. The tubes are imported in six different lengths. One of these six tubes is “tent-poled” at the end (reduced in diameter). The tubes are galvanized and then varnished.

The imported tubes are specifically designed and manufactured for assembly into shipping cages. In turn, the shipping cages are specifically designed and produced for the transportation of liquids. After importation, protestant bends the tubes to shape so that they can be welded together for fabrication into the steel cages. The steel cages are used in the production of intermediate bulk containers (IBCs). According to information contained in the protestant’s submission, the completed IBC consists of (1) the UniCUBE, the external cage assembled of the imported articles; (2) the 275-330 gallon cylindrical plastic bottle inside the cage; and (3) a pallet of wood, plastic, or steel. The base pallet and the plastic bottle for holding liquids are attached to the steel cages to form the IBC. The plastic bottle is equipped with a special valve and a cap to facilitate loading and unloading of liquids. The cap is opened to permit airflow while the liquid is being withdrawn or filled.

On the Greif Bros. website the word UniCUBE is followed by the ® symbol, which means that the term UniCUBE is a registered trademark. The Greif Bros. website indicates that the UniCUBE IBC is the optimum packaging for a large range of liquids both hazardous and non-hazardous, during transport and storage. The UniCUBE IBC bottle is housed in a high strength tubular steel cage that meets stringent quality and industry standards. On the steel and plastic pallet versions, the bottom of the UniCUBE IBC has a special domed shape to ensure that the contents can be drained completely thus eliminating waste. Based on this information contained on the Greif Bros. website, we will refer to the finished article as the UniCUBE IBC.

The UniCUBE IBCs are specifically engineered to serve three basic purposes. First, the tubular supports of the UniCUBE IBC allow the liquid-carrying bottle to be secure for different modes of transport. Second, the UniCUBE IBC is designed to allow the liquid contents to be loaded, unloaded and reused over extended time periods and long distances. Third, the UniCUBE IBC provides the structural support needed to protect the plastic bottle, preventing damage and leakage during shipment. The imported components assembled into the UniCUBE IBC are specifically designed to allow the UniCUBE IBC to meet the Department of Transportation (DOT) standards for IBC’s and the additional durability and strength demanded by end-users of reusable IBCs. Without the tubular shipping cages made from the corrosion-resistant, high-strength, custom-cut imported steel tubes, the product could not function as a reusable IBC for use in various modes of transport.

The protestant states that the combination of the patented coating, the high-strength properties, and the specific dimensions of the imported tubes render them unsuitable for any use other than as parts for the UniCUBE. The tubes have never been, and will never be used for any other purpose. On this basis the protestant contends that the imported tubes have the essential character of a finished container for transporting fluids that is classified in subheading 8609.00.00, HTSUS.

The tubes are not imported in complete unassembled sets containing all the necessary components to make the finished UniCubes. Instead each shipment consists of only one or two specific lengths of tubes. Tubes from several different imported shipments containing different sizes must be combined with each other and with the other materials/components to produce the UniCUBE container. ISSUE:

What is the correct classification under the HTSUS of the imported steel tubes that are used in the production of the "UniCUBE" IBC?

LAW AND ANALYSIS:

Merchandise imported into the U.S. is classified under the HTSUS. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (GRIs) and, in the absence of special language or context that requires otherwise, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law.

GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule and any relative section or chapter notes and, unless otherwise required, according to the remaining GRIs taken in order. In interpreting the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and Coding System may be utilized. The ENs, although not dispositive or legally binding, provide a commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUS. See T.D. 89 80, 54 Fed. Reg. 35127 (August 23, 1989).

The HTSUS headings under consideration are as follows:

7306 Other tubes, pipes and hollow profiles (for example, open seamed or welded, riveted or similarly closed), of iron or steel:

Other, welded, of circular cross section, of iron or nonalloy steel: Having a wall thickness of less than
1.65 mm

8609.00.00 Containers (including containers for the transport of fluids) specially designed and equipped for carriage by one or more modes of transport

Protestant believes that the custom cutting, coating, and reduction of the ends on some of the tubes are unique characteristics that indicate that the tubes are intended for use solely in the production of the steel cages of the UniCUBES. Consequently, protestant argues that the tubes should not be classified in the general basket provision for tubes.

