RR:CR:GC 965364 JLV
Director, Port of Savannah
U.S. Customs Service
1 East Bay Street
Savannah, GA 31401
RE: Protest No. 1703-01-100202; steel wire rod for tire bead wire; exclusion from 201 tariff rate quota; deformable and non-deformable inclusions; test procedures for determining size of inclusions; Proclamation 7273
Dear Port Director:
You have forwarded protest No. 1703-01-100202 which was timely filed on October 25, 2001, against your decision to deny a claim for exemption from the tariff rate quota (TRQ) for wire rod of subheading 7213.91.4510, Harmonized Tariff Schedule of the United States (HTSUS). Our decision follows.
FACTS:
Protest No. 1703-01-100202 concerns certain steel wire rod from two entries, No. 336-xxxxxxx-4 (January 10, 2001) and No. 336-xxxxxxx-4 (January 31, 2001), which were liquidated on August 17, 2001, under subheading 9903.72.05/7213.91.4590, HTSUS, and subject to duties of 10% ad valorem in addition to the duties of 0.6%. The importer had entered the wire rod under subheading 7213.91.4510, HTSUS, as “1080 tire bead wire quality wire rod” exempt from the TRQ.
Samples were requested. Samples from Entry No. 336-xxxxxxx-4 were sent for analysis by Customs laboratory and samples from Entry No. 336-xxxxxxx-4 were sent for analysis by an independent laboratory. According to Report No EDOV-04-03-02198A dated April 4, 2001, the sample from the first entry was determined by the independent laboratory to contain “inclusions up to 0.0028” long x 0.0005” wide. (71.12um x 12.7um)” and according to Report No. SV20010127S dated June 19, 2001, the sample from the second entry was determined by the Customs laboratory to contain “inclusions measuring greater than 20 microns”. The test methods used by the independent laboratory were in accordance with ASTM-E3-95 (Practice for Preparation of Metallographic Specimens) and ASTM-E45-97 (Standard Test methods for Determining the Inclusion Content of Steel). The test methods used by the Customs laboratory were not indicated on the supplemental report.
Within ASTM-E45-97 there are two general methods: macroscopical, which is typically used to indicate inclusion content and distribution in cross-sections and microscopical, which is typically used to characterize the size distribution number and type of inclusions on the surface of steel product. There are five types of microscopical methods, each of which is used for specific purposes and reveals different data. In general, the ASTM method is used to determine the nonmetallic inclusion content of steel and is designed to rate these inclusions.
The protestant argues that the steel wire rod satisfied the conditions set forth in U.S. Note 9(h) to Subchapter III, Chapter 99, for “1080 tire bead wire quality wire rod” and should not have been subjected to the TRQ and additional duties set out in Subchapter III of Chapter 99. Specifically, protestant argues that (1) deformable inclusions should be ignored for purposes of the test, and that (2) the wire rod did not contain undeformable [non-deformable] inclusions greater than 20 microns.
In support of its argument, protestant submits (1) a discussion of its own testing procedure for products which are produced specifically as wire rod for tire bead wire, and (2) a copy of the testing standards used by one of its customers. The manufacturer’s testing standard for longitudinal sections excludes consideration of deformable inclusions and measures only the thickness of the non-deformable inclusions (measurement perpendicular to the length of the section). This method has been identified by the manufacturer as AFNOR (Association francaise de normalisation) standard AF-A-04-107. A copy of the standard was not submitted. For transverse sections, the manufacturer submits a testing method that determines the size of inclusions (deformable and non-deformable) by dividing the sum of the length and thickness of the inclusions.
The protestant also submitted the procedure of one customer. The customer uses the procedure to determine the size of inclusions in wire rod (produced by a supplier according to the manufacturer’s specification) for the propose of assigning “penalty points of the wire” as delivered. In the procedure for inclusions on longitudinal sections, only the thickness (measurement in a direction perpendicular to the axis of the wire) of inclusions is measured. The procedure applies to both deformable and non-deformable inclusions.
Based on the reports from the laboratories, Customs issued a Notice of Action on Customs Form 29 for each entry and subsequently liquidated the entries (with respect to the wire rod that had been tested) under subheading 9903.72.05/7213.91.4590 dutiable at 10.6% ad valorem.
ISSUE:
Does the reference to “having no inclusions greater than 20 microns” in Note 9(h) to Subchapter III of Chapter 99 apply to any type of inclusion that measures greater than 20 microns regardless of whether the measurement represents the length or the width of the inclusion?
If so, what standards are used to determine the measurement of inclusions for purposes of the statutory provision?
LAW AND ANALYSIS:
By Proclamation 7273 of February 16, 2000 (65 FR 8621, February 18, 2000), the President of the United States imposed a tariff rate quota (TRQ) on certain wire rod imports, effective March 1, 2000. Certain specialty wire rod products were excluded from the TRQ. Subchapter III of Chapter 99, HTSUS, was amended by the addition of Note 9 and subheadings 9903.72.01 through 9903.72.15. Note 9 provides the list of steel products excluded from the TRQ. Note 9(h) is the specific exclusion for “1080 tire bead wire quality wire rod” that, in pertinent part, has “no inclusions greater than 20 microns.”
