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HQ 966796




November 8, 2004

CLA-2: RR:CR:TE: 966796 BtB/JAS

CATEGORY: CLASSIFICATION

TARIFF NO.: 7225.30.7000

Port Director
Bureau of Customs and Border Protection
423 Canal Street
New Orleans, LA 70130
Attn: Protest Office, Room 306

RE: Protest 2002-03-100581; hot-rolled flat-rolled dual-phase alloy steel in coils

Dear Port Director:

This is our decision on Application for Further Review (“AFR”) of Protest No. 2002-03-100581, timely filed by M.G. Maher & Co., Inc. on July 16, 2003, on behalf of Marubeni-Itochu Steel America (“protestant”), importer of record, concerning the classification, under the Harmonized Tariff Schedule of the United States Annotated (“HTSUSA”) of certain hot-rolled flat-rolled dual-phase alloy steel sheet in coils.

FACTS:

The merchandise at issue was entered at the Port of New Orleans under the provision for flat-rolled products of other alloy steel, of a width of 600 mm or more, of silicon electrical steel, other, in subheading 7225.19.0000, HTSUSA. The Bureau of Customs and Border Protection (CBP) issued Notices of Action advising the importer that based on the mill certificates submitted with the entries, the merchandise was properly classified under subheading 7225.30.7000 HTSUSA, as flat-rolled products of other alloy steel, of a width of 600 mm or more, other (other than silicon electrical steel), not further worked than hot-rolled, in coils, of a thickness of less than 4.75 mm, other. The Notice of Action also rate advanced the merchandise to 1% ad valorem and advised that merchandise classified in subheading 7225.30.70000, HTSUSA, was subject to additional Section 201 steel safeguard duties under subheading 9903.72.67, HTSUSA. The entries liquidated on April 18, 2003.

On protest, an administrative ruling is cited purporting to classify substantially similar merchandise as silicon electrical steel. Further, the protestant claims the steel is exempted from 201 steel safeguard duties because it is hot rolled.

Subsequently, by letter dated October 26, 2004, the protestant, now represented by counsel, makes an additional argument, pursuant to Section 174.28, Customs Regulations (19 CFR 174.28), that the steel at issue is exempted from the 201 steel safeguard duties by Chapter 99, Subchapter III, U.S. Note 11(b)(xvii)(D), HTSUSA. This exemption relates to a hot-rolled, flat-rolled, dual-phase steel product with the requisite percentage, by weight, of silicon, and the necessary tensile strength and elongation percentages listed in the note.

ISSUE:

Whether the merchandise is classified under subheading 7225.19.0000, HTSUSA, or 7225.30.7000, HTSUSA; whether it is subject to the additional 201 steel safeguard duties.

LAW AND ANALYSIS:

Classification under the HTSUSA is made in accordance with the General Rules of Interpretation (GRI). GRI 1 provides, in part, that classification decisions are to be "determined according to the terms of the headings and any relative section or chapter notes." In the event that 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 may then be applied.

The Harmonized Commodity Description and Coding System Explanatory Notes (EN) constitute the official interpretation of the Harmonized System at the international level (for the 4 digit headings and the 6 digit subheadings) and facilitate classification under the HTSUSA by offering guidance in understanding the scope of the headings and GRI. While neither legally binding nor dispositive of classification issues, the ENs provide commentary on the scope of each heading of the HTSUSA and are generally indicative of the proper interpretation of the headings. See T.D. 89-80, 54 Fed. Reg. 35127-28 (Aug. 23, 1989).

According to the mill certificates submitted with the entries, typical dimensions for this hot-rolled steel sheet are 2.9 mm (thickness) x 1343 mm (width) x C (coil) and 3.2 mm x 1253 mm x C. Typical chemical compositions for the steel are, by weight: carbon 0.06 %, silicon 1.18-1.24%, manganese 1.28-1.32%, phosphorous .007-009%, sulfur .001%, and aluminum .023-.028%. The steel at issue meets the definition set forth in Chapter 72, Note 1.(k), HTSUSA, which defines “flat-rolled products,” in part, as rolled products of solid rectangular (other than square) cross section in the form of coils of successively superimposed layers. The steel also meets the definition of “other alloy steel” set forth in Chapter 72, Note 1.(f), HTSUSA, as it has a silicon content of 0.6 percent or more by weight.

