CLA-2 CO:R:C:M 955718 KCC
District Director
U.S. Customs Service
511 N.W. Broadway
Portland, Oregon 97209
RE: Protest 2704-93-100094; graphite cathode blocks; Note 1, and
Additional U.S. Note 1, Chapter 69; ceramic; substantially
crystalline; Eastalco Aluminum Co. v. United States; used to
line electrical furnaces; refractory brick; 8545.90.40; used
for electrical purposes; Additional U.S. Rule of
Interpretation 1(a); principal use
Dear District Director:
This pertains to Protest 2704-93-100094, concerning the
tariff classification of graphite cathode blocks under the
Harmonized Tariff Schedule of the United States (HTSUS).
Information presented in additional submissions dated June 9,
October 5, 1993, January 21, and June 9, 1994, and at a meeting
on May 2, 1994, were considered in rendering this decision.
FACTS:
The articles under consideration are graphite cathode
blocks, also known as "bottom blocks", which are used to line the
bottom of aluminum reduction furnaces known as "cells" or "pots".
The graphite cathode blocks are made from petroleum coke and
pitch which is formed into blocks and then baked. They are also
subjected to a second furnacing operation, known as
"graphitization", whereby the blocks are heated to temperatures
of 2500 degrees Celsius for an extended period of time. The
protestant states that the graphite cathode blocks contain
electrical characteristics similar to the carbon blocks in
Eastalco Aluminum Co. v. United States, 10 CIT 622 (1986), and
function in exactly the same manner as those carbon blocks in
that they act as a cathode for the initial start-up phase (12 to
24 hours), after which the molten aluminum pad becomes the
cathode.
The entries of the graphite cathode blocks were liquidated
on February 5, and 12, 1993, under subheading 8545.90.40, HTSUS,
as other articles of graphite or other carbon, of a kind used for
electrical purposes. In a protest timely filed on April 29,
1993, the protestant contends that the graphite cathode blocks
are provided for under subheading 6902.90.10, HTSUS, as other
refractory bricks, or, alternatively, under subheading
8514.90.00, HTSUS, as parts of industrial or laboratory electric
furnaces and ovens.
The competing subheadings are as follows:
6902.90.10 Refractory bricks, blocks, tiles, and similar
refractory ceramic constructional goods, other
than those of siliceous fossil meals or similar
siliceous earths...Other...Bricks....
8514.90.00 Industrial or laboratory electric (including
induction or dielectric) furnaces and ovens; other
industrial or laboratory induction or dielectric
heating equipment; parts thereof...Parts.
8545.90.40 Carbon electrodes, carbon brushes, lamp carbons,
battery carbons and other articles of graphite or
other carbon, with or without metal, of a kind
used for electrical purposes...Other...Other.
ISSUE:
Are the graphite cathode blocks classified under subheading
6902.90.10, HTSUS, as other refractory bricks, or subheading
8514.90.00, HTSUS, as parts of industrial or laboratory electric
furnaces and ovens, or subheading 8545.90.40, HTSUS, as other
articles of graphite or other carbon, of a kind used for
electrical purposes.
LAW AND ANALYSIS:
The classification of merchandise under the HTSUS is
governed by the General Rules of Interpretation (GRIs). GRI 1,
HTSUS, 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...."
To be classified under subheading 6902.90.10, HTSUS, the
graphite cathode blocks must meet the definition of ceramic in
Note 1, and Additional U.S. Note 1(a), HTSUS. Note 1, Chapter
69, HTSUS, states that chapter 69, HTSUS, "...applies only to
ceramic products which have been fired after shaping."
Additional U.S. Note 1(a), Chapter 69, HTSUS, states that:
For the purposes of this chapter, a "ceramic article" is a
shaped article having a glazed or unglazed body of
crystalline or substantially crystalline structure, the body
of which is composed essentially of inorganic nonmetallic
substances and is formed and subsequently hardened by such
heat treatment that the body, if reheated to pyrometric cone
020, would not become more dense, harder, or less porous,
but does not include any glass articles (emphasis in
original).
