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HQ 966524




October 3, 2003

CLA-2 RR:CR:GC 966524 DBS

CATEGORY: CLASSIFICATION

TARIFF NO.: 9903.73.84

Port Director
U.S. Customs and Border Protection
9901 Pacific Highway
Blaine, WA 98230
ATTN: Entry Unit

RE: Protest 3004-03-100027; Steel tubes; Section 203 of the Trade Act of 1974 (Steel 201 Safeguard Duties)

Dear Port Director:

This is our decision on Protest 3004-03-100027 filed against your classification under the Harmonized Tariff Schedule of the United States (HTSUS), of certain steel tubes designated N-319, which resulted in the assessment of additional so-called "Section 201 Duties" on this merchandise pursuant to Presidential Proclamation 7529, issued on March 5, 2002 (67 FR 10553). The entries were liquidated on April 4, 2003, and the protest was timely filed on May 19, 2003.

FACTS:

Protestant M.B. Metals, Inc., imported into the United States certain N-319-designated steel tubing (N-319 tubes) in standard metric sizes on October 30, 2003. The tubing is a product of the People’s Republic of China. M.B. Metals entered the tubing under subheading 7306.60.10, HTSUS, which provides for other welded pipes and tubes of noncircular cross section, having a thickness of 4mm or more, of iron or nonalloy steel. You subsequently issued a Customs Form 29 Notice of Action advising the protestant that the entry was subject to a quota restraint and that the amount of tubing that exceeded the quota restraint level would be assessed at the increased duty rate.

The United States Trade Representative (USTR), under the authority of the President of the United States, administered “safeguard measures” following a determination by the International Trade Commission of import injury with respect to certain steel products. These safeguard measures, commonly known as “Section 201 Duties,” which are increased duties and quota restraints, went into effect on March 20, 2002. Some steel products, including the N-319 tubes at issue here, were retroactively excluded from these measures via Federal Register notice 67 FR 46221, dated July 12, 2003. USTR later modified several of these exclusions on a prospective basis. These modifications were published in Federal Register on August 30, 2002 (67 FR 56182). The modification, among other things, imposed a prospective quota restriction on N-319 tubes.

Counsel for M.B. Metals filed the instant protest in opposition to the quota restraint, arguing that the imposition of the tariff rate quota was not timely and therefore was unlawful.

ISSUE:

Whether Customs properly administered the quota restraint?

LAW AND ANALYSIS:

Section 203(a)(3) of the Trade Act of 1974, codified in Title 19, Section 2253, of the United States Code, provides for the means by which the President of the United States may take action for relief from injury caused by import competition. 19 U.S.C. 2253(a)(1)(A) provides, in general, the following:

After receiving a report from the International Trade Commission under section 202(f) [19 U.S.C. § 2252(f)] containing an affirmative finding regarding serious injury, or the threat thereof, to a domestic industry, the President shall take all appropriate and feasible action within his power which the President determines will facilitate efforts by the domestic industry to make a positive adjustment to import competition and provide greater economic and social benefits than costs.

In Presidential Proclamation 7529, supra, President Bush imposed, pursuant to 19 U.S.C. §2253, “safeguard measures” in order to facilitate efforts by the domestic industry to make a positive adjustment to import competition and provide greater economic and social benefits than costs. Section 2253(a)(3) of Title 19 defines “action,” for purposes of paragraph 1 thereof, in part, as follows:

(A) proclaim an increase in, or the imposition of, any duty on the imported article; (B) proclaim a tariff-rate quota on the article; (C) proclaim a modification or imposition of any quantitative restriction on the importation of the article into the United States

(J) take any combination of actions listed in subparagraphs (A) through (I).

19 U.S.C. § 2253 also sets forth limitations on actions in subparagraph (e). It provides, in relevant part, the following:

(7) (A) If an article was the subject of an action under subparagraph (A), (B), (C), or (E) of subsection (a)(3) of this section, no new action may be taken under any of those subparagraphs with respect to such article for-- (i) a period beginning on the date on which the previous action terminates that is equal to the period in which the previous action was in effect, or (ii) a period of 2 years beginning on the date on which the previous action terminates, whichever is greater. (B) Notwithstanding subparagraph (A), if the previous action under subparagraph (A), (B), (C), or (E) of subsection (a)(3) with respect to an article was in effect for a period of 180 days or less, the President may take a new action under any of those subparagraphs with respect to such article if-- (i) at least 1 year has elapsed since the previous action went into effect; and (ii) an action described in any of those subparagraphs has not been taken with respect to such article more than twice in the 5-year period immediately preceding the date on which the new action with respect to such article first becomes effective.

