CLA-2 RR:CR:GC 960671 DWS
Assistant Manager, Traffic & Administration
Pechiney World Trade (U.S.A.), Inc.
500 Plaza Drive
Secaucus, NJ 07096
RE: Reconsideration of NY 877860; Anthracite/Graphite Composite
and Graphitic
Cathode Blocks; Chapter 69, Additional U.S. Note 1;
Substantially Crystalline;
Eastalco Aluminum v. U.S. (Eastalco I, II, and III);
955718; 8545.90.40
Dear Sir/Madam:
On May 5, 1993, Customs issued NY 877860 to Pechiney World
Trade (U.S.A.) Inc., concerning the classification of certain
anthracite/graphite composite and graphitic cathode blocks under
the Harmonized Tariff Schedule of the United States (HTSUS). We
have since had reason to reconsider the holding in NY 877860, and
this letter contains our review of that decision.
Pursuant to 625(c)(1), Tariff Act of 1930 [19 U.S.C.
1625(c)(1)], as amended by section 623 of Title VI (Customs
Modernization) of the North American Free Trade Agreement
Implementation Act, Pub.L. 103-82, 107 Stat. 2057, 2186 (1993),
notice of the proposed modification of NY 877860 was published on
September 24, 1997, in the CUSTOMS BULLETIN, Volume 31, Number
39. The only comment received in response to the notice
concerned the testing procedure used to ascertain the proper
percentage of crystallinity in the samples.
FACTS:
The merchandise which was the subject of NY 877860 consists
of cathode blocks (style nos. HC3, HC5, and HC10) made of
anthracite/graphite composites and graphite. Representative
sizes of the cathode blocks are as follows: 20 in. x 18 in. x 115
in.; 15 in. x 26 in. x 80 in.; and 14 in. x 18 in. x 30 in. The
blocks are used to line the bottom of an aluminum reduction cell
which produces aluminum metal by electrolysis. Samples of the
blocks were forwarded to the U.S. Customs Laboratory, and it was
determined that the subject three styles had the following
percentages of crystalline composition: HC3 - 52.9% anthracite/graphite; HC5 -
63.3% anthracite/graphite; and HC10 - 93.8% graphite.
ISSUE:
Whether the cathode blocks meet the term "substantially
crystalline" for tariff purposes and are classifiable under
subheading 6902.90.10, HTSUS, as other refractory bricks, or
under subheading 8545.90.40, HTSUS, as other articles of graphite
or other carbon, with or without metal, of a kind used for
electrical purposes.
LAW AND ANALYSIS:
Classification of merchandise under the HTSUS is in
accordance with the General Rules of Interpretation (GRI's). GRI
1 provides that classification is determined according to the
terms of the headings and any relative section or chapter notes.
The subheadings under consideration are as follows:
6902.90.10: [r]efractory bricks, blocks, tiles and similar
refractory ceramic
constructional goods, other than those of
siliceous fossil meals or
similar siliceous earths: [o]ther: [b]ricks.
Goods classifiable under this provision receive duty-free
treatment.
8545.90.40: [c]arbon 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: [o]ther:
[o]ther.
The general, column one rate of duty for goods classifiable
under this provision
is 2 percent ad valorem.
Chapter 69, additional U.S. note 1, HTSUS, states that:
[f]or 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.
Thus, if a cathode block does not possess a substantially
crystalline structure, it is not a ceramic article and is
precluded from classification in chapter 69, HTSUS. In NY
877860, Customs adopted the standard of "70 percent or more
crystalline material present" in a cathode block to meet the
definition of "substantially crystalline". Because HC10 was the
only block to meet that standard (93.8%), it was classifiable
under subheading 6902.90.10, HTSUS, and HC3 and HC5 were held to
be classifiable under subheading 8545.90.40, HTSUS.
The three relevant court cases dealing with the
classification of cathode blocks are as follows: Eastalco
Aluminum Co. v. U.S., 10 CIT 622 (1986) (Eastalco I), Eastalco
Aluminum Co. v. U.S., 13 CIT 864 (1989) (Eastalco II), and
Eastalco Aluminum Co. v. U.S., 916 F.2d 1568 (1990) (Eastalco
III). See HQ 955718, dated October 4, 1994, for an overview of
Eastalco I, II, and III.
The standard set in NY 877860 was adopted from Eastalco II,
which was cited in the ruling letter. However, such a standard
was taken from testimony in the case and was not part of the
holding in Eastalco II. Therefore, that standard should not be
determinative as to what meets the "substantially crystalline"
test.