The issue of "substantially crystalline" in regards to the
tariff classification of carbon blocks has been addressed by the
U.S. Court of International Trade in Eastalco Aluminum Co. v.
United States, 10 CIT 622 (1986) ("Eastalco I"). The articles
involved in Eastalco I were side and bottom carbon blocks used to
line an aluminum reduction cell in which aluminum was produced
through an electrolytic process. The carbon blocks were designed
to withstand extreme stress, heat, and corrosion during the
production of aluminum. For a period of 12 to 24 hours during
the start-up phase of the cell, the carbon bottom blocks act as a
cathode. Cathodic action is necessary for proper start-up and to
ensure the longevity of the cell. After the start-up phase and
after molten aluminum is added, a molten aluminum pad becomes the
cathode. For the duration of the life of the cell, approximately
1500 days, the carbon bottom blocks continue to function in their
refractory capacity. The carbon corner and side blocks do not
function cathodically except in an incidental manner or under
abnormal conditions.
The subject merchandise of Eastalco I was classified by
Customs in item 517.61, Tariff Schedules of the United States
(TSUS), as electrodes in part of carbon or graphite, for electric
furnace or electrolytic purposes and was claimed classifiable by
Eastalco in item 531.27, TSUS, as refractory brick. The
Government counterclaimed for classification in item 517.91,
TSUS, as articles not specifically provided for, of carbon or
graphite, or in item 535.14, TSUS, as other ceramic electrical
ware.
The Court held that the carbon blocks were not eo nomine or
chief use electrodes in part of carbon or graphite, for electric
furnace or electrolytic purposes classifiable in item 517.61,
TSUS. The Court found that the side carbon blocks were not
intended to be used as electrodes and that both the side and
bottom carbon blocks had a vital use as heat insulators and
refractories which extended for their entire lives.
Additionally, the Court found that the bottom carbon blocks' heat
insulating and refractory functions were longer lasting than the
electrode function. The carbon bottom blocks acted as an
electrode for only 12 to 24 hours, i.e., less than 1% of the
cell's life, given the average cell-life of 1500 days. The Court
then concluded that the carbon blocks had not been shown to be
classifiable as refractory brick in item 531.27, TSUS, and
remanded the matter to Customs for further consideration.
In Eastalco Aluminum Co. v. United States, 13 CIT 864, 726
F. Supp. 1342 (CIT 1989) ("Eastalco II"), the Court stated that
Customs had been instructed to address two issues:
1. whether the electrical conductivity and resistivity of the
bottom block made it something other than refractory brick,
item 531.27, TSUS....
2. whether the bottom and side blocks are "ceramic articles."
On remand, Customs classified the carbon blocks in item 517.91,
TSUS, as articles not specifically provided for, of carbon or
graphite.
The principal issue as to whether the bottom and side blocks
were ceramic articles dealt with whether the articles were
"substantially crystalline." After hearing evidence from both
parties, the Court determined that the "substantially
crystalline" arguments presented were equipoise. "Plaintiff's
expert witness had testified to the effect that the block was
more than 50 percent crystalline. Defendant's expert witness had
indicated that it was less than 50 percent crystalline."
Eastalco II at 865. However, the testimony did indicate that
quantitative testing could be established. A testing method was
agreed upon by both parties, implemented and the Court stated:
At the risk of oversimplication, the court believes the
quantitative test reveals that the block has substantially
less than fifty percent crystalline content.
Id.
The Plaintiff argued that the 50 percent standard was not
the appropriate gauge of substantial crystallinity. However, the
Court stated that:
While fifty percent may not be the appropriate dividing line
on the issue of what constitutes substantial crystallinity,
as that term is used in the tariff schedules, the
quantitative test has shown that a very low level of
crystallinity is involved and that plaintiff's witness'
earlier evaluation was not as accurate as that of
defendant's expert.
Id.
The Court concluded that the carbon blocks did not meet the
definition of ceramic and, therefore, could not be classified as
refractory brick in item 531.27, TSUS. The carbon blocks were,
therefore, classified in item 517.91, TSUS, as articles not
specifically provided for, of carbon or graphite. Additionally,
we note that as to the first remand issue, the Court stated in a
footnote that:
This issue need not be resolved finally because of the
court's finding on the second issue, although the court was
of the opinion after hearing further evidence that the
electrical properties, by themselves, did not make the
refractory brick designation inappropriate.