During the consideration of these safeguard measures, companies were invited to request exclusions from the application of the relief. In clause (5) of Proclamation 7529, the President authorized the USTR, within 120 days after March 5, 2002, to further consider any request for exclusion of a particular product submitted in accordance with the procedures set out in 66 Fed. Reg. 54321, 54322-54323 (October 26, 2001). See also Presidential Proclamation 7576 of March 9, 2002 (67 FR 45285). In addition, Presidential Proclamation 6969 of January 27, 1997, signed by President William J. Clinton, authorizes the USTR to make technical and conforming changes to the HTSUS, pursuant to Section 604 of the Trade Act of 1974, codified at 19 U.S.C. § 2483.

Pursuant to the aforementioned authorities, the USTR published several lists of exclusions of particular products from actions under Section 203 of the Trade Act of 1974 with regard to certain steel products and several conforming changes and technical corrections to the HTSUS in the Federal Register. These exclusions are set forth in Note 11(c) of Chapter 99, HTSUS. Exclusions were implemented retroactively to March 20, 2002.

In 67 FR 45285, dated July 12, 2002, N-319 tubes were excluded from the application of relief (i.e., additional duties). This exclusion was embodied in Note 11(c)(lxviii), Ch. 99, HTSUS. However, on August 30, 2002, the USTR published additional exclusions and technical changes in 67 FR 56182. Among the technical corrections was an amendment to Note 11(c)(lxviii). The amendment provided as follows:
inser[t] after "N-319" the phrase "and entered in an aggregate quantity not to exceed 10 t during the 12-month period beginning on September 1, 2002 or September 1, 2003 or during the period from September 1, 2004 through March 20, inclusive", and the article description of subheading 9903.77.32 is modified by inserting at the end thereof "and entered in an aggregate quantity not to exceed 10 t during a period specified in such note".

Protestant claimed that this amendment constituted an “action” under 19 U.S.C. § 2253(a)(3)(B) or (C) that was not taken in a timely fashion, according to the limitations set forth in 19 U.S.C. § 2253(e)(7)(B), because the exclusion had been in effect for 180 days or less and one year had not elapsed since the last action was taken.

Following consultations with USTR, the U.S. Department of Commerce, and the U.S. International Trade Commission, it was made clear that the company that had requested the exclusion for N-319 tubes stated it would only be importing a limited amount. Therefore, the exclusion was intended only to cover a small amount of goods being entered. It was never intended to exclude all N-319 tubes from relief. Therefore, the absence of the quota restraint in the July 12, 2002, notice was an oversight, corrected pursuant to Presidential Proclamation 6969, supra, by USTR in 67 FR 56182. The prospective nature of the amended exclusion was due to fairness to importers and a lack of administrability of a retroactive quota restraint.

In fact, the Federal Register notices specifically state the following:

Pursuant to authority delegated to the USTR in Presidential Proclamation 6969 of January 27, 1997USTR is making technical corrections to subchapter III of chapter 99 of the Harmonized Tariff Schedule of the United States (HTS).These modifications correct several inadvertent errors and omissions in the subheadings 9903.72.30 through 9903.74.24 of the HTS so that the intended tariff treatment is provided.

Accordingly, the amendment of August 30, 2002, does not constitute a proclamation of a tariff rate quota or a modification or imposition of any quantitative restriction. That is, it is not an unlawful “new action” under 19 U.S.C. 2253(e)(7). As such, Protestant’s claim fails. Customs properly implemented the amended exclusion.

HOLDING:

The N-319 steel tubes which are the subject of Protest 3004-03-100027 are subject to applicable Section 201 Duties authorized by Presidential Proclamation 7529 and are therefore classified in subheading 9903.73.84, 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 Bureau of Customs and Border Protection Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

Myles B. Harmon, Director
Commercial Rulings Division

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