CLA-2 RR:TC:MM 958623 JAS
Thomas J. O'Donnell, Esq.
O'Donnell, Byrne & Williams
20 North Wacker Drive, Suite 3710
Chicago, Illinois 60606
RE: PC 848161 Modified; Specialty Steel; Flat-Rolled Products, Specialty Steel Produced by Forging; Specialty Steel Produced by Flat-Rolling, Chapter 72, Note 1(k), HTSUS; Bars, Chapter 72, Note 1(m); Turning, Peeling, Mechanical
Descaling, Cold-Forming, Cold-Finishing; HQ 955737, HQ 956468
Dear Mr. O'Donnell:
Preclassification (PC) decision 848161, issued to you on January 26, 1990, by the District (now Port) Director of Customs, Chicago, on behalf of Uddeholm Corporation, concerned the tariff classification of specialty steel identified as flat-rolled products, forged products, kleen ground flats/precision ground flats, precision machined drill rod and hollow bar. We have reconsidered the classification of the flat-rolled products and believe that it is incorrect.
FACTS:
The specialty steel described in PC 848161 under the heading Flat Rolled Products consists of steel meeting the definition of Flat-rolled products, in Chapter 72, Note 1(k), Harmonized Tariff Schedule of the United States (HTSUS), and steel meeting the definition of Other bars and rods, in Chapter 72, Note 1(m), HTSUS.
The steel meeting the former definition was held to be classifiable as flat-rolled products of other alloy steel, in appropriate subheadings of heading 7225 and heading 7226, depending on width. The steel meeting the latter definition was held to be classifiable as other bars and rods of other alloy steel in subheading 7228.30.60, HTSUS. The steel in both cases meets the definition of Tool steel, in Chapter 72, Additional U.S. Note 1(e), HTSUS, and was described as being hot rolled and peeled and turned, a process referred to as mechanical descaling.
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The provisions under consideration are as follows:
7225 Flat-rolled products of other alloy steel, of a width of 600 mm or more:
7225.40 Other, not further worked than hot-rolled, not in coils:
Of a thickness of 4.75 mm or more:
7225.40.10 Of tool steel (other than high-speed steel)
...9.6 (now 7.7) percent ad valorem
7225.50 Other, not further worked than cold-rolled (cold-reduced):
7225.50.10 Of tool steel (other than high-speed steel)
...8.1 percent ad valorem
* * * *
7226 Flat-rolled products of other alloy steel, of a width of less than 600 mm:
Other:
7226.91 Not further worked than hot-rolled:
Of tool steel (other than high-speed steel):
Other:
7226.91.10 (now 15) Of a width of 300 mm or more...9.6 (now 7.7) percent ad valorem
7226.91.30 (now 25) Of a width of less than 300 mm...11.6 (now 9.3) percent ad valorem.
7226.92 Not further worked than cold-rolled (cold-reduced):
7226.92.10 Of a width of 300 mm or more
...8.1 percent ad valorem
7226.92.30 Of a width of less than 300 mm
...8.5 percent ad valorem
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* * * *
7228 Other bars and rods of other alloy steel;...
7228.30 Other bars and rods, not further worked than hot-rolled, hot-drawn or extruded:
Of tool steel (other than high-speed steel):
7228.30.60 Other...10.6 (now 8.5) percent ad valorem
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)
...8.5 percent ad valorem
ISSUE:
Whether specialty steel that has been peeled and turned is considered to be "further worked" than hot-rolled 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 provisions in subheadings 7225.40.10, 7226.91.10 (now 15), 7226.91.30 (now 25), and 7228.30.60 all cover alloy steel products that have not been further worked than hot-rolled. The classifications confirmed in PC 848161 with respect to this merchandise were predicated on information that the steel was peeled and turned for the purpose of mechanical descaling. Mechanical descaling involves removing the oxide scale that develops on the steel's outer surface at elevated temperatures. It is a finishing operation not normally regarded, for tariff purposes, as a "further working."
However, certain peeling and turning operations can result in a product that is considered cold-formed.
The terms cold-formed and cold-finished are not defined either in the text of the HTSUS or in the Harmonized Commodity Description and Coding System Explanatory Notes (ENs). The sense of the industry in which these processes are utilized is therefore useful in understanding their meaning. Our understanding of the - 4 -
relevant technology is that the design of the mill or the characteristics of the steel
frequently preclude the possibility of hot rolling a product to within precise sectional or out-of-round limitations, or to roll a product with a surface suitable for subsequent fabrication requirements. In such cases, the product is further processed in the mill's finishing department by operations such as turning. Turning is designed to improve the bars' surface condition by removing undesirable defects. Because these defects appear at different places on the bars' surface, and are at different depths, it is sometimes necessary to remove so much metal that a product with cold worked tolerances results. Subsequent heat treatments such bars may undergo are not usually sufficient to affect the closer dimensional tolerances and shape imparted by the turning.
We addressed similar circumstances in HQ 956468, issued to you on September 19, 1994. In that ruling we stated that when flat-rolled steel and other alloy steel bars are imported with diameters expressed in 1/8 inch increments, expressed in thousandths or ten thousandths of an inch, there is the suggestion that the turning to which they have been subjected is designed less for removal of surface oxides than to insure dimensional accuracy in accordance with customers' specifications. In that
ruling we cited a ruling under the HTSUS predecessor tariff code, the Tariff Schedules of the United States (TSUS), in which under nearly identical circumstances we held that turning carbon steel and alloy steel bar to change its dimension from metric to imperial sizes is a cold-forming or cold-finishing operation. HQ 079807, dated January 22, 1988, aff'd. in HQ 086464, dated April 17, 1991. See also HQ 955737, dated July 19, 1995.
HOLDING:
Flat-rolled products of other alloy steel, tool steel, and other bars and rods of other alloy steel, tool steel, that have been peeled and turned, imported with diameters expressed in 1/8 increments, expressed in thousandths or ten thousandths of an inch, are considered to be cold-rolled, cold-formed or cold-finished for tariff purposes. Under the authority of GRI 1, these products are provided for in headings 7225, 7226 and 7228, as appropriate. They are classifiable in subheadings 7225.50.10, 7226.92.10, 7226.92.30, and 7228.50.10, HTSUS, as appropriate.
PC 848161, dated January 26, 1990, is modified accordingly. This decision is effective 60 days from the date of this letter with respect to merchandise classifiable in subheadings 7225.50.10 and 7226.92.10, HTSUS,
Sincerely,
John Durant, Director
Tariff Classification
Appeals Division