Id.
In affirming the CIT in Eastalco II, the Court in Eastalco
Aluminum Co. v. United States, 916 F.2d 1568 (Fed. Cir. 1990)
("Eastalco III"), noted that the test results of the carbon block
in Eastalco II indicated a crystalline content of 5 percent (plus
or minus 1 percent). Eastalco contended that the CIT erred in
concluding that "substantially crystalline" referred to a
quantitative crystalline content. Eastalco maintained instead
that the words "substantially crystalline" only require that the
blocks have acquired some crystalline carbon ordering.
The Court rejected this argument and affirmed the CIT's
finding that the test of whether a material is "substantially
crystalline" is a quantitative one. In resolving this issue, the
Court referred to the legislative history involving ceramic
articles. The Court noted that Congress limited ceramic articles
to items that were substantially crystalline and excluded certain
silica-derived substances. The dividing line as expressly stated
in the legislative history is "whether they have 'small
quantities' or 'sufficient amounts' of crystalline structure, the
adverbial adjective, 'substantially,' was meant to import a
quantitative limitation." Eastalco III at 1571. Furthermore,
the Court stated that the legislative history indicates that the
amount envisioned for a ceramic article was to exceed trivial
percentages such as that found in opalescent glass. Therefore,
the Court stated that since the uncontested evidence indicates
that the carbon blocks have at most a 6 percent crystalline
content, they are not "substantially crystalline" and cannot be
classified as a refractory brick in item 531.27, TSUS.
Congress has indicated that earlier tariff decisions must
not be disregarded in applying the HTSUS. The conference report
to the Omnibus Trade Bill of 1988, stated that "on a case-by-case
basis prior decisions should be considered instructive in
interpreting the HTS[US], particularly where the nomenclature
previously interpreted in those decisions remain unchanged and no
dissimilar interpretation is required by the text of the
HTS[US]." H. Rep. No. 100-576, 100th cong., 2d Sess. 548, 550
(1988). Since the subject articles at issue in the Eastalco
cases and the instant case are similar, if not identical, and the
nomenclature of the TSUS and HTSUS is similar, we find that the
Eastalco cases are instructive.
In order for the graphite cathode blocks to be classified
under subheading 6902.90.00, HTSUS, they must be "substantially
crystalline." The Courts in Eastalco II and Eastalco III
determined that a low amount of crystalline content, i.e., 6%,
was not enough to meet the requirement of "substantially
crystalline." We are of the opinion that none of the Courts in
the Eastalco cases determined the exact percentage of
crystallinity necessary for an article to meet the definition of
"ceramic" for tariff classification purposes. The only comments
made regarding this issue are found in Eastalco II at 865:
While fifty percent may not be the appropriate dividing line
on the issue of what constitutes substantial crystallinity,
as that term is used in the tariff schedules, the
quantitative test has shown that a very low level of
crystallinity is involved and that plaintiff's witness'
earlier evaluation was not as accurate as that of
defendant's expert.
At the risk of oversimplication, the court believes the
quantitative test reveals that the block has substantially
less than fifty percent crystalline content.
While the Court mentions a 50% figure, this percentage figure was
introduced by the parties to the case. We are of the opinion
that the Courts reference to 50% in Eastalco II is mere dictum as
it was not necessary for the Court to address the 50% bench mark
in rendering its final classification decision.
The Eastalco II Court did find that defendant's expert was
more accurate in its evaluation of the carbon block. An
examination of the "DIRECT TESTIMONY of DR. VERNON BURDICK",
defendant's witness, who was called to give his opinion on
ceramics, reveals that he recommends "[s]eventy or more percent
crystallinity in ceramics is required in order that the ceramic
articles attain the desired properties of high mechanical,
thermal and chemical integrity that they are known for." Id at
4. Once again, we note that none of the Eastalco Courts adopted
the 70% figure presented by the defendant.
