CLA-2 RR:CR:GC 960824 JAS
Mr. Fred Brewer
Magnequench International, Inc.
6435 Scatterfield Rd.
Anderson, IN 46013
RE: NY A86780 Modified; Neodymium-Iron-Cobalt Alloy Ingots; Powdered Product Used to Make Magnets; Ferroalloy, Chapter 72, Note 1(c); Heading 7202; Steel, Chapter 72, Note 1(d); Cast Articles of Iron or Steel, Heading 7325
Dear Mr. Brewer:
NY A86780, which the Customs Director, National Commodity
Specialist Division, New York, issued to a Customs broker on your
behalf on October 18, 1996, in part classified M4392 neodymium-iron-cobalt alloy ingots in subheading 7202.99.50, Harmonized
Tariff Schedule of the United States (HTSUS) as other
ferroalloys.
Pursuant to section 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. 103-182, 107 Stat. 2057, 2186 (1993),
notice of the proposed modification of NY A86780 was published on
July 29, 1998, in the Customs Bulletin, Volume 32, Number 30.
One comment was received by counsel on your behalf in support of
the proposed modification. The classification of neodymium
powder also discussed in NY A86780 is not in issue here.
FACTS:
The merchandise in question, M4392 neodymium-iron-cobalt
alloy, is made by melting either pure neodymium or eutectic (88%
neodymium and 12% iron) neodymium ingots in an electric induction
furnace with iron in the form of steel billets, cobalt in the
form of broken cathodes, and irregularly shaped ferroboron
pieces. The resulting alloy is cast into ingots, typically
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measuring 6 inches in diameter and 10 inches in length. This is
the condition of the product as imported. The chemistry of this
imported ingot is 27-29% rare earth elements (typically
neodymium), 63% iron, 4.7-5.3% cobalt, and 1% other elements.
After importation, the ingots are melted and ejected onto a
chilled rotating wheel in a jet cast process. This rapid
solidification cools or quenches the molten metal into flakes
which are then crushed into powder form. The powder is used to
make magnets for computers, anti-lock brakes, etc.
The provisions under consideration are as follows:
7202 Ferroalloys:
7202.99 Other
7202.99.50 Other...5 percent ad valorem
* * * *
7325 Other cast articles of iron or steel:
7325.99 Other
7325.99.50 Other...3.5% ad valorem
ISSUE:
Whether the neodymium-iron-cobalt alloy is a ferroalloy for
tariff purposes.
LAW AND ANALYSIS:
Merchandise is classifiable under the Harmonized Tariff
Schedule of the United States (HTSUS) in accordance with the
General Rules of Interpretation (GRIs). GRI 1 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, and provided the headings or notes do not
require otherwise, according to GRIs 2 through 6.
Chapter 72, Note 1(c), HTSUS, in relevant part, defines
Ferroalloys to include alloys in pigs, blocks, lumps, or similar
primary forms, or in forms obtained by continuous casting,
commonly used as an additive in the manufacture of other alloys
or as deoxidants, desulfurizing agents or for similar uses in
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ferrous metallurgy and generally not usefully malleable,
containing by weight 4% or more of the element iron and a total
of more than 10% of other elements, excluding carbon.
The percentage of iron and rare earth elements brings the
product within the chemical composition defined in Note 1(c).
However, literature submitted in connection with the ruling
request that resulted in NY A86780 contains the following
statement with respect to the imported neodymium-iron-cobalt
alloy ingot that, after importation, is reduced to flakes, then
to powder form "We use this powder to produce fully-dense MQ2
and MQ3 magnets. Annealed, the powder is sold as MQP to
customers who wish to make their own bonded magnets or is used
in-house to produce our line of MQ1 bonded magnets." The
company specification for the product designated M4392 states it
"[c]overs a purchased cast metal product to be used in the
manufacture of Magnequench magnet material." Lacking other
information, these statements compel the conclusion that the
imported product is not commonly used as an additive in the
manufacture of other alloys or as deoxidants, desulfurizing
agents or for similar uses in ferrous metallurgy. The product is
not a ferroalloy as defined in Chapter 72, Note 1(c), HTSUS.
Heading 7224 covers other alloy steel in ingots or other
primary forms. However, the ingots of this heading are
subsequently rolled or forged generally into semifinished
products such as blooms, billets, slabs, etc., but sometimes
directly into bars, sheets or other finished products. The post-importation processing, as described in this case, does not
support classification of this product in any provision of
heading 7224.
At importation, M4392 neodymium-iron-cobalt alloy ingots are
cast articles. Heading 7325, other cast articles of iron or
steel, covers all cast articles of iron or steel, not elsewhere
specified or included, other than recognizable parts of machinery
or mechanical appliances, or castings considered, for tariff
purposes, as being unfinished articles of other headings.
Lacking evidence of a more specific provision for the ingots in
question, we conclude that they are cast articles of heading
7325.
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HOLDING:
Under the authority of GRI 1, M4392 neodymium-iron-cobalt
alloy ingots are provided for in heading 7325. They are
classifiable in subheading 7325.99.50, HTSUS. NY A86780, dated
October 18, 1996, is modified accordingly.
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
Commercial Rulings Division