CLA-2 RR:CR:GC 967225 RSD
TARIFF NO. 7116.20.5000
Mr. Craig M. Schau
Corporate Manager-Customs Compliance Services
Emery Customs Brokers
6940 Engle Road, Suite A
Middleburg Heights, Ohio 44130
RE: The tariff classification of Polycrystalline Diamond Cutters from multiple countries; NY J81909, Affirmed
Dear Mr. Schau:
This is in response to your letter of June 24, 2004, on behalf of Kennametal, Inc., concerning the classification under the Harmonized Tariff Schedule of the United States (HTSUS) of PolyCrystalline Diamond metal cutting inserts (PCD). Specifically, you request reconsideration of New York Ruling (NY) J81909, dated March 24, 2003. The Customs and Border Protection (CBP), National Commodity Specialist Division in New York forwarded your letter to the Washington, D.C., CBP, Office of Regulations and Rulings for a reply.
FACTS:
According to NY J81909, the merchandise under consideration are PCDs brazed onto a carbide substrate. The primary uses of the PCDs are turning and boring, profiling, grooving, milling and hole making. The carbide substrate is made of 1018 low carbon. The PCDs are designed to have a cutting edge that will operate at a high speed. They may have multiple cutting areas and are attachable to various types of cutter bodies. NY J81909 classified the PCDs in subheading 7116.20.50, HTSUS, as other articles of precious or semiprecious stones.
You claim that the PCD is properly classified under heading 8207, HTSUS, as interchangeable tools for hand tools. You have provided a copy of a German binding ruling with English translation. The German ruling determined that the PCDs are classified in heading 8207.
ISSUE:
Whether the PCDs are classified in heading 8207, HTSUS, as interchangeable tools for hand tools or in heading 7116, HTSUS, as other articles of precious or semiprecious stones?
LAW AND ANALYSIS:
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRI’s). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs may then be applied.
The HTSUS provisions under consideration are as follows:
7116 Articles of natural or cultured pearls, precious or semi-precious
stones (natural synthetic or reconstructed):
7116.20 Of precious or semiprecious stone (natural, synthetic or
reconstructed):
Other:
7116.20.50 Other.
* * * * * * * * * * * * *
8207 Interchangeable tools for handtools, whether or not power-
operated, or for machine-tools (for example, for pressing,
stamping, punching, tapping, threading, drilling, boring,
broaching, milling, turning or screwdriving), including dies
for drawing or extruding metal, and rock drilling or earth
boring tools; base metal parts thereof:
8207.80 Tools for turning:
8207.80.60 Other.
* * * * * * * * * * * * *
Chapter 71 Legal Note 3(k) states in pertinent part, that this chapter does not cover:
[A]rticles of chapter 82 with a working part of precious or semiprecious stones (natural, synthetic or reconstructed);… However, articles and parts thereof, wholly of precious or semiprecious stones (natural, synthetic or reconstructed) remain classified in this chapter, except unmounted worked sapphires and diamond for styli (heading 8522).
Chapter 82 Legal Note 1 states that:
Apart from blow torches and similar self-contained torches, portable forges, grinding wheels with frameworks, manicure or pedicure sets, and goods of heading 8209, this chapter covers only articles with a blade, working edge, working surface or other working part of:
(a) Base metal
(b) Metal carbide or cermets
(c) Precious or semiprecious stones (natural, synthetic or reconstructed) on a support of base metal, metal carbide or cermet; or
(d) Abrasive materials on a support of base metal, provided that the articles have cutting teeth, flutes grooves or the like, of base metal,
which retain their identity and function after the application of the abrasive. (Emphasis added).
The Harmonized Commodity Description and Coding System Explanatory Notes (EN’s) constitute the official interpretation of the Harmonized System. While not legally binding on the contracting parties, and therefore not dispositive, the EN’s 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 Harmonized System. CBP believes the EN’s should always be consulted. See T.D. 89 80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).
EN 82.07 states:
Whereas (apart from a few exceptions such as machines saw blades) the
preceeding headings of this Chapter apply in the main to hand tools ready for
use as they stand or after affixing handles, this heading covers an important
group of tools which are unsuitable for use independently, but are designed to be fitted, as the case may be into:
(A) handtools…
(B) machine-tools…
(C) tools of heading 84.67,...
Many of the tools of heading 8207 are composite tools. EN 8207 provides the following explanation of the term composite tools:
Composite tools consist of one or more working parts of base metal,
of metal carbides or of cermets, of diamond or of other precious or semi-
precious stones, attached to a base metal support either permanently, by welding or insetting, or as detachable parts. In the latter case, the tool consists of a base metal body and one or more working parts (blade, plate, point) locked to the body by a device comprising, for example, a bridge plate, a clamping screw or a spring cotter-pin with, where appropriate, a chip-breaking lip.
The EN description of a composite tool indicates that it consists of one or more working parts … of diamonds or other precious or semiprecious stones attached to a base metal support. This might seem to be in conflict with Chapter 82 Legal Note 1(c) cited above, since Legal Note 1(c) indicates that the stones may be on a “support of base metal, metal carbide or cermet”. In the Legal Note, the support is a support matrix, in effect a part of the working part while in the EN, the base metal support is the “base metal body” or holder for the working part.
