CLA-2 OT:RR:CTF:TCM H077356 DAC
TARIFF NOS.: 7307.93.30, 7303.93.90
Port Director
Port of Chicago
U.S. Customs and Border Protection
9915 Bryn Mawr Ave.
Rosemont, IL 60018
RE: Application for Further Review of Protest No. 3901-09-100896; Classification of certain unfinished forged carbon butt welding steel pipe fittings.
Dear Port Director,
This is our decision regarding the Application for Further Review (AFR) of Protest No. 3901-09-100896, filed June 18, 2009, on behalf of protestant, Bentrade, Inc. (“Bentrade”), against U.S. Customs and Border Protection’s (CBP) classification under the Harmonized Tariff Schedule of the United States (HTSUS) of seventeen entries of certain unfinished forged carbon steel butt welding pipe fittings.
FACTS:
The merchandise consists of unfinished forged carbon steel butt welding pipe fittings. The protestant (Bentrade) contends the subject merchandise is classified under six-digit subheading 7307.99 (and in eight-digit subheading 7307.99.10) whereas the port believes it is classified in six-digit subheading 7307.93 (and in eight-digit subheadings 7307.93.30 or 7307.93.90, as appropriate).
The instant protest covers merchandise entered between February 23, 2008 and November 5, 2008, under subheading 7307.99.10, HTSUS. The entries were liquidated by the port on January 16, 2009, under subheading 7307.93.30 and subheading 7307.93.90, as appropriate.
No samples of the merchandise were provided for review and examination by this office.
In the protest, it states, in pertinent part, the following with respect to the merchandise under consideration:
[T]he forgings in question were imported after forging without having been further worked and were in a state unsuitable for use as butt welding fittings at the time of importation. Pursuant to the wording of 7307.99.1000, the imported forgings were not “machined, not tooled and not otherwise processed after forging.” The tee blanks imported by Bentrade undergo cold forging as part of the forging process, which cold forging occurs on a hydraulic press know as a “bulge machine.”
In order to be useful as butt weld fittings, the forging are required to undergo further processing in the United States that includes shot blasting; machine beveling, boring and tapering; grinding; die stamping; inspecting; painting; with certain elbows also undergoing a hot forming process prior to beveling, which was performed by Bentrade’s customers in the United States.
On November 13, 2008, the protestant provided the port with the following statements asserting the actions listed below were to be completed on the subject merchandise within the United States after importation of the merchandise:
“Unmachined forgings” we are importing will become the commercially marketable final products after going through several manufacturing and inspection processes at Weldbend facility. The following steps are the key essence of those processes;
Verify the data in MTR by chemical analysis and physical testing on the forgings received. Verify the actual size and dimension of the forgings can be machined into the dimension of the final products. Unverifiable forgings and under / over sizes will be rejected.
Depending on the type of forging process being used at the overseas supplier, Weldbend will conduct appropriate heat treatment on some of the forgings to keep up with the physical property of the product standard, ASTM A 234 and etc.
Forgings will be machined into the dimension of the final products standards, such as ASME B16.9 or 16.28.
Clean the surface of machined forgings and apply rust-preventive coatings.
Final inspection on the products, and certify the products by issuing the MTR from Weldbend.
On November 14, 2008, the protestant provided the port with the following statements asserting the actions listed below were to be completed on the subject merchandise within the United States after importation of the merchandise:
“Unmachined forgings” we are importing will be turned into the final product known as “Butt-weld fittings” after going through several manufacturing processes described below at Weldbend facility;
Cold-formed Tee forgings will be heat treated, clean the surface and MT (magnetic particle test) tested on its surface. The physical property of the material need [sic] to comply with ASTM A234 WPB.
Branch end cap of Tee forgings will be removed by saw or torch cut.
Each end of the forgings will be machine-finished into the Butt welding end by one or more dedicated beveling machines. The dimension of the finished products need to comply with ASME B16.9.
Clean the surface of finished products and apply rust-prevention coatings.
Final inspection on the products, and certify the products by issuing the MTR from Weldbend.
The port examined two sample fittings: one with a cap on one end and the other one without a cap on one end. Upon this examination, the port indicates that the two samples as imported have the shape, form and appearance of butt weld fittings of heading 7307.93. That is, by their appearance they cannot be machined, tooled or processed into another type of fittings other than butt welding fittings. The sample without a cap is already in the form of a square cut butt welding fitting whereas the other sample can be used as square cut butt weld fitting after removing the cap.
The port also indicates that the documentation submitted with respect to these products shows that in their imported condition the products already have the characteristics of butt weld fittings. ASTM A234, ASME B16.9 and WPB technical standards are all shown in either or both the invoice and the mill test certificates. These are the technical standards for butt welding fittings. ASTM A234 is the standard for pipe fittings of wrought carbon steel and alloy steel for moderate and high temperature service; ASME B16.9 is for butt welding fittings; and WPB is for steel grade to be used in butt welding fittings. These standards allow only for processing of the ends of pipes either by square cut or beveled.
