CLA-2 R:C:M 955737 JAS
District Director of Customs
610 South Canal Street
Chicago, ILL. 60607
RE: PRD 3901-93-101490; Alloy Tool Steel Bars, Hot Rolled;
Peeling, Turning, Machining; Cold Forming, Cold
Finishing; Further Working; Mechanical Descaling; Subheading
7228.40.00; NY 847047 Distinguished
Dear District Director:
This is our decision on Protest No. 3901-93-101490, filed
against your classification of certain hot rolled alloy steel
bars. The entries were liquidated on May 7, 1993, and this
protest timely filed on August 5, 1993. The file contains
submissions from counsel for protestant, dated October 21 and
December 10, 1993, and August 2 and 28, 1994. In addition,
counsel made an oral presentation at a meeting in our office on
August 3, 1994.
FACTS:
The merchandise under protest is round, rectangular or
block-shaped and flat bars of alloy tool steel, either press
forged or roll forged from blooms or billets. These bars,
designated Thyroplast, Thyrodur and Thyrotherm, are then annealed
to improve the steel's mechanical properties, after which the
rounds are peeled or turned and the blocks and flats machined or
milled. The dimensions of the imported product taken from
representative invoices are in 1/8 inch increments, expressed in
thousandths or ten thousandths of an inch. These processes
effectively remove between 0.01 inch to 0.1 inch of steel from
the bars' entire external surface area, representing an
approximate 7 to 10 percent reduction by weight.
The bars were entered under the provision for other bars and
rods, not further worked than forged, in subheading 7228.40.00,
Harmonized Tariff Schedule of the United States (HTSUS). Counsel
for protestant maintains that the peeling, turning and machining
operations are mechanical descaling processes designed to remove - 2 -
scale and crust which originated during hot rolling or forging.
As such, these processes are the equivalent of rough turning
which is not regarded for tariff purposes as a finishing
operation that would lead to a change in classification. The
conclusion is that these processes are not cold forming or cold
finishing operations for tariff purposes. Counsel cites as
authority a ruling to protestant, NY 847047, dated December 5,
1989, which held in part that round and flat tool steel bars
produced by hot-rolling or forging that have been mechanically
descaled, are classifiable in subheading 7228.40.00, HTSUS, as
other bars and rods, not further worked than forged. The
concerned import specialist determined that the processes of
machining, peeling and turning, as described, were in fact cold
forming or cold finishing operations, and liquidated the entries
under subheading 7228.50.10, HTSUS, as bars and rods, not further
worked than cold-formed or cold-finished.
The provisions under consideration are as follows:
7228 Other bars and rods of other alloy steel...:
7228.40.00 Other bars and rods, not further worked
than forged...6 percent
* * * * *
7228.50 Other bars and rods, not further worked
than cold-formed or cold-finished:
7228.50.10 Of tool steel (other than high-
speed steel)...10.6 percent
ISSUE:
Whether mechanically removing between 0.01 inch to 0.1 inch
from the entire external surface area of alloy tool steel bars
constitutes cold forming or cold finishing for tariff purposes.
LAW AND ANALYSIS:
Merchandise is classifiable under the Harmonized Tariff
Schedule of the United States (HTSUS) in accordance with the
General Rules of Interpretation (GRIs). GRI 1 states in part
that for legal purposes, classification shall be determined
according to the terms of the headings and any relative section
or chapter notes, and provided the headings or notes do not
require otherwise, according to GRIs 2 through 6.
The Harmonized Commodity Description And Coding System
Explanatory Notes (ENs) constitute the official interpretation of
the Harmonized System. While not legally binding on the
contracting parties, and therefore not dispositive, the ENs - 3 -
provide a commentary on the scope of each heading of the
Harmonized System and are thus useful in ascertaining the
classification of merchandise under the System. Customs believes
the notes should always be consulted. See T.D. 89-80. 54 Fed.
Reg. 35127, 35128 (Aug. 23, 1989).
Initially, the terms cold-formed and cold-finished are not
defined either in the text of the HTSUS or in the ENs. The sense
in which these terms are understood in the iron and steel
industry is therefore useful in understanding their meaning.
Additionally, the Chapter 72 General Explanatory Notes, at p.
981, identify types of mechanical working that are considered
finishing treatments to which products of that chapter may be
subjected. Turning, milling, grinding, perforation or punching,
folding, sizing, peeling, etc., are listed examples of such
mechanical working. The same notes state that rough turning
merely to eliminate the oxidation scale and crust, and rough
trimming are not regarded as finishing operations leading to a
change in classification. The notes continue by listing certain
surface treatments or other operations that improve the
properties or appearance of the metal that, except as provided in
the text of certain headings, do not affect the heading in which
the goods are classified. Annealing and similar heat treatments
to improve the mechanical properties of the metal and descaling
and similar processes to remove the oxide scale and crust formed
during the heating of the metal are among the listed surface
treatments and operations. Descaling is a generic term that
includes chemical processes such as pickling and mechanical
processes such as grit blasting, which are designed to remove
oxides and rust from the bars' surface area. It appears from
these notes that the iron and steel industry regards turning and
rough turning and/or descaling as separate and distinct
operations.
The following passage concerning the finishing and shipping
of bar products appears in the United States Steel (now USX)
Corporation publication The Making, Shaping and Treating of
Steel, 10th. ed. (1985), at p. 944:
In the manufacture of bar products, the design and
type of rolling mill or the characteristics of the
steel frequently preclude the possibility of hot-
rolling a round to within precise sectional or out-
of-round limitations, or to roll a round with a surface
suitable for subsequent fabrication requirements. When
such requirements must be met, rounds are further
processed in the finishing departments by such
operations as sizing, turning, centerless grinding, or
by combinations of the latter two. Bars to be processed
by any one of these methods are hot-rolled over-size by
an amount predetermined by experience.
- 4 -
Current technology does not permit bars to be hot-rolled to
precise sectional or out-of-round limitations, or hot-rolled with
a surface suitable for subsequent fabrication requirements.
Because the surface defects that appear in hot-rolled bar
products are at different places on the bars' surface, and often
at different depths, it is sometimes necessary to remove so much
metal from the bar's entire surface area that a product with cold
worked tolerances results. It appears in these circumstances
that the turning, peeling and milling or machining, as described,
are processes designed not only to improve the bars' surface
condition by removing undesirable defects, but also to impart a
desired form or shape to the bar, as evidenced by the close
dimensional tolerances. These processes are considered cold-
forming or cold-finishing operations for tariff purposes.
NY 847047, dated December 5, 1989, dealing with round and
flat tool steel bars that have been hot-rolled or forged and
mechanically descaled, is distinguished on the facts, and does
not cover the merchandise in this protest.
HOLDING:
Under the authority of GRI 1, the bars of other alloy steel,
in round, block or rectangular, and flat shapes, that have been
peeled, turned or milled, as described, are provided for in
heading 7228. They are classifiable in subheading 7228.50.10,
HTSUS.
The protest is DENIED. In accordance with Section 3A(11)(b)
of Customs Directive 099 3550-065, dated August 4, 1993, Subject:
Revised Protest Directive, you should 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
take steps to make the decision available to Customs personnel
via the Customs Rulings Module in ACS and to the public via the
Diskette Subscription Service, Lexis, the Freedom of Information
Act and other public access channels.
Sincerely,
John Durant, Director
Commercial Rulings Division