CLA-2 RR:CR:GC 966359 DSS
Port Director
U.S. Customs and Border Protection
P.O. Box 55580
Portland, OR 97220
RE: Internal Advice 03/003; nickel alloy; unwrought
Dear Port Director:
This is in response to your memorandum dated March 10, 2003, addressed to the Customs Information Exchange regarding Internal Advice Request 03/003, in which you request internal advice on the classification of certain nickel alloy under the Harmonized Tariff Schedule of the United States ("HTSUS"). The Chief, Metals and Machinery Branch, National Commodity Specialist Division (“NCSD”) forwarded your memorandum and an accompanying NCSD memorandum dated April 24, 2003 to our office.
FACTS:
The article at issue is vacuum induction melted (“VIM”) nickel alloy barstock, in the form of round bars of 3“ to 6” uniform diameter, not in coils. The nickel alloy is produced in a vacuum induction furnace by WASA. It is then poured into a mold. When removed from the mold, it is cropped and the article is cleaned in a shot blasting process to remove any surface oxidation. The article is then stamped, inspected, packaged and shipped ready for either remelt or future forging applications in the United States.
Customs Laboratory Report SF20020005, dated February 1, 2002, which is included in the file, describes the sample article as, “[a] solid heavy disc of steel-gray metal measuring approximately 11 centimeters in diameter by 5.5 centimeters thick. Spectrographic analysis indicates that the metal is 53% nickel by weight, with lesser amounts of chromium, iron, niobium and molybdenum.” The laboratory test further states:
The metal has been roughly cast into the disc shape; the surface of the disc has been descaled by shot blasting, and rough edges have been removed by rough (probably hand) grinding. This sample has not been precision cast into precise shape, and had not been precision ground. …
Other product specifications included in the file indicate that the article is composed of over 50 percent nickel, and over 10 percent each of iron and chromium. The instant article is used in direct investment casting of aircraft engine parts after importation.
ISSUE:
Whether the instant article is classified as unwrought nickel, under heading 7502, HTSUS, or as nickel bar under heading 7505, HTSUS.
LAW AND ANALYSIS:
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative Section or Chapter Notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs may then be applied.
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System at the international level. While not legally binding, the ENs provide a commentary on the scope of each heading of the HTSUS and are thus useful in ascertaining the classification of merchandise under the System. The Bureau of Customs and Border Protection (Customs) believes the ENs should always be consulted. See T.D. 89-90, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The HTSUS provisions under consideration are as follows:
Unwrought nickel:
7502.20.00 Nickel alloys
* * * *
Nickel bars, rods, profiles and wire:
Bars, rods and profiles:
Of nickel alloys:
Bars and rods:
7505.12.30 Not cold-formed
The importer would classify the instant article under heading 7502, HTSUS, as unwrought nickel alloy, on the belief that the grinding and shot blasting the goods undergo amounts to simple descaling of the goods. If the grinding and shot blasting performed on the article, however, is more than simple descaling, it would be specifically provided for under heading 7505, HTSUS, as nickel bar, as discussed below.
The instant article meets the chemical definition of ferro-alloys; however, it is not used as an additive in the manufacture of other alloys or as deoxidants, de-sulphurising agents or a similar use in ferrous metallurgy, nor is it generally usefully maleable. See Chapter 72, Note 1(c). Therefore, classification of the article does not fall under Chapter 72. It is provided for in Chapter 75, as a nickel alloy. A definition of nickel alloy is provided in subheading Note 1(b) to Chapter 75, HTSUS, which provides:
1. In this chapter the following expressions have the meanings hereby assigned to them: …
(b) Nickel alloys
Metallic substances in which nickel predominates by weight over each of the other elements provided that:
the content by weight of cobalt exceeds 1.5 %,
the content by weight of at least one of the other elements is greater than the limit specified in the foregoing table, or
the total content by weight of elements other than nickel plus cobalt exceeds 1 %.
The information in the file indicates that the article satisfies this criteria. The question is whether the article is considered “unwrought” for tariff purposes.
Section XV, Additional U.S. Note 1 provides that:
For the purposes of this section [including chapter 75], the term “unwrought” refers to metal, whether or not refined, in the form of ingots, blocks, lumps, billets, cakes, slabs, pigs, cathodes, anodes, briquettes, cubes, sticks, grains, sponge, pellets, flattened pellets, rounds, rondelles, shot and similar manufactured primary forms, but does not cover rolled, forged, drawn or extruded products, tubular products or cast or sintered forms which have been machined or processed otherwise than by simple trimming, scalping or descaling.
