CLA-2 CO:R:C:M 956597 DWS
Ms. Gail T. Cumins
Sharretts, Paley, Carter & Blauvelt, P.C.
Sixty-seven Broad Street
New York, NY 10004
RE: Nickel-Cadmium Storage Batteries; Rolls of Nickel-Plated,
Perforated Steel Sheet For Use in Batteries; Heading 7210;
Impregnation and Alkali Treatments; Battery Parts;
8507.90.80; HQs 955346, 955947, 952938, 084610, and 081606;
NAFTA; Article 509; General Notes 12(b)(i) and (ii)(A), and
12(t)/85.13(A); Change in Tariff Classification
Dear Ms. Cumins:
This is in response to your letter of February 16, 1994, on
behalf of Sanyo Energy (USA) Corporation (SEC), to the Area
Director of Customs, New York Seaport, concerning the applicability
of the North American Free Trade Agreement (NAFTA) and
classification of rolls of nickel-plated, perforated steel sheet
and nickel-cadmium storage batteries under the Harmonized Tariff
Schedule of the United States (HTSUS). Your letter was referred
to this office for a response.
FACTS:
The merchandise consists of rolls of nickel-plated, perforated
steel sheet which has been surface treated with chemicals. These
rolls range from 400 to 500 meters (1300 to 1600 feet) in length
and from 70 to 80 centimeters (2.3 to 2.6 feet) in width. The
fully processed rolls will be imported into Mexico from a country
other than the U.S., Canada, or Mexico, for use in the production
of positive and negative plates for nickel-cadmium storage
batteries. After importation into Mexico, the rolls will be cut
into strips approximately 1 1/4 inches in width. The narrow strips
will then be cut into lengths of approximately 6 1/2 inches. These
metal pieces will then be placed into the battery can along with
the other components necessary to complete the battery. The
completed nickel-cadmium storage batteries will be imported into
the U.S.
The subheadings under consideration are as follows:
8507.90.80: [e]lectric storage batteries, including
separators therefor, whether or not rectangular
(including square); parts thereof: [p]arts:
[o]ther.
The general, column one rate of duty for goods classifiable
under this provision is 5.1 percent ad valorem.
8507.30.80: [n]ickel-cadmium storage batteries: [o]ther.
The general, column one rate of duty for goods classifiable
under this provision is 5.1 percent ad valorem.
7326.90.90: [o]ther articles of iron or steel: [o]ther:
[o]ther: [o]ther: [o]ther.
The general, column one rate of duty for goods classifiable
under this provision is 5.7 percent ad valorem.
ISSUES:
Whether the rolls of nickel-plated, perforated steel sheet
are classifiable under subheading 8507.90.80, HTSUS, as parts of
electric storage batteries, or under subheading 7326.90.90, HTSUS,
as other articles of steel.
Whether the nickel-cadmium storage batteries are eligible for
preferential treatment under the NAFTA.
LAW AND ANALYSIS:
CLASSIFICATION
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.
As noted, nickel-cadmium storage batteries are specifically
provided for under subheading 8507.30.80, HTSUS. Accordingly, upon
importation into the U.S. from Mexico, the completed batteries will
be classifiable under this provision.
In HQ 955346, dated February 9, 1994, which concerned the
classification of coils of stainless steel curved wire designed
for the manufacture of piston rings for automobile engines, we
stated that:
[u]nder a longstanding Customs principle, goods which are
material when entered are not classifiable as a particular
article unfinished. See Sandvik Steel, Inc. v. U.S.,
321 F.Supp. 1031, 66 Cust. Ct. 12, C.D. 4161 (1971) (shoe
die knife steel in coils and cutting rules in lengths,
without demarcations for cutting or bending, held to be
material rather than unfinished knives or cutting blades);
The Harding Co. v. U.S., 23 Cust. Ct. 250 (1936) (rolls of
brake lining held to be material because the identity of
the brake lining was not fixed with certainty); Naftone,
Inc. v. U.S., 67 Cust. Ct. 340, C.D. 4294 (1971) (rolls of
plastic film without demarcations for cutting despite
having only one use held to be insulating material).