The Chapter 73 General ENs describe tubes and pipes as concentric hollow products of uniform cross-section with only one enclosed void along their whole length having their inner and outer surfaces of the same form. Steel tubes are mainly of circular, oval rectangular (including square) cross section.They may be polished, coated bent threaded and coupled or not drilled, waisted (narrowed) expanded, cone shaped or fitted with flanges, collars or rings.

The ENs to heading 7306 further state that the tubes of this heading may be used for numerous purposes. They provide numerous examples of the types of products that are included in the heading:

This heading includes, in particular, line pipes of a kind used for oil or gas, casing and tubing of a kind used in drilling for oil or gas, tubes and pipes suitable for use in boilers, superheaters, heat exchangers, condensers, feed-water heaters for power stations, galvanised or black tubes (so-called gas tubes) for high or medium pressure steam or water distribution in buildings, as well as tubes for water or gas street distribution mains. In addition tubes, pipes and hollow profiles are used for the manufacture of parts for automobiles or for machinery, bicycle frames, prams, or for other structural uses, scaffolding or tubular structures or building construction. “Open seam” tubes are used, for example, as frames for metal furniture.

The ENs, however, also indicate that pipes and tubes made up into specific identifiable articles are excluded from heading 7306, HTSUS.

Protestant contends that the imported steel tubes are unassembled and incomplete shipping containers that should be classified in heading 8609, HTSUS in accordance GRI 2(a). Protestant’s position is based on its claim that the imported steel tubes have the essential character of the finished UniCUBE IBCs.

GRI 2(a) states that:

Any 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. It shall also include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), entered unassembled or disassembled.

By its terms, GRI 2(a), HTSUS, extends the scope of a 4-digit heading to include an article, whether assembled or unassembled, that is imported incomplete or unfinished. The first part of Rule 2(a) extends the scope of any heading which refers to a particular article to cover not only the complete article but also that article incomplete or unfinished, provided that, as presented, it has the essential character of the complete or finished article

In interpreting the HTSUS, we have construed the term "essential character" to mean the attribute which strongly marks or serves to distinguish what an article is; that which is indispensable to the structure, core or condition of the article. See HQ 956538 dated November 29, 1994. As the merchandise changes, so, too, may the factor or factors which determine its essential character. Factors found to be relevant in other contexts are the significance of the imported components or their role in relation to the use or overall functioning of the completed article and, to the extent that it validates that comparison, the cost or value of the completed article versus the cost or value of the imported merchandise. See HQ 956410 dated October 14, 1994.

EN (V) to GRI 2(a) states that:

The second part of Rule 2(a) provides that complete or finished articles presented unassembled or disassembled are to be classified in the same heading as the assembled article. When goods are so presented, it is usually for reasons such as requirements or convenience of packing, handling or transport.

EN (VII) to GRI 2(a) states that:

For the purposes of this Rule, "articles presented unassembled or disassembled" means articles the components of which are to be assembled either by means of fixing devices (screws, nuts, bolts, etc.) or by riveting or welding, for example, provided only simple assembly operations are involved. Unassembled components of an article which are in excess of the number required for that article when complete are to be classified separately.

We note that the steel tubes are being imported for the purpose of making the UniCUBE IBCs. Therefore, we must consider whether the imported tubes have the essential character of the UniCUBE IBC. In considering whether the imported steel tubes have the essential character of the finished and fully assembled UniCUBE IBC, we note that two major components of the UniCUBE IBC, the plastic bottles and the pallets, are not present when the tubes are imported. We believe that the plastic bottle is a very significant part of the completed UniCUBE IBC. The plastic bottle is the component of the UniCUBE IBC that actually holds the liquids that are being transported. Thus, without the plastic bottle, the steel cages cannot be considered an UniCUBE IBC suitable for transporting liquids. Therefore, we believe that the imported tubes without the plastic bottle and the pallet cannot be considered to have the essential character of the finished UniCUBE IBC.

