CLA-2 CO:R:C:M 950121 DWS
Mr. Kenneth G. Weigel
Baker & Hostetler
Washington Square, Suite 1100
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036
RE: Clad Plate Steel; Unfinished Parts of Pressure Vessels;
Reconsideration of NY 863800; 8419.90.90; 7326.90.90;
GRI 2(a); Avins Industrial Products Co. v. United States;
J.B. Henriques, Inc. v. United States; HQ 087047;
Additional U.S. Rule of Interpretation 1(c)
Dear Mr. Weigel:
This is in response to your letter of August 8, 1991,
requesting the reconsideration of NY 863800, dated June 26, 1991,
concerning the classification of clad plate steel under the
Harmonized Tariff Schedule of the United States Annotated
(HTSUSA).
FACTS:
The merchandise consists of clad plate steel that, it is
claimed, prior to importation, has been specifically cut to the
size and shape of parts of pressure vessels.
Pressure vessels are installed at refineries and chemical
plants, and are used to heat and pressurize liquids for chemical
reactions. A pressure vessel is a cylindrical article that is
closed on each end. The sides of a pressure vessel may be
parallel or tapered depending on its function. They may be
tapered for the different reactions which occur in certain places
within the vessel, depending on the vessel's end use.
You advise that the chemicals are preheated before
introduction into the pressure vessels. However, the chemical
reactions which occur within the pressure vessel do produce some
change in temperature. Also, you have stated that between 10 to
20 percent of the pressure vessels incorporate mechanical
stirrers.
Pressure vessels can be produced from forged rings or plate,
depending on their intended use. The base material of the clad
steel plate is carbon or alloy steel. The cladding material is
austenitic, ferritic stainless or nickel alloy steel. You point
out that clad steel plate is used to make pressure vessels
because the cladding provides corrosion resistance while the
carbon steel backing provides strength and reduces material cost.
After the clad plates are produced, they are cut to a
specific size and shape based upon the engineering drawings for a
particular fabricator's requirements concerning a specific
pressure vessel. The cutting is done by a computer controlled
gas or plasma torch at pressure vessel fabrication facilities.
You claim that once the plate is cut, it cannot be used for any
application other than as a part of a specific pressure vessel.
Once the plates have been cut, one side of the cut-to size
plate is chosen as the reference dimension and then is machined
to exact size as required by drawings. The other edges of the
plate are then machined to size based upon the reference side.
You claim that very tight tolerances are required because the
finished product cannot have gaps in the cladding.
Next, by milling to shape, the edges are prepared for
joining. This operation is done by a special machine created by
the manufacturer. You claim that this operation is significantly
more complex and costly than torch beveling of plate.
After the edge treatment, the cladding is then peeled back
from the edges of the plate. This process involves cutting away
the cladding and part of the backing. All the cladding must be
removed to permit proper welding of the carbon steel backing and
stainless steel cladding of the adjoining parts of a pressure
vessel. You claim that the peeling is extremely important
because it prevents corrosion by minimizing the dilution of the
cladding material at the weld joint.
Once the merchandise is imported into the United States, the
plate is put through a bending process, which involves the plate
passing through a roller. Except for the welding of the plate to
other parts, the bending is the last step in the process of
manufacturing a pressure vessel.
ISSUE:
Whether, under the HTSUS, the merchandise is classifiable as
clad plate steel material or as unfinished pressure vessel parts?
LAW AND ANALYSIS:
Classification of merchandise under the HTSUS is in
accordance with the General Rules of Interpretation (GRI's),
taken in order. GRI 1 provides that classification is determined
according to the terms of the headings and any relative section
or chapter notes.
NY 863800, dated June 26, 1991, classified the subject
merchandise under subheading 7210.90.10, HTSUS, which provides
for: "[f]lat-rolled products of iron or nonalloy steel, of a
width of 600mm or more, clad, plated or coated: [o]ther: [c]lad",
and under subheading 7212.60.00, HTSUS, which provides for:
"[f]lat-rolled products of iron or nonalloy steel, of a width of
less than 600mm, clad, plated or coated: [c]lad." One reason for
such a classification is the belief that the merchandise could be
used in the construction of other structures, such as storage
tanks and boilers.
