CLA-2 CO:R:CV:G 088116 JLV
District Director of Customs
40 South Gay Street
Baltimore, Maryland 21202
RE: Internal Advice 62/90; sheet bar; semifinished; primary
hot-rolling; rough appearance; flat-rolled; stainless;
continuous cast slab
Dear Mr. Beikirch:
In a memorandum of August 30, 1990, you forwarded a request
for internal advice that was submitted by counsel for Avesta,
Inc., New Castle, Indiana, concerning the classification of
certain hot-rolled stainless steel products. This ruling is our
decision on the classification issue.
FACTS:
The merchandise consists of flat-rolled stainless steel
products that have been hot-rolled from continuous cast slab.
The processing operations performed prior to importation are
described as follows: 1) continuous cast slab, measuring 50
inches wide and 5.5 to 8 inches thick as cast, is cut to
specified lengths, such as 98.5 inches; 2) the lengths of slab
are heated to approximately 2300oF; and 3) they are then
longitudinally hot-rolled (reduced) to thicknesses of 0.750 to
2.00 inches in such a manner that the width of the slabs becomes
the length. The hot-rolled products are called "sheet bars" and
are described as having "rough surfaces" and rounded ends and
rounded edges, and as having only been longitudinally rolled.
They are not rolled to any tolerances established by the importer
other than the approximate thickness, (e.g., one inch).
After importation, the sheet bar is cut, heated to hot
working temperature, hot-rolled to final gauges ranging from
0.187 to 1.00 inch, and edge worked. The plate or sheet products
are then annealed, shot blasted to remove scale, roller or roller
and stretcher flattened, cut to size, pickled, and ground.
ISSUE:
Are the hot-rolled stainless steel products considered to be
"semifinished products" and, therefore, classifiable as
semifinished products of stainless steel in subheading
7218.90.00, Harmonized Tariff Schedule of the United States
(HTSUSA), or are they "flat-rolled products" classifiable as
flat-rolled products of stainless steel, of a width of 600 mm or
more, not further worked than hot-rolled, not in coils, of a
thickness exceeding 10 mm, in subheading 7219.21.00, HTSUSA?
LAW AND ANALYSIS:
Legal note 1(ij), Chapter 72, HTSUSA, defines "semifinished
products" as follows:
1. In this chapter * * * the following
expressions have the meanings hereby
assigned to them:
* * * * *
(ij) Semifinished products
Continuous cast products of
solid section, whether or not
subjected to primary hot-rolling
[emphasis added]; and
Other products of solid section,
which have not been further
worked than subjected to primary
hot-rolling or rough shaped by
forging, including blanks for
angles, shapes or sections.
These products are not presented in
coils.
Semifinished products of stainless steel fall within heading
7218, HTSUSA.
Legal note 1(k), Chapter 72, HTSUSA, defines "flat-rolled
products," in pertinent part, as the following:
(k) Flat-rolled products
Rolled products of solid
rectangular (other than square)
cross section, which do not
conform to the definition at
(ij) above in the form of:
* * * * *
- straight lengths, which if of a
thickness less than 4.75 mm are of
a width measuring at least 10 times
the thickness or if of a thickness
of 4.75 mm or more are of a width
which exceeds 150 mm and measures
at least twice the thickness.
* * * * *
Flat-rolled products of stainless steel, of a width of 600 mm
or more, fall in heading 7219, HTSUSA.
The hot-rolled stainless steel is not in coils, measures
more than 10 mm in thickness and 600 mm in width, and has not
been further worked than hot-rolled. The definitions for
"semifinished" and "flat-rolled" do not define the terms
"primary hot-rolling" and "rolling" which are used to describe
the condition of the steel products that result from those
processes. The Explanatory Notes (EN) to the Harmonized
System, however, do provide some guidance for the construction
and scope of these terms. The EN to headings 7218 and 7219
refer to the EN found at headings 7207 and 7208, pages 991 to
995, Explanatory Notes to the Harmonized Commodity Description
and Coding System, Supp. 1 to 5 (1990), mutatis mutandis. The
EN to heading 7207 states the following:
* * * For purposes of this Note, the
expression "subjected to primary hot-
rolling" applies to products which have been
subjected to a rolling operation which has
given them a rough appearance.
The heading covers * * * sheet bars * *
* and all products obtained by continuous
casting.
(A) BLOOMS, BILLETS, ROUNDS, SLABS,
AND SHEET BARS
All these products are obtained by
hot-rolling or forging the ingots, puddled
bars or pilings classified in heading 72.06.
They are semi-finished products intended for
further hot-rolling or forging. They are
therefore not required to be made exactly to
size; the edges are not accurate and the
surfaces are often convex or concave and may
retain marks cause during the manufacturing
processes (e.g., roller marks).
* * * * *
Slabs and sheet bars are also
rectangular * * * in section * * * have
widths considerably greater than their
thicknesses, slabs being thicker than sheet
bars. Slabs are therefore usually re-rolled
to plates, while sheet bars are normally
used to produce sheets or strip. * * * With
regard to the distinction between slabs and
sheet bars and certain plates, see the
Explanatory Note to heading 72.08 below.
* * * * *
(D) SEMI-FINISHED PRODUCTS
OBTAINED BY CONTINUOUS CASTING
This group covers all semi-finished
products of iron or non-alloy steel, under
any form, obtained by continuous casting.