In Eastalco III , the merchandise at issue was carbon blocks
used to line an aluminum reduction cell, and the blocks had a
crystalline content of 5%, more or less 1%. The Court did not
establish a standard defining "substantially crystalline" but did
state that:
[i]n light of the uncontested evidence that the blocks in
question have at most a
crystalline content of 6% and the admission by Eastalco's
expert that this percentage of crystallinity is inconsistent
with being labeled "substantially crystalline" in the trade, we
cannot find that the court erred . . .
Therefore, even though the Court did not establish a
standard, they held that a block having a crystalline content of
6% could not qualify as being "substantially crystalline" for
tariff classification purposes.
In HQ 955718, Customs ruled on merchandise which consisted
of graphite cathode blocks with a crystalline content between 50%
and 70%. In holding that the blocks qualified as "substantially
crystalline", we stated that:
[t]he 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. . . 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.
In HQ 955718, we did not set a standard 50% or above of
crystalline content. We merely determined that the merchandise,
which had a crystalline content of between 50% and 70%, was
distinguishable from the merchandise in the Eastalco cases and
qualified as "substantially crystalline".
In Eastalco III, we note that the Court also stated that:
[t]he definition of "ceramic articles" specifically excludes
any glass article from its
scope. The primary distinction between the ceramic articles
. . . and glass
articles . . . is that glass is essentially noncrystalline
in structure whereas ceramic ware is essentially
crystalline.
Therefore, the purpose of the term "substantially
crystalline" is to preclude glass from classification in chapter
69, HTSUS.
As the standard in NY 877860 was wrongly applied, and
because no other Customs ruling or court case sets a standard for
determining what is "substantially crystalline", we must make a
decision concerning the application of the term "substantially
crystalline". Obviously, because each piece of merchandise may
have differing percentages of crystallinity, classification of
such products must be decided on a case-by-case basis. For
review, the Court in Eastalco III stated that crystallinity of 6%
or less is not substantial but did not decide on percentages any
higher than 6%, and we have held in HQ 955718 that graphite
cathode block with a crystalline content of at least 50% met the
"substantial crystalline" test. Therefore, it is our position
that cathode block with a crystalline content of 6% percent and
under does not meet the "substantially crystalline" test, and
cathode block with a crystalline content of 50% or above does
meet the "substantially crystalline" test. Classification of
cathode block with a crystalline content between 6% and 50% will
have to be dealt with on a case-by-case basis utilizing
laboratory reports, etc. Such a guideline should be used unless
a court rules differently.
Therefore, because styles HC3 and HC5 possess crystallinity
percentages above 50%, they are described under subheading
6902.90.10, HTSUS, with style HC10.
We must now determine whether carbon cathode blocks which
are used for lining aluminum reduction cells are described under
subheading 8545.90.40, HTSUS, as other articles of carbon.
In understanding the language of the HTSUS, the Harmonized
Commodity Description and Coding System Explanatory Notes may be
utilized. The Explanatory Notes, although not dispositive or
legally binding, provide a commentary on the scope of each
heading of the HTSUS, and are generally indicative of the proper
interpretation of these headings. See T.D. 89-80, 54 Fed. Reg.
35127, 35128 (August 23, 1989). In part, Explanatory Note 85.45
(p. 1522) states that:
[t]his heading covers all articles of graphite or other
carbon which are recognisable by their shape, dimensions
or otherwise, as being for electrical purposes, whether or not
they contain metal. . .
In HQ 955718, which dealt with the classification of
graphite cathode blocks used to line the bottom of aluminum
reduction furnaces, we stated that:
. . . 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.
As with the cathode blocks in HQ 955718, it is our
understanding that the subject cathode blocks are not
principally used for electrical purposes, but serve predominately
as refractory articles. Therefore, the blocks are precluded from
classification under subheading 8545.90.40, HTSUS.
Because the cathode blocks are not more specifically
provided for in the HTSUS, they are classifiable under subheading
6902.90.10, HTSUS.
HOLDING:
The cathode blocks meet the term "substantially crystalline"
for tariff purposes and are classifiable under subheading
6902.90.10, HTSUS, as other refractory bricks.
NY 877860 is modified to reflect the holding of this ruling.
In accordance with 19 U.S.C. 1625(c)(1), this ruling will become
effective 60 days after its publication in the CUSTOMS BULLETIN.
Publication of rulings or decisions pursuant to 19 U.S.C.
1625(c)(1) does not constitute a change of practice or position
in accordance with section 177.10(c)(1), Customs regulations [19
CFR 177.10(c)(1)].
Sincerely,
John Durant, Director
Tariff Classification Appeals
Division