Chapter 72, Subheading Note 1.(c) defines silicon electrical steel as:

Alloy steels containing by weight at least 0.6 percent but not more than 6 percent of silicon and not more than 0.08 percent of carbon. They may also contain by weight not more than 1 percent of aluminum but no other element in a proportion that would give the steel the characteristics of another alloy steel.

Although the instant merchandise contains the amounts of silicon and carbon specified in Chapter 72, Subheading Note 1.(c), we find that the steel contains other elements in such proportions as to give it the characteristics of another alloy steel, i.e., its proportions of aluminum and carbon make the steel dual- phase steel, not silicon electrical steel. Technical information available to us indicates the instant merchandise is believed to be used in making wheel rims, which is not a silicon electrical steel application, and is hot-rolled, whereas silicon electrical steel is generally supplied cold-rolled.

The ruling protestant cites, NY 889389, dated September 13, 1993, classified a steel product said to be substantially similar to the merchandise under protest here as silicon electrical steel, in subheading 7225.10.0000, HTSUSA. We find this ruling to be inconclusive as to the stated classification because the percentage of aluminum, by weight, is not listed and it is unclear whether the other listed elements are by weight. In the absence of an accurate mill certificate as to the actual metallurgy, we are unable to confirm the correct classification of the product in NY 889389.

Counsel’s claim of exemption from the 201 steel safeguard duties under Chapter 99, Subchapter III, U.S. Note 11(b)(xvii)(D), HTSUSA, was made on October 26, 2004, under Section 174.28, Customs Regulations (19 CFR 174.28). This regulation permits a reviewing officer to consider alternative claims and additional grounds or arguments submitted in writing with respect to a protest filed within the time allowed. Protestant made the requisite claim of exemption in its timely filed protest, stating as its basis that the steel was hot rolled. Hot-rolled, flat-rolled dual-phase steel is covered by Note 11(b)(xvii)(D), cited by counsel. This is additional grounds or, more appropriately, perfection of a claim timely made. Note 11(b)(xvii)(D) requires, in pertinent part, a silicon content of from 0.9 percent to 1.5 percent, by weight, and, for thicknesses greater than or equal to 2 mm either a tensile strength of from 540 N/mm2 to 640 N/mm2 with an elongation percentage of greater than or equal to 26 percent, or by a tensile strength of from 590 N/mm2 to 690 N/mm2 with an elongation percentage of greater than or equal to 23 percent. The mill certificates and documents from Nippon Steel Corporation entitled Commodity Description, indicate to us that the instant steel has the requisite silicon content, by weight and, for those sizes with tensile strength in the 540 to 640 N/mm2 range an elongation greater than or equal to 26 percent, and for those sizes with tensile strength in the 590 to 690 N/mm2 range an elongation of greater than or equal to 23 percent.

HOLDING:

Under GRI 1, the steel at issue is provided for in heading 7225. It is classifiable under subheading 7225.30.7000, HTSUSA, as flat-rolled products of other alloy steel, of a width of 600 mm or more, other (other than silicon electrical steel), not further worked than hot-rolled, in coils, of a thickness of less than 4.75 mm, other. Merchandise so classified is subject Section 201 additional duties for steel products under subheading 9903.72.67, HTSUSA, unless exempted, as indicated above.

The protest should be DENIED, except to the extent that applicability of the exemption under Chapter 99, Subchapter III, U.S. Note 11(b)(xvii)(D), results in a PARTIAL ALLOWANCE.

In accordance with Section IV of the Customs Protest/Petition Processing Handbook (CIS HB, January 2002, pp. 18 and 21), you are to mail this decision, together with the CBP Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entries in accordance with the decision must be accomplished prior to mailing of the decision. No later than 60 days from the date of this letter, 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 by other methods of public distribution.

Sincerely,

Myles B. Harmon, Director
Commercial Rulings Division


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