You argue that NY 863800 is incorrect, and that the
merchandise is classifiable either under subheading 8419.90.90,
HTSUS, which provides for: "[m]achinery, plant or laboratory
equipment, whether or not electrically heated, for the treatment
of materials by a process involving a change of temperature such
as heating, cooking, roasting, distilling, rectifying,
sterilizing, pasteurizing, steaming, drying, evaporating,
vaporizing, condensing or cooling, other than machinery or plant
of a kind used for domestic purposes; instantaneous or storage
water heaters, nonelectric; parts thereof: [p]arts: [o]ther", or
under subheading 7326.90.90, HTSUS, which provides for: "[o]ther
articles of iron or steel: [o]ther: [o]ther: [o]ther: [o]ther."
In claiming that the merchandise constitutes unfinished
pressure vessel parts, your principal arguments are that the
merchandise "cannot be classified under Chapter 72 because the
pre-importation processing substantially advances them to the
point where it is no longer simply material, . . . , but has been
transformed into pressure vessel parts", and that "[t]o use the
pressure vessel parts as clad plate would be economically
impracticable."
GRI 2(a) provides that:
[a]ny reference in a heading to an article shall be taken to
include a reference to that article incomplete or
unfinished, provided that, as entered, the incomplete or
unfinished article has the essential character of the
complete or finished article. It shall also include a
reference to that article complete or finished (or falling
to be classified as complete or finished by virtue of this
rule), entered unassembled or disassembled.
Avins Industrial Products Co. v. United States, 72 Cust. Ct.
43 (1974) aff'd, 515 F.2d 782 (CCPA 1975), dealt with the
importation of antenna wire under the Tariff Schedules of the
United States (TSUS). The issue was whether the merchandise was
classifiable as wire material or whether it was so far advanced
in construction that it was classified as an unfinished part of a
radio antenna. The court held that the wire was not classifiable
as an unfinished part, but as wire material.
The court in Avins stated that "[t]he general rule is that a
thing may be classed as an unfinished article if in its imported
condition it has been so far advanced beyond the stage of
materials as to be dedicated to and commercially fit for use as
that article and is incapable of being made into more than one
article or class of articles." The court also provided that
"since as imported the merchandise had not been physically
deformed by having been bent, . . . , or otherwise committed to
shape, it would have been possible, by the modification of the
material requirements and type and extent of fabrication inhering
in other uses of Type 302 stainless steel wire, to make use in
some of those applications of wire of the same diameter and
lengths as the imported articles." (emphasis supplied). The
court finished by ruling, "[t]hus, the fact that the instant
merchandise has been cut to length and is in certain dimensions
making it particularly adaptable for use in producing radio
antennas does not take it out of the category wire and into that
of an unfinished part."
By adopting the court's reasoning in Avins, it is our
position that the clad steel plate has not been advanced beyond
the stage of materials and, consequently, is not an unfinished
part of a pressure vessel. Even though the plate has been cut,
shaped, bevelled, and peeled back, we find that it is not
"incapable of being made into more than one article or class of
articles." Even though you claim that it would be uneconomical
for the plate to be used as parts of furnaces or storage tanks,
we do not believe it to be unrealistic for such a use to occur.
As the court in Avins implies, because the plate has not been
bent, it would be possible, by the modification of material
requirements, for the plate to be used in other applications.
Just because the plate has been cut to certain dimensions making
it particularly adaptable for use in producing pressure vessels
does not make it an unfinished part.
You argue that the bending operation in the United States
after importation is a relatively simple one. We disagree. Once
the plate has been imported, it is placed into a rolling machine
where it can be bent to any number of degrees. You seem to base
the argument of its simplicity on the fact that its operation can
take place in the field. Simplicity of the operation depends on
the operation itself, not where it takes place. Before the
bending takes place, the merchandise is in the shape of steel
sheet. During the bending process, the plate can be bent to 120
degrees or to 360 degrees. It is our position that this
operation is rather substantial. When the plate is imported into
the United States, we find that it is in the middle of a complex
process to create pressure vessel parts. However, before the
bending process, the merchandise is simply clad plate steel.