* * * * *
The references to the EN at heading 7208 refer to the
following EN:
This heading covers, inter alia, "wide
coils", "sheets" and "plates".
* * * * *
Certain "sheets" and "plates" may have
dimensions similar to those of slabs and
sheet bars. However, they can be
distinguished from slabs and sheet bars
since:
(1) They are most often cross-rolled
(longitudinally and transversely) and
sometimes oblique-rolled whereas slabs
and sheet bars are roughly rolled
longitudinally only (in the slabbing or
roughing mill).
(2) Their edges are normally sheared or
flame-cut and show traces of the
shears or flame whereas slabs and
sheet bars have round edges.
(3) Tolerances as to thickness and surface
defects are very strict whereas slabs
and sheet bars are not of uniform
thickness and show various surface
defects.
In summary, we conclude there are general principles which may
be drawn from these legal notes and EN. In this respect, the
following general principles may be considered in determining
whether certain hot-rolled steel products are semifinished or
flat-rolled: a primary hot-rolling is a rolling process that
(1) reduces the dimensions of an ingot or other primary form
or continuous cast product and (2) leaves the resulting
product with a rough appearance; a rough appearance (this term
is not the same as roughly shaped) is one that is identified
by convex or concave surfaces, presence of roller marks and
other surface defects, and lack of strict, uniform dimensional
tolerances (usually with reference to tolerances for
thickness, flatness, or cross-section); products which have
been subjected to a primary hot-rolling are usually intended
for further hot working and they do not meet the industry
tolerances (or comparable end-user dimensional requirements)
for flat-rolled products; and hot-rolled flat-rolled products
are rolled to tolerances which meet recognizable industry
standards or comparable end-user standards for hot-rolled
plate, sheet, wide coils, wide flats, and similar finished
products.
Applying these principles to the facts in issue, we
conclude that the imported stainless steel products are
semifinished products and classified as other semifinished
products of stainless steel in subheading 7218.90.00, HTSUSA.
Counsel and the importer claim that the hot-rolling performed
on the slab is a primary hot-rolling because it is used to
break down the slab to an intermediate product called "sheet
bar," which is a thinner, semifinished material that must be
processed by a secondary hot-rolling to make flat-rolled
products (plates or sheets). The imported products are said
to have a rough appearance which, according to counsel for the
importer, is used to describe "the appearance of the imported
sheet bars as those which have been 'hot-rolled' only, and
which have not been subject to the well-recognized finishing
operations." However, we note that, in the terms of the EN to
heading 7207, "rough appearance" is more specific and means
the following: the products are not rolled "exactly to size"
or, in other words, are not rolled to cross-sectional or other
dimensional tolerances required for flat-rolled products; the
surfaces may be convex or concave; and the surfaces may have
obvious roller marks or imperfections which require secondary
hot-working to produce flat-rolled products.
Counsel and importer state that the imported hot-rolled
products do not meet the industry standards for the close
tolerances (gauge) required for flat-rolled products (plate or
sheet). It is further stated that the imported hot-rolled
products are not rolled, pursuant to requirements established
by the importer or a specific end-user, to tolerances which
are comparable in accuracy to the industry standards for
flat-rolled products. There is no evidence in the file that
controverts these statements.
Semifinished products, such as sheet bar, are intended
for further hot-working. However, it is the condition of the
product at the time of importation that determines whether or
not it is that kind of steel product that is "intended for
further hot-working" and, therefore, classifiable as
semifinished steel products. Classification of semifinished
products is not an actual use determination. Therefore,
although the actual hot-rolling of a steel product after
importation may have some evidentiary value, it is neither
conclusive evidence that a steel product is a semifinished
product, nor is it conclusive evidence that a steel product is
not a flat-rolled product.
Our decision to classify the imported products as
semifinished stainless steel products is based on the
statements by counsel and the importer that the products were
not hot-rolled to either internal or industry specifications
which meet or satisfy the criteria for flat-rolled products
known as "hot-rolled plate." That is, the products are not
rolled with controls for gauge, edge, or surface condition
required for plate. The imported product requires further
hot-working in order to impart these features. It is on the
basis of these statements of fact presented by counsel and the
importer that we classify these hot-rolled products as
semifinished stainless steel. Any change in the facts as
presented (e.g., the existence of production standards for
dimensional tolerances equivalent to tolerances for flat-
rolled products) may result in a different conclusion.
We note that the fact that the imported product was not
surface finished (i.e., still had scale left after the primary
hot-rolling and subsequent cooling) and was not edge trimmed
(or similar edge control) is not the basis for our decision.
Plates may have a hot-rolled finish, which is described in
ASTM designation A 480/A480M, section 10.1.1, as "[s]cale not
removed, an intermediate finish." We also note that edge
trimming may be performed at any time to impart the edge
finished on a flat-rolled product, such as plate.
Regarding the applicability of voluntary restraint
agreement (VRA) certification requirements, as this program is
administered by the U.S. Department of Commerce, we recommend
that you contact the Office of Agreements Compliance,
International Trade Administration, U.S. Department of
Commerce, Washington, D.C., 20230, telephone (202) 377-3793,
for the VRA requirements applicable to the imported product.
HOLDING:
The stainless steel products have been reduced from
continuous cast slabs by a primary hot-rolling only and are
classified as semifinished stainless steel products in
subheading 7218.90.00, HTSUSA.
Sincerely,
Harvey B. Fox
Director, Office of
Regulations and Rulings