The port further indicates that the merchandise has been advanced after forging by heating and/or coining processes. These processes are considered in the scope of the applicable antidumping orders (see below) as advancement processes, by themselves or together with other specified operations.
ISSUE:
Whether the merchandise is classified under subheading 7307.93 or under subheading 7307.99.
LAW AND ANALYSIS:
Initially we note that the matter is protestable under 19 U.S.C. §1514(a)(2) as a decision on classification and the rate and amount of duties chargeable. The protest was timely filed on June 18, 2009, within 180 days of the above-referenced liquidations, pursuant to 19 U.S.C. §1514(c)(3).
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 2 through 6 may then be applied in order.
The relevant HTSUS provisions under consideration provide in pertinent part:
7307 Tube or pipe fittings (for example, couplings, elbows, sleeves), of iron or steel:
Other:
7307.93 Butt welding fittings:
With an inside diameter of less than 360 mm:
7307.93.30 Of iron or nonalloy steel
7307.93.90 With an inside diameter of 360 mm or more
7307.99 Other:
Not machined, not tooled and not otherwise processed after forging:
7307.99.10 Of iron or nonalloy steel
In interpreting the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and Coding System may be utilized. The ENs, although not dispositive or legally binding, provide a commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUS. See T.D. 89 80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The relevant EN provisions for heading 7307 provide, in pertinent part, as follows:
This heading covers fittings of iron or steel, mainly used for connecting the bores of two tubes together, or for connecting a tube to some other apparatus, or for closing the tube aperture. This heading does not however cover articles used for installing
pipes and tubes but which do not form an integral part of the bore (e.g., hangers, stays and similar supports which merely fix or support the tubes and pipes on walls, clamping or tightening bands or collars (hose clips) used for clamping flexible tubing or hose to rigid piping, taps, connecting pieces, etc.) (heading 73.25 or 73.26).
The connection is obtained:
by screwing, when using cast iron or steel threaded fittings;
or by welding, when using butt welding or socket welding steel fittings. In the case of butt welding, the ends of the fittings and of the tubes are square cut or chamfered (emphasis added);
or by contact, when using removable steel fittings.
This heading therefore includes flat flanges and flanges with forged collars, elbows and bends and return bends, reducers, tees, crosses, caps and plugs, lap joint stub ends, fittings for tubular railings and structural elements, off sets, multi branch pieces, couplings or sleeves, clean out traps, nipples, unions, clamps and collars.
As indicated above, there is no dispute or disagreement that the merchandise is classified by application of GRI 1 in heading 7307, which provides for “tubes or pipe fittings (for example, couplings, elbows, sleeves), of iron or steel.” Therefore, consideration must now be given to classification of the merchandise within heading 7307, HTSUS. GRI 6 prescribes that, for legal purposes, GRIs 1 to 5 govern, mutatis mutandis (or with the necessary changes), classification at subheading levels within the same heading. Or, in other words, GRIs 1 to 5 are to be reapplied to determine the classification of goods at the subheading level. Goods are to be classified at equal subheading levels (that is, at the same digit level) within the same heading under the subheading that most specifically describes or identifies them (or as otherwise required or directed under GRIs 1 to 5). Only subheadings at the same level within the same heading are comparable (i.e., no consideration should be given to the terms of any subheading within another subheading when considering the proper classification of merchandise at the higher level subheading).
There are two competing six-digit subheadings in the instant case: (1) subheading 7307.93, HTSUS, which provides for “butt welding fittings,” and (2) subheading 7307.99, HTSUS, which provides for “other” than butt welding fittings. Accordingly, due to the hierarchical structure of the Harmonized System, if the merchandise is determined to meet the terms of subheading 7307.93, HTSUS, as butt welding fittings, it is classified in that subheading and not in subheading 7307.99, HTSUS.
With respect to whether an unfinished article has the essential character of the finished article, GRI 2(a) states as follows:
Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), entered unassembled or disassembled.
The relevant EN provisions for GRI 2 (a) provide, in pertinent part, as follows:
RULE 2 (a)
(Incomplete or unfinished articles)
(I) The first part of Rule 2 (a) extends the scope of any heading which refers to a particular article to cover not only the complete article but also that article incomplete or unfinished, provided that, as presented, it has the essential character of the complete or finished article.
(II) The provisions of this Rule also apply to blanks unless these are specified in a particular heading. The term “blank” means an article, not ready for direct use, having the approximate shape or outline of the finished article or part, and which can only be used, other than in exceptional cases, for completion into the finished article or part (e.g., bottle preforms of plastics being intermediate products having tubular shape, with one closed end and one open end threaded to secure a screw type closure, the portion below the threaded end being intended to be expanded to a desired size and shape).