In HQ 958704, dated April 23, 2004, and HQ 958293, dated April 23, 2004, CBP considered the classification polycrystalline diamond cutter blanks consisting of synthetic diamonds bonded to a tungsten carbide substrate. After importation, the “blank” was to be completed by insertion into a drill bit body or shank. These two rulings cited the relevant EN’s of heading 8207, which states that the interchangeable tools of that heading may be either one-piece or composite articles. We further explained that EN 8207 also indicates that composite tools consist of one or more parts of base metal of metal carbides or of cermets, of diamond or other precious or semiprecious stones, attached to a base metal support, either permanently by welding or insetting or as detachable parts. Because the PCD substrate was tungsten carbide, a man-made inorganic compound, it was not considered a base metal under Section XV, Note 3. Consequently, we held that the PCDs were not within the scope of the cited ENs and thus were not provided for as a composite tool in heading 8207.
In considering whether the PCDs that are the subject of NY J81909, are classified in chapter 71 or in chapter 82 of the HTSUS, we consider the language of the Legal Notes to Chapter 82, HTSUS. As stated above, Legal Note 1 of Chapter 82, states that this “chapter covers only articles with a blade, working edge, working surface or other working part of.” In our view, the phrase “with a” in Legal Note 1 of Chapter 82, HTSUS, means that in order to be a composite tool which would be classified in Chapter 82, HTSUS, the article must consist of something other than just the cutting edge or the working part of the tool. This means that a working part of a tool such as the cutting blade alone without a holder or some type of attachment would not be classified in Chapter 82, HTSUS. Language contained in the EN’s for Chapter 82 further supports this analysis: This language is:
The Chapter also, however includes tools if the working part is of natural, synthetic or reconstructed precious or semi-precious stones (e.g., black diamonds) fitted onto a support of base metal, metal carbides or cermets; (emphasis added)
Thus, we conclude that in order to be classified in Chapter 82, a composite tool must include a working part with a holder or some other type of attachment. In this instance, the articles under consideration consist only of the PCD cutting tool insert without a holder or other attachment. In this case, the diamonds are brazed onto a carbide substrate. The PCD tool inserts are not excluded from heading 8207, HTSUS because the polycrystalline diamonds are brazed onto a carbide substrate. Tools of heading 8207 can have a working blade, edge, surface or other working part of polycrystalline diamond on a support of tungsten carbide as indicated by Chapter 82, Legal Note 1(c) as long as the working part is imported with the “base metal body”. The PCD inserts at issue here as well as the items ruled upon in HQ 958704 and HQ 958293 do not fall under heading 8207 because they lack the “base metal body”. Therefore, classification under Chapter 82 is precluded and Legal Note 3(k) to Chapter 71 does not apply.
Because the merchandise cannot be classified on the basis of GRI 1, we must consider classification of the PCDs based on the remaining GRI’s. The PCDs are finished goods, and thus they cannot be classified based on GRI 2. In accordance with GRI 3, the PCD are composite goods that are prima facie classifiable in the following headings:
2849: Carbides, whether or not chemically defined;
7116: Articles of precious or semiprecious stones (natural, synthetic or
reconstructed).
Each of these headings describes part only of the PCDs. There is no single heading that provides a specific description for these PCDs, in accordance with GRI 3(a). Therefore, we apply GRI 3(b). Under GRI 3(b), the PCDs are classified as if they consist of the material or the component that gives them their essential character, insofar as these criteria are applicable. The EN’s state the factors which determine the essential character will vary as between different kinds of goods. It may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods. In this case, the carbide provides the substrate on which the bonded diamond crystals are brazed. As in HQ 958704, the bulk and weight of the carbide is greater than the bonded diamond crystals. However, while cost or value information has not been provided, we were advised that the diamonds clearly predominate in value. More significantly, we pointed out in HQ 958293 and HQ 958704, that the synthetic crystalline diamonds provide the cutting surface of the core bit and cutting is the function of the article. Consequently, in those rulings, we concluded that the diamond surface imparts the essential character to the whole so that the PCDs must be classified as if they consist only of diamonds. Similarly, in this case, we find that the diamond surface imparts the essential character to the PCDs because it provides the cutting surface and cutting is the function of the PCDs. Based on the application of GRI 3(b), we conclude that the PCDs are classified in heading 7116, HTSUS.
You contend that NY J81909 is inconsistent with the position taken in a German classification ruling, which classified PCDs in heading 8207. As stated in T.D. 89-80, classification decisions of other administrations, while instructive, are not binding on the United States, as these rulings may have been subject to political realities or domestic regulations which are different from our own. Therefore, for the reasons previously stated, we affirm our decision that the PCDs in this case are classified in heading 7116, HTSUS.
HOLDING:
Under the authority of GRI 3(b), the PCDs tools are classified in subheading 7116.20.5000, HTSUS, as: “Articles of natural or cultured pearls, precious or semi-precious stones (natural, synthetic or reconstructed): Of precious or semiprecious stone (natural, synthetic or reconstructed): Other: Other” at the column one, general rate which is free. Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov.
EFFECT ON OTHER RULINGS
NY J81909, dated March 24, 2003, is affirmed.
Sincerely,
Myles B. Harmon , Director
Commercial Rulings Division