Additionally, we note that protestant's counsel has
submitted a statement from Dr. Peter Thrower, who was the expert
selected by both the plaintiff and defendant in Eastalco II to
perform the agreed upon testing procedure. Dr. Thrower opines
that a "substantially crystalline" standard of 70% or more is
indefensible. He states that:
There is no doubt in his mind that a lower limit for
"substantially crystalline" should be adopted....
The Eastalco cases did not determine the exact percentage of
crystallinity necessary for an article to meet the definition of
"ceramic" and varying evidence has been submitted as to what is
considered the proper percentage for an article to be
"substantially crystalline." The Eastalco cases merely
determined that the subject blocks, which were at the most 6%
crystalline, were not "substantially crystalline" for tariff
classification purposes.
The crystalline content of the graphite cathode blocks in
this case is considerably different than the Eastalco blocks.
Customs Laboratory Report 8-93-20950-001 dated September 2, 1993,
examined the crystallinity of the subject graphite cathode blocks
pursuant to the testing method established and agreed upon by the
parties in Eastalco II. The analysis states that:
[T]his sample indicates that it is carbon (graphite) that is
over 50% but less than 70% crystalline.
As the subject graphite cathode blocks are between 50% and
70% crystalline, they are not to be classified as the blocks were
in the Eastalco cases. Based on the information before this
office, we are of the opinion that the graphite cathode blocks
are "substantially crystalline" and, therefore, meet the
definition of a ceramic article and are classifiable within
Chapter 69, HTSUS.
Furthermore, we are of the opinion that the graphite cathode
blocks are classified under subheading 6902.90.10, HTSUS, as
other refractory brick. The protestant states that like the
blocks in the Eastalco cases, the graphite cathode blocks at
issue have an initial electrical use. For a short period of time
during the start-up phase of the cell, the graphite cathode
blocks act as a cathode. After the start-up phase and after
molten aluminum is added, a molten aluminum pad becomes the
cathode. For the duration of the life of the furnace or cell,
the graphite cathode blocks function primarily in their
refractory capacity.
As found in the Eastalco cases, we believe that the graphite
cathode blocks are not classifiable under subheading 8545.90.40,
HTSUS, as other articles of graphite or other carbon, of a kind
used for electrical purposes. The language "of a kind used for
electrical purposes" indicates that heading 8545, HTSUS, is a use
provision. Additional U.S. Rule of Interpretation 1(a), HTSUS,
states that:
[A] tariff classification controlled by use (other than
actual use) is to be determined in accordance with the use
in the United States at, or immediately prior to, the date
of importation, of goods of that class or kind to which the
imported goods belong, and the controlling use is the
principal use.
We note that the graphite cathode blocks have electrical
properties. See, "DIRECT TESTIMONY of DR. VERNON BURDICK" (pgs.
10-11), and Aluminum, McGraw-Hill Encyclopedia of Science and
Technology, Vol. 1, pgs. 418-419. However, we are of the opinion
that the graphite cathode blocks are not principally used for
electrical purposes. They are used for electrical purposes
during the short start-up period of the furnace or cell.
Thereafter and for the greater period of their useful life, they
serve predominately as a refractory article. This conclusion is
supported by the Court in Eastalco II which stated that the
"...electrical properties, by themselves, did not make the
refractory brick designation inappropriate." Therefore, as the
graphite cathode blocks are not principally used for electrical
purposes, they are not classified under subheading 8545.90.40,
HTSUS.
HOLDING:
The graphite cathode blocks are classified under classified
under subheading 6902.90.10, HTSUS, as other refractory bricks.
The protest should be GRANTED. In accordance with Section
3A(11)(b) of Customs Directive 099 3550-065, dated August 4,
1993, Subject: Revised Protest Directive, this decision should
be mailed by your office to the protestant no later than 60 days
from the date of this letter. Any reliquidation of the entry in
accordance with the decision must be accomplished prior to
mailing the decision. Sixty days from the date of the decision
the Office of Regulations and Rulings will take steps to make the
decision available to customs personnel via the Customs Rulings
Module in ACS and the public via the Diskette Subscription
Service, Freedom of Information Act and other public access
channels.
Sincerely,
John Durant, Director
Commercial Rulings Division