CLA–2 OT:RR:CTF:TCM H213699 AMM
Port Director
Service Port – Detroit
2810 B West Fort Street, Suite #123
Detroit, MI 48216
Attn: Lisa Wallace
RE: Internal Advice; Classification and Country of Origin of Bend Pipe
Dear Port Director,
This is in response to your memorandum dated May 27, 2012, forwarding with comments, a request for Internal Advice initiated by UPS Supply Chain Solutions (UPS), on behalf of the importer of record, Cintube, Ltd., of Mississauga, Ontario, CA (Cintube), pursuant to 19 C.F.R. §177.11. The internal advice request concerns the classification and country of origin of bend pipe under the Harmonized Tariff Schedule of the United States (HTSUS). In reaching our decision, Customs and Border Protection (CBP) has taken into consideration the original Request for Internal Advice from UPS, dated November 3, 2011, comments from the Port of Detroit (the Port), dated March 27, 2012, a meeting held with representatives from UPS and Cintube via teleconference on May 3, 2013, and a supplemental submission from UPS and Cintube, dated May 13, 2013.
FACTS:
The instant merchandise consists of steel pipe, cut to a specific length, and bent to specific dimensions. Cintube, the manufacturer, begins its process by purchasing steel pipe on the Canadian market. The country of origin of this pipe is either China or Korea. The pipe is then cut to length and bent to specific dimensions, and exported to the United States. The instant products are concentric hollow pipes, of uniform cross-section with only one enclosed void along their whole length, having their inner and outer surfaces of the same form.
According to the general manufacturing drawing, included as Attachment D to UPS’ request for internal advice, dated November 3, 2011, the instant products are shaped like “elbows or bends”. Each product has a straight section on the ends (of varying length, depending on the nominal pipe size), and a curved section in the middle. From the side view, the curve appears to be 90 degrees. From the top, the curve is anywhere between 3 degrees and 31 degrees, depending on the exact product. The result is a bent, elbow-shaped section of pipe. UPS further asserts that the imported products are used for boiler, pressure vessel, and pressure piping, and that their only possible use is as pipe fittings. They are made to specific dimensions for that purpose. Cintube’s customer requires that the final product meet Canadian Standards Association (CSA) B51, entitled “Boiler, pressure vessel, and pressure piping code” and American Society of Mechanical Engineers (ASME) standard B31.3, entitled “Pressure piping”. After importation, the products are trimmed, flanges are welded on, a rubberized coating is added to the inside of the tube, and the exterior is painted.
On August 22, 2011, UPS entered the instant bend pipe at the Port, under Entry No. XXX-XXXX273-1, under subheading 7306.19.10, HTSUS, which provides for “Other tubes, pipes and hollow profiles … of iron or steel: Line pipe of a kind used for oil or gas pipelines: Other: Of iron or nonalloy steel.” UPS also deposited antidumping and countervailing duties, in accordance with Antidumping Duty Order A-570-910 and Countervailing Duty Case No. C-570-911, at the time of entry. UPS now asserts that the merchandise is properly classified under subheading 7307.99.50, HTSUS, which provides for “Tube or pipe fittings (for example, couplings, elbows, sleeves), of iron or steel: Other: Other: Other”. UPS also seeks the return of the antidumping and countervailing duties deposited at the time of entry.
ISSUES:
I. Whether the instant bend pipe is properly classified under heading 7306, HTSUS, as “Other tubes, pipes and hollow profiles … of iron or steel”, or under heading 7307, HTSUS, as “Tube or pipe fittings (for example, couplings, elbows, sleeves), of iron or steel”.
II. Whether the country of origin of the bend pipe is Canada, China, or Korea.
III. Whether UPS is entitled to a refund of antidumping and countervailing duties deposited at the time of entry, if the instant bend pipe is properly classified under heading 7307, HTSUS.
LAW AND ANALYSIS:
In their request for internal advice, made in accordance with 19 C.F.R. §177.11(b)(2), UPS asserts that the instant merchandise is properly classified under heading 7307, HTSUS, specifically under subheading 7307.99.50, HTSUS, which provides for “Tube or pipe fittings (for example, couplings, elbows, sleeves), of iron or steel: Other: Other: Other”. UPS further asserts that, by virtue of this classification, that antidumping and countervailing duties are not owed, and requests a refund. Finally, UPS asserts that the country of origin of the instant merchandise is Canada.
I. Classification
Classification of goods under the HTSUS is governed by the General Rules of Interpretation (GRI). GRI 1 provides that classification 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 2013 HTSUS provisions at issue are as follows:
7306 Other tubes, pipes and hollow profiles (for example, open seamed or welded, riveted or similarly closed), of iron or steel:
Line pipe of a kind used for oil or gas pipelines:
7306.19 Other:
7306.19.10 Of iron or nonalloy steel
7306.19.10 50 With an outside diameter exceeding 114.3 mm
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7307 Tube or pipe fittings (for example, couplings, elbows, sleeves), of iron or steel:
Other:
7307.99 Other:
7307.99.50 Other
GRI 2 states, in pertinent part:
(a) 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.
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The Harmonized Commodity Description and Coding System Explanatory Notes (ENs), constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of the headings. It is CBP’s practice to consult, whenever possible, the terms of the ENs when interpreting the HTSUS. See T.D. 89–80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
EN(II) to GRI 2 states, in pertinent part:
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 manufactures 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”.
The General EN to Chapter 73 states, in pertinent part:
For the purposes of this Chapter, the expressions “tubes and pipes” and “hollow profiles” have the following meanings hereby assigned to them:
(1) Tubes and pipes
Concentric hollow products, of uniform cross-section with only one enclosed void along their whole length, having their inner and outer surfaces of the same form. Steel tubes are mainly of circular, oval, rectangular (including square) cross-sections but in addition may include equilateral triangular and other regular convex polygonal cross-sections. Products of cross-section other than circular, with rounded corners along their whole length, and tubes with upset ends, are also to be considered as tubes. They may be polished, coated, bent (including coiled tubing), threaded and coupled or not, drilled, waisted, expanded, cone shaped or fitted with flanges, collars or rings.
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EN 73.06 states, in pertinent part:
This heading includes, in particular, line pipes of a kind used for oil or gas, casing and tubing of a kind used in drilling for oil or gas, tubes and pipes suitable for use in boilers, superheaters, heat exchangers, condensers, feed-water heaters for power stations, galvanised or black tubes (so-called