See also HQ 955947, dated July 18, 1994, HQ 952938, dated
August 4, 1993, and HQ 084610, dated May 17, 1990.
Even though the merchandise has been processed prior to
importation into Mexico, because the rolls of nickel-plated,
perforated steel sheet are imported in material lengths without
demarcations for cutting, it is our position that they cannot be
classifiable under subheading 8507.90.80, HTSUS, as parts of
electric storage batteries.
In HQ 081606, dated August 10, 1988, we held that similar
rolls of nickel-plated, perforated steel sheet strip, to be further
processed, for use as positive and negative grids in rechargeable
nickel-cadmium storage batteries, were classifiable under
subheading 7326.90.90, HTSUS, as other articles of steel. It is
our position that the subject merchandise is also classifiable
under subheading 7326.90.90, HTSUS.
Consideration was given to classification of the merchandise
under heading 7210, HTSUS, which provides for: "[f]lat-rolled
products of iron or nonalloy steel, of a width of 600 mm or more,
clad, plated or coated." However, as noted, it has been surface
finish treated. Harmonized Commodity Description and Coding System
Explanatory Note 72.10 and General Explanatory Note (IV)(C)(2)
provide that heading 7210, HTSUS, includes products which have been
clad, plated, or coated as specifically described. It does not
include surface treatment with chemical compounds as a coating
process. Therefore, it is our position that heading 7210, HTSUS,
does not describe the subject merchandise.
NAFTA APPLICABILITY
To be eligible for tariff preferences under the NAFTA, goods
must be "originating goods" within the rules of origin in general
note 12(b), HTSUS. General notes 12(b)(i) and (ii)(A), HTSUS,
state:
[f]or the purposes of this note, goods imported into the
customs territory of the United States are eligible for the
tariff treatment and quantitative limitations set forth in
the tariff schedule as "goods originating in the territory
of a NAFTA party" only if --
(i) they are goods wholly obtained or produced entirely in
the territory of Canada, Mexico and/or the United
States; or
(ii) they have been transformed in the territory of Canada,
Mexico and/or the United States so that --
(A) except as provided in subdivision (f) of this note,
each of the non-originating materials used in the
production of such goods undergoes a change in
tariff classification described in subdivisions (r),
(s) and (t) of this note or the rules set forth
therein . . .
The batteries contain the metal pieces which are cut from the
rolls of nickel-plated, perforated steel sheet imported into Mexico
from a non-NAFTA country. Therefore, because the batteries contain
goods from a country other than Mexico, Canada, and/or the U.S.,
general note 12(b)(i), HTSUS, does not apply. Consequently, we
must resort to general note 12(b)(ii)(A), HTSUS.
Because the completed nickel-cadmium storage batteries are
specifically provided for under subheading 8507.30.80, HTSUS, a
transformation is evident when a change in tariff classification
occurs which is authorized by general note 12(t)/85.13(A), HTSUS,
which states:
[a] change to subheadings 8507.10 through 8507.80 from any
other heading.
Therefore, any non-originating materials in the subject
nickel-cadmium storage batteries must come from a heading other
than subheadings 8507.10, HTSUS, through 8507.80, HTSUS. As
previously stated, the non-originating rolls of nickel-plated,
perforated steel sheet are classifiable under subheading
7326.90.90, HTSUS, as other articles of steel.
Consequently, a change in tariff classification does occur,
and the nickel-cadmium storage batteries, containing metal pieces
cut from rolls of nickel-plated, perforated steel sheet from a non-
NAFTA country, are eligible for preferential treatment under the
NAFTA.
HOLDING:
The rolls of nickel-plated, perforated steel sheet are
classifiable under subheading 7326.90.90, HTSUS, as other articles
of steel.
The nickel-cadmium storage batteries are classifiable under
subheading 8507.30.80, HTSUS, and are eligible for preferential
treatment under the NAFTA.
Sincerely,
John Durant, Director