This Note has been interpreted by the courts to refer to “forms that have undergone some processing but must undergo further processing before they appear in an eventual final product.” See Anval Nyby Powder AB v. United States, 20 CIT 608, 616, 927 F. Supp. 463 (1996). In this instance, the article is not an end product in itself but rather is intended to be reformed or reforged into an end product – aircraft engine parts.
Certain cast products can be considered bars if they have been worked after production, other than by simple trimming or descaling. Chapter 75, Note 1(a) provides:
In this Chapter the following expressions have the meanings hereby attached to them:
Bars and rods
Rolled, extruded, drawn or forged products, not in coils, which have a uniform solid cross-section along their whole length in the shape of circles, ovals, rectangles (including squares), equilateral triangles or regular convex polygons … The expression also covers cast or sintered products, of the same forms and dimensions, which have been subsequently worked after production (otherwise than by simple trimming or descaling), provided that they have not thereby assumed the character of articles or products of other headings.
However, an article shaped like a bar also can be considered as a “similar manufactured primary form.” EN 74.07, which provides guidance for the products of heading 7407, HTSUS (“Copper bars, rods and profiles”) states in relevant part:
Bars and rods obtained by casting (including the so-called “jets” and continuously cast bars) or by sintering fall in heading 74.03 [Refined copper and copper alloys, unwrought] provided they have not been subsequently worked after production otherwise than by simple trimming or descaling. If, however, they have been worked beyond this stage, they are classified in this heading, provided that they have not thereby assumed the character of articles or of products of other headings [emphasis in original].
EN 75.05 states that EN 74.07 applies to heading 7505, HTSUS, mutadis mutandis. Thus, if the instant article has only been subject to simple trimming or descaling it falls under heading 7502, HTSUS. This is consistent with Additional U.S. Note 1 to Section XV, above.
Grinding is usually considered to be a simple descaling operation. Grinding does not move or form metal as rolling, forging, drawing or extruding do. Grinding may shape metal, but there is no indication that the rough grinding that has been done to the imported articles was for the purpose of machining the product for specific dimensions. The ENs to Chapter 75 state in relevant part, “Products and articles of nickel may be subjected to various treatments to improve the properties or appearance of the metal, etc. These treatments are generally referred to at the end of the General Explanatory Notes to Chapter 72 and do not affect classification of the goods.” Grinding is a process listed in the ENs to Chapter 72, as a process used to eliminate oxidation scale and crust. See Chapter 72, EN (IV)(C). It also states that, generally speaking, rough trimming should not be regarded as a finishing operation that would lead to a change in classification.
The information in the file indicates that after casting and prior to importation, the article is rough ground or shot blasted to clean the product and remove any surface oxidation (i.e., simple descaling). The imported article must undergo further processing before it appears in an eventual final product (i.e., aircraft engines). The instant article is remelted and reformed or forged (i.e., further processed) in the United States before it will appear in a final product. The purchaser of the imported products submitted its purchasing specifications, which require “the surface to be clean and free of oxide, rust, oil and other surface contaminants.” However, the purchase orders in the file do not indicate specific dimensional tolerances by the purchaser. WASA also has stated that the dimensional tolerances are achieved by the casting mold size, not the grinding operation. Furthermore, the General ENs for Chapter 75 suggest operations are done to the nickel to improve the properties or appearances and should not affect the classification. Thus, the instant article meets the definition of unwrought nickel alloy. As discussed above, the instant article does not fall under heading 7505, HTSUS, because in its condition as imported, it has not undergone an operation subsequent to production other than descaling.
Accordingly, we find that the subject nickel alloy is provided for in heading 7502, HTSUS, and is classified in subheading 7502.20.00, HTSUS.
HOLDING:
The instant article is classified in subheading 7502.20.00, HTSUS, which provides in pertinent part for, “Unwrought nickel: Nickel alloys.”
This decision should be mailed by your office to the internal advice requestor no later than 60 days from the date of this letter. On that date, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs and Border Protection Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
/s/
Myles B. Harmon
Director,
Commercial Rulings Division