Classification of the wire rod in subheading 7213.91.45 is not at issue. The sole issue concerns the scope of the term “inclusions” for purposes of the exemption from the TRQ. Protestant has argued that only certain types of inclusions, i.e., those known in the trade as “non-deformable inclusions,” are to be measured for purpose of this statutory requirement. In general, non-deformable are much less desirable and are measured by thickness (often globular in shape). These types of inclusions do not elongate when the steel is drawn or rolled lengthwise. Non-deformable inclusions are typically globular in shape and are undesirable contaminants which may cause breakage during working of the steel.
The protestant has offered evidence that, for purposes of the manufacturer’s production process, only the non-deformable inclusions are measured against the customer’s specifications. Furthermore, the protestant has offered information from one of the manufacturer’s customers that the measure of thickness, not length, is the critical measure for purposes of determining penalty points for failure to meet specification in the delivered product.
Inclusions are non-metal particles in steel and are characterized by size and shape, and may be angular, globular or elongated. They may have a significant impact on the working of steel, such as causing defects, breaks or tears during the rolling or drawing of steel. Inclusions can be divided into two broad classes: deformable, which are soft and deform or elongate during rolling or drawing of steel, and non-deformable, which are hard and maintain original shape (and, therefore, size) during the rolling or drawing of steel. See article on “What is Steel Cleanness” at www.matter.org.uk, University of Liverpool, last updated on July 25, 2000. In this article there is a reference to “tyre wire steels” and the fact that this kind of steel requires very low levels of hard non-deformable inclusions which could cause wire breaks during wire drawing.
In a reference work on testing for fatigue in metals, it was noted that the influence of inclusions depended more on the shape and distribution than on the size. See Fatigue Testing and Analysis of Results, W. Weibull, Pergamon Press (1961), which can be found at http://www.barringer1.com/wa_files/Weibull's1960Book-1.pdf. This comment would appear to be applicable to the effect of inclusions on the working of metal because the non-deformable inclusions retain their shape during rolling or drawing. Deformable inclusions, which are typically elongated, are not considered to be as detrimental to the working of steel.
In Proclamation 7273 there is no reference or restriction on the type of inclusions that are considered for purposes of Note 9(h) to Subchapter III of Chapter 99. A review of the report of Investigation No. TA-201-69 (U.S.I.T.C. Publication 3207) indicates that no discussion was taken on the meaning of the term “inclusions” as proposed for the exemption for “1080 tire bead wire quality wire rod” that was proposed by the petitioners. The text of Note 9(h) is substantively the same as the text proposed by petitioners and reproduced in Annex A to Publication 3207.
Although the argument submitted by protestant presents a reasonable opinion as to the possible intent of the language in Note 9(h), the protestant has not produced specific information that the U.S. International Trade Commission or the President used the term “inclusions” as meaning only non-deformable inclusions. In the trade, the term “inclusions” refers to both deformable and non-deformable types of inclusions. When implementing the TRQs, the President provided specific exclusions. With regard to the exclusion for certain wire rods to be used for tire bead wire, the exclusion applies only to wire rod “having no inclusions greater than 20 microns.” This is the legal text to be applied by Customs to entries of products claimed to be eligible for the exclusion in Note 9(h). The legal text does not refer to a differentiation between types of inclusions. The role of Customs, in this case, is more ministerial and would not include the authority to narrow or interpret the meaning of the term “inclusions” as used in Proclamation 7273.
The sampled products contained inclusions which measured more than 20 microns. In the analysis from the independent laboratory, there were inclusions that measured up to 71.12 microns in length. In the analysis from the Customs laboratory, it was indicated that there were inclusions that exceeded the allowable 20 microns. Based on these analyses, the wire rod failed to satisfy one of the requirements for the exclusion of certain wire rod from the TRQ.
In this case, any acceptable standard method may be used to select a sample section and test for inclusions. The ASTM method, used by the independent laboratory, is recognized and acceptable. The ASTM method rates, but does not distinguish between the types of inclusions. The actual measurement appears to control regardless of the nature of the inclusion.
Therefore, we cannot accept protestant’s claim that only non-deformable inclusions are to be considered.
HOLDING:
The protest and application for further review was timely filed within 90 days after the date of liquidation of the entries in question. The entries were rate advanced and liquidated in accordance with the determination that the wire rod failed to meeting the criteria for certain wire rod excluded by Note 9(h) to Subchapter III to Chapter 99.
The term “inclusions” has not been limited to only one type of inclusion for purposes of the legal text and, therefore, the wire rod is subject to the TRQ and you should deny the protest with respect to the two entries.
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.
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 Customs Home Page on the World Wide Web at www.customs.gov and by means of the Freedom of Information Act and other methods of public distribution.
Sincerely,
Myles B. Harmon
Acting Director
Commercial Rulings Division