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HQ 968016




July 27, 2006

CLA-2 RR:CTF:TCM 968016 JAS

CATEGORY: CLASSIFICATION

TARIFF NO.: 7616.90.00

Port Director
U.S. Customs and Border Protection
555 Battery Street
San Francisco, CA 94111

RE: Protest 2809-05-100586; Nickel-Plated Polished Aluminum Disk Substrates; Request for Further Review Denied

Dear Port Director:

Protest 2809-05-100586, timely filed by counsel on behalf of the Maxtor Corporation, concerns the classification of nickel-plated and polished aluminum disk substrates for use in the manufacture of media for hard disk drives under the Harmonized Tariff Schedule of the United States (HTSUS). Counsel states that further review at Headquarters is warranted based on Section 174.24(c), U. S. Customs and Border Protection (CBP) Regulations (19 CFR § 174.24(c)), as the protest is alleged to involve questions of law which were not addressed at the time the matter was previously ruled upon by the Commissioner of Customs and Border Protection or his designee or the Customs courts. For reasons that follow, we do not agree that further review is warranted in this case.

A teleconference between counsel and members of my staff was conducted on June 29, 2006, at which time relevant facts and legal issues were discussed. These were confirmed in a letter dated July 14, 2006.

As imported, the merchandise consists of circular flat disks of alloy aluminum in varying standard disc sizes. They are imported either machined or ground or machined and ground and nickel-plated. In either event, aluminum predominates, by weight, over each of the other metals in the alloy. After importation, a magnetic coating is applied to the disks by a sputtering process. It is this magnetic coating that permits the disk to
retain data. One component of a hard disk drive is the head/disk assembly consisting of the head, the media or disks, a positioning mechanism (actuator) and a spin motor. Each complete or finished disk has a head suspended directly above or below it, which can read data from or write data to the spinning disk.

In HQ 084217, dated June 28, 1989, and HQ 084219, dated July 7, 1989, CBP classified these disk substrates as other articles of aluminum, in subheading 7616.90.00, HTSUS. Numerous rulings issued subsequently confirmed this classification. Counsel maintains that at the time of importation the disk substrates qualify as incomplete or unfinished articles under General Rule of Interpretation (GRI) 2(a), HTSUS, because they are “blanks.” “Blanks” are articles not ready for direct use, having the approximate shape or outline of the finished article or part and which can only be used, other than in exceptional cases, for completion into the finished article or part. Counsel concludes that the disk substrates are “blanks” that can only be used for completion into parts of automatic data processing (ADP) machines. Under the authority of Section XVI, Note 2(b), HTSUS, counsel concludes that the substrates are classifiable under subheading 8473.30.50, HTSUS, as parts suitable for use solely or principally with machines of headings 8469 to 8472.

Counsel further contends that the criteria which justifies further review under 19 CFR § 174.24(c) relates to language in the rulings concerning exclusion (a) in the Harmonized Commodity Description and Coding System Explanatory Note (EN) to heading 8523 “direct[ing] the classification based on component material.” Counsel maintains it is the intended end use of the good - in this case as parts of ADP machines - that directs classification, rather than component material. In counsel’s opinion, this is a legal argument not considered at the time the cited rulings were issued, or in subsequent rulings. Also, he cites the addition to the 8523 EN at (5) relating to solid-state non-volatile data storage devices known as flash memory cards in the form of integrated circuits. If intended for use as media to record sound but not prepared for such use, counsel opines that the integrated circuits for the flash memory cards would be classifiable under heading 8542 (in Section XVI), as the respective heading for this good under exclusion (a) to EN 8523, and not by component material. By analogy, counsel concludes this warrants classification of the aluminum disk substrates as unfinished parts of ADP machines under heading 8473 pursuant to GRI 2(a), HTSUS, rather than according to their constituent material.

In our opinion, EN(5) on solid-state non-volatile data storage devices does not constitute a legal argument that was not previously considered at the time HQ 084217 and HQ 084219 were issued. This is because EN(5) has no bearing on the classification of the nickel-plated aluminum disk substrates at issue here. It is the application of exclusion (a) to EN 8523 that is relevant here, and that has been addressed numerous times as hereafter indicated.

CBP has consistently expressed its position that classification of the nickel-plated aluminum disk substrates in heading 8473 as blanks under GRI 2(a) is unwarranted because, when completed or finished by sputtering, they become prepared unrecorded media for sound recording or similar recording of other phenomena of heading 8523, HTSUS, and exclusion (a) to EN 8523 expressly excludes articles intended for use as media for recording sound or other phenomena but not yet prepared for use as such [by sputter coating]; these are classified in their respective headings (for example, in Chapter 39 or 48, or Section XV). (Bracketed material added). HQ 084217 and HQ 084219 clearly stated this position in the following passages:

Assuming that the blanks are unfinished parts of storage units of heading 8471, they are precluded from classification as parts of these units by Section XVI, Note 2(a) because heading 8523 specifically provides for prepared unrecorded media for sound or similar recording of other phenomena. EN(4) to heading 8523 indicates that the heading includes discs of metal that are capable of being magnetized (magnetic coating on the surface) for recording data for machines of heading 8471. However, to the extent that these blanks are not yet prepared for use as media for recording other phenomena, they are precluded from classification in heading 8523. EN(a) to heading 8523. Therefore, although GRI 2(a) would otherwise direct the classification of these unfinished recording discs in heading 8523, the EN to this heading indicates that the term ‘prepared’ as used in the heading requires that the discs classified in heading 8523 be physically finished with a magnetic surface. This EN directs the classification according to the material of which the blank is composed.

Our position has been that the “respective heading” for these disk substrates under exclusion (a) to EN 8523 is heading 7616, articles of aluminum.

After thoroughly reviewing the matter, we conclude that no legal argument has been presented that was not considered at the time HQ 084217 and HQ 084219 were issued. As the further review criteria in 19 CFR § 174.24(c) has not been satisfied, and no other further review criteria has been asserted, we are returning Protest 2809-05-100586 to you for disposition in accordance with existing precedent.

Sincerely,

Gail A. Hamill
for Myles B. Harmon, Director
Commercial and Trade Facilitation Division

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