Semi-manfactured not yet having the essential shape of the finished articles (such as is generally the case with bars, discs, tubes, etc.) are not regarded as ‘’blanks.’’
As indicated above, the first part of GRI 2 (a) extends the scope of any heading that refers to a particular article to cover not only the complete article but also that article incomplete or unfinished, provided that, as presented, it has the “essential character” (which is discussed below) of the complete or finished article. By application of GRI 6, GRI 2(a) applies at the subheading level.
The term “essential character,” as used in the GRIs, is not defined in the Harmonized System. As concerns that term, however, it is stated in the Explanatory Notes to the Harmonized System that the factor that determines the essential character of a good will vary as between different kinds of goods (i.e., essential character must be determined on a case-by-case basis). The essential character of a good, may, for example, be determined by the nature of the material or component, its bulk, quality, weight or value, or by the role of a constituent material in relation to the use of the goods. Other factors may be considered in determining the essential character of a product.
As indicated above, the protestant indicates that the merchandise under consideration will be further processed into butt welding fittings. Thus, the merchandise consists of unfinished butt welding fittings. Also, as indicated above, the examination by the port shows that as imported the merchandise has the essential character of butt welding fittings of subheading 7307.93 insofar as it consists of unfinished butt welding fittings. In light of the above and based on the record, we conclude pursuant to GRIs 1, 2(a) and 6 and the relevant Explanatory Notes that the merchandise under consideration has the essential character of butt welding fittings of and is classified in six-digit subheading 7307.93, HTSUS. The merchandise is classified under eight-digit subheadings 7307.93.30, HTSUS, or 7307.93.90, HTSUS, as appropriate.
In support of its position that the merchandise is classified in six-digit subheading 7307.99 (and specifically in eight-digit subheading 7307.99.10), the protestant cites to and relies upon several court cases, e.g., Midwood Industries, Inc. v. United States, 313 F.Supp. 951 (1970); Uniroyal, Inc. v. United States, 542 F. Supp. 1026 (1982); Boltex Manufacturing Co., L.P. v. United States, 140 F. Supp. 2d 1339 (2000); Viraj Forgings, Ltd. v. United States, 283 F. Supp. 2d 1335 (2003). These cases, however, do not deal with tariff classification of merchandise under the HTSUS. Accordingly, in our view, they are not relevant to the classification of the instant merchandise under the HTSUS. As indicated above, merchandise is to be classified under the HTSUS by application of the GRIs.
In its amended petition, the protest states, in pertinent part, the following:
Importer Bentrade’s previously filed protest re the subject entries challenges Customs’ decision in liquidation as to the classification of certain imported forgings (imported by Bentrade from Benex Corp. in Japan) which are transformed into carbon steel butt-weld pipe fittings after importation into the U.S. The originally filed protest focused on Customs decision in liquidation increasing the regular duties due on these entries via Customs determining that a classification different from that used by the importer at entry was applicable to the subject entries. The importer hereby amends and supplements its protest to additionally challenge the correctness of the anti-dumping duties assessed by Customs with respect to the involved entries.
In this regard, importer Bentrade amends and supplements its subject protest to include reference to Commerce’s current Administrative Review of anti-dumping case #A588-602, “Carbon Stell Butt Weld Pipe Fittings from Japan.” This Administrative Review is described in Volume 74 of the Federal Register of March 24, 2009, pp 12310 through 12313. This Administrative Review (the results of which are still pending) was instigated by Commerce at the instance of Benex Corporation, the Japanese supplier of the forgings imported by Bentrade, including the forgings imported via the instant protested entries.
While, pursuant to obtaining Administrative Review of the subject anti-dumping order, Benex confirms that its exported forgings are not further advanced after forging, the scope of the anti-dumping order for carbon steel butt weld fittings from Japan expressly covers products which “if forged, have been advanced after forging,” and the order states that such description is dispositive as to the scope of the order, See 70 F.R. 70059. As has been reviewed in detail in Bentrade’s originally filed protest, Bentrade’s imported forgings for butt weld fittings are forged and were not advanced or processed beyond forging.
We therefore request that Bentrade’s entries set forth in this protest be reliquidated, so as to exclude those entries from the scope of anti-dumping order A-588-602 re Carbon Butt Weld Pipe Fittings from Japan.