Although the subject tubes may be designed and manufactured solely for use in making the UniCUBE IBC, in their imported condition, they do not have the shape of the finished UniCUBE IBC. The tubes are imported only in straight lengths. Before they are assembled together to form the finished steel cage section of the UniCUBE IBCs, they must be bent to shape. After the tubes are bent, they can be welded together. Accordingly, when the tubes are imported, they cannot be clearly or reasonably identified as the completed UniCUBE IBCs. This further supports our conclusion that the imported tubes do not have the essential character of the UniCUBE IBC.

We also note that the tubes do not qualify as unassembled incomplete steel cages for the UniCUBE IBCs under GRI 2(a) because they are not imported in sets or units that have the essential character of the steel cages. Protestant argues that Customs should recognize that the tubes are designed and manufactured for the purpose of making steel cages for the UniCUBE IBCs. Protestant further maintains that the steel tubes are only shipped in uniform lengths because it is easier and cheaper to transport them that way. Transporting the tubes in this manner maximizes container space and minimizes freight charges. It also reduces the time, expenses and other problems associated with packing, forklift handling, storage and inventory control of the unassembled containers. Because of these conditions, protestant asks us to classify merchandise that is contained in several different shipments as one article.

However, Customs has followed a long-standing rule that an article is to be classified according to its condition as imported. See XTC Products, Inc. v. United States, 771 F. Supp. 401, 405 (1991). See also, United States v. Citroen, 223 U.S. 407 (1911), where the Supreme Court stated that "in order to produce uniformity in the imposition of duties, the dutiable classification of articles must be ascertained by an examination of the imported article itself, in the condition in which it is imported." Customs has also applied a rule derived from United States v. Baldt Anchor, Chain & Forge Division of Boston Metals Co., 59 CCPA 122, C.A.D. 1051, 429 F.2d 1403 (1972), and Franklin Industries, Inc. v. United States, 1 CIT 349, (1981), in which the courts held that to enjoy classification under a single tariff item number, all components necessary to establish the essential character of a particular article must be imported in the same shipment. See HQ 963321, April 26, 2000. Accordingly, we must classify based on the merchandise contained in each shipment and will not aggregate the contents of several shipments together to determine the classification of merchandise.

All the tubes that are used for making the steel cages of the UniCUBE IBCs are not imported together in the same shipment, but the different length tubes for making the steel cages are imported in separate shipments. The tubes of only one length lack too many of the other items that are involved in making the steel cages of the UniCUBE IBCs to be considered as having the essential character of the steel cages. In other words, the individual length tubes that are imported separately are too far removed from the finished steel cages to have the essential character of the finished steel cages of the UniCUBE IBC. Therefore, the tubes must be classified separately. This is consistent with the principle set forth in Citroen and the other cases cited above.

Although the steel tubes may be parts for the complete UniCUBE IBC, the tariff provision for shipping containers for transporting fluids, subheading 8609.00.00, HTSUS, does not provide for parts. Therefore, we find that the imported steel tubes cannot be classified in subheading 8609.00.00, HTSUS. They are classified in subheading 7306.30.10, HTSUS as: “Other tubes, pipes: Other, welded, of circular cross section, of iron or nonalloy steel: Having a wall thickness of less than 1.65 mm.”

HOLDING:

The imported non-alloy steel tubes are classified in subheading 7306.30.10, HTSUS as: “Other tubes, pipes: Other, welded, of circular cross section, of iron or nonalloy steel: Having a wall thickness of less than 1.65 mm.”

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 the decision. No later than sixty (60) days from the date of this decision, the Office of Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other means of public distribution.

Sincerely,

Myles B. Harmon,

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