In your February 21, 1992, submission, you cite a portion of
Avins which discusses the court's opinion in J.B. Henriques, Inc.
v. United States, 46 CCPA 54 (1958). The court stated in Avins
that "[i]n the Henriques case, rectangular pieces of acrylic
resin cut to specific sizes for use in making transparent lids
for ice cream dispensers were held to be partly finished articles
rather than sheets on the ground that they were not adapted for
any purpose other than making lids." You also note that the
Henriques court stated that "the imported pieces have no other
commercial use than in the making of lids, although it would be
possible to use them in making signs or other articles of
relatively small size." The court went on by stating that
"[w]hile it would be possible to use them in making small
articles, there would be no object in using them for that
purpose, since they are more expensive, per unit of area, than
standard sheets and are no better adapted than such sheets for
the making of small articles."
It is our position that the merchandise involved in
Henriques is distinguishable from the subject clad plate steel.
Unlike the transparent lids in Henriques, the clad plate steel
can be adapted for other commercial purposes. It has already
been noted that before the bending operation takes place, the
subject plate can be used in the construction of furnaces,
boilers, and storage tanks. You claim that these uses may be
more expensive and the plate may be thicker than required for
such uses.
Additional U.S. Rule of Interpretation 1(c), HTSUS, states
that:
a provision for parts of an article covers products solely
or principally used as a part of such articles but a
provision for "parts" or "parts and accessories" shall not
prevail over a specific provision for such part or
accessory.
Even though you argue that the subject plate is ill-suited
for any use other than as pressure vessel parts, under Additional
U.S Rule of Interpretation 1(c), HTSUS, the clad plate steel is
specifically classifiable under subheadings 7210.90.10 and
7212.60.00, HTSUS, and, consequently, cannot be classifiable as
"parts".
HQ 087047, dated May 14, 1990, dealt with the classification
of circular steel blanks, which, after importation, were to be
processed into torque converter covers. In that ruling, it was
held that, even though the blanks were cut and shaped to precise
diameter requirements, they did not possess the essential
character of torque converter covers. It was stated that "[t]he
fact that these steel circles may, in all instances, be used only
to make torque converter covers is not legally dispositive as to
their essential character. There is no evidence that the circles
in issue here are incapable of being made into other articles
requiring the same grade of steel. Despite taking less than a
minute to complete, the post-importation processing necessary to
make finished torque converter covers, involving multiple draws
through different dies, is substantial."
As with the torque converter covers in HQ 087047, the fact
that the clad plate steel may be used to make pressure vessel
parts is not legally dispositive as to their essential character.
Similar to the wire in Avins, the clad plate steel is not
"incapable of being made into more than one article or class of
articles." Again, it is our position that the bending operation
which takes place after importation is substantial.
Because it is your argument that the subject merchandise
constitutes unfinished parts of pressure vessels, you cite the
Harmonized Commodity Description and Coding System Explanatory
Notes in favor of excluding the merchandise from chapter 72,
HTSUS. The Explanatory Notes, although not dispositive, are to
be used to determine the proper interpretation of the HTSUS. 54
Fed. Reg. 35127, 35128 (August 23, 1989). In part, Explanatory
Note (C) to Section XV (p. 973), HTSUS, provides that "[i]n
general, identifiable parts of articles are classified as such
parts in their appropriate headings in the Nomenclature."
We find that the clad plate steel is not excluded from
chapter 72, HTSUS, because it is our position that the
merchandise does not constitute identifiable, unfinished parts of
pressure vessels.
HOLDING:
The subject clad plate steel is classifiable under
subheadings 7210.90.10 or 7212.60.00, HTSUS, depending on size.
NY 863800 is affirmed in full.
Sincerely,
John Durant, Director
Commercial Rulings Division