When antidumping duty order A-588-602 (52 FR 4167) (February 10, 1987) relating to certain carbon steel butt-weld pipe fittings from Japan was issued, the product scope of the order was identified as follows:
The products covered by this investigation are certain carbon steel butt-weld type pipe fittings, other than couplings, under 14 inches in inside diameter, whether finished or unfinished, that have been formed in the shape of elbows, tees, reducers, caps, etc., and, if forged, have been advanced after forging. These advancements may include any one or more of the following: coining, heat treatment, shot blasting, grinding, die stamping or painting. These fittings are currently provided for under item 610.8800 of the Tariff Schedule s of the United States Annotated (TSUSA). Induction pipe bends classifiable under item 610.8800 which have at one or both ends tangents that equal or exceed 12 inches in length are excluded from the scope of this investigation.
The protestant references in its amended protest a notice from the International Trade Administration, Department of Commerce (covering A-351, A-583-605, A-588-602, A-549-807, A-570-814) entitled “Continuation of Antidumping Duty Orders: Certain Carbon Steel Butt-Weld Pipe Fittings from Brazil, Taiwan, Japan, Thailand, and the People’s Republic of China” (70 FR 70059) (November 21, 2005). In this notice, it states that:
[T]he Department hereby orders the continuation of the antidumping duty orders on certain carbon steel butt-weld pipe fittings (“pipe fittings”') from Brazil, Taiwan, Japan, Thailand, and the People's Republic of China (“China''). The Department is publishing notice of the continuation of these antidumping duty orders.
With respect the scope of the orders, the notice states as follows:
The products covered by these orders are pipe fittings from Brazil, Taiwan, Japan, Thailand, and China. Pipe fittings from Brazil, Taiwan, and Japan are defined as carbon steel butt-weld pipe fittings, other than couplings, under 14 inches in diameter, whether finished or unfinished, that have been formed in the shape of elbows, tees, reducer, caps, etc., and, if forged, have been advanced after
forging. These advancements may include any one or more of the following: coining, heat treatment, shot blasting, grinding, die stamping or painting. Such merchandise was classifiable under Tariff Schedules of the United States Annotated (``TSUSA'') item number 610.8800. These imports are currently classifiable under the Harmonized Tariff Schedule of the United States (``HTSUS'') item number 7307.93.30. (Emphasis added.)
Pipe fittings from Thailand and China are defined as carbon steel butt-weld pipe fittings, having an inside diameter of less than 14 inches, imported in either finished or unfinished form. These formed or forged pipe fittings are used to join sections in piping systems where conditions require permanent, welded connections, as distinguished from fittings based on other fastening methods (e.g., threaded, grooved, or bolted fittings). These imports are currently classifiable under the HTSUS item number 7307.93.30.
The TSUSA and HTSUS subheadings are provided for convenience and customs purposes. The written description remains dispositive as to the scope of the product coverage for each of these orders.
With respect to the imposition of dumping duties, we note that CBP merely follows the Department of Commerce’s instructions in assessing and collecting duties. CBP has a ministerial role in liquidating antidumping duties. See Mitsubishi Elecs. Am., Inc. v. United States, 44 F.3d 973, 976 (Fed. Cir.1994). See also, e.g., HQ H033175 (May 28, 2009). As concerns the protestant’s assertion that the order does not cover the merchandise under consideration, we disagree. Upon review, we instead agree with your port’s determination that the merchandise that is from the specified countries and within the dimensions listed above is covered by the order insofar as the merchandise consists of unfinished butt-welded pipe fittings that have been formed in a shape listed therein. Moreover, we also agree with your port’s further determination that the merchandise has been advanced after forging by heating and/or coining processes. These processes are considered in the scope of the above-referenced applicable antidumping orders as advancement processes, by themselves or together with other specified operations.
HOLDING:
By application of GRI 1, the above-mentioned merchandise is classified in heading 7307 HTSUS, and by application of GRIs 1, 2(a) and 6 under six-digit subheading 7307.93. The appropriate eight-digit subheading for the merchandise depends on the dimensions or size of the inside diameter: (1) if less than 390 mm: 7307.93.30, HTSUS, as “Tube or pipe fittings (for example, couplings, elbows, sleeves), of iron or steel: Other: Butt welding fittings: With an inside diameter of less than 360 mm: Of iron or nonalloy steel” and (2) if more than 360 mm: under subheading 7307.93.90, HTSUS, as “Tube or pipe fittings (for example, couplings, elbows, sleeves), of iron or steel: Other: Butt welding fittings: With an inside diameter of 360 mm or more.”
The column one, general rates of duty for merchandise of subheadings 7307.93.30 HTSUS, and 7307.93.90 HTSUS, at the time of entry, were 6.2 percent ad valorem and 4.3 percent ad valorem, respectively.
The merchandise is within the scope of the dumping order under consideration as indicated and discussed above.
The protest should be denied in full. In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, 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 of the decision. Sixty days from the date of the decision Regulations and Rulings of the Office of International Trade will make the decision available to CBP personnel, and to the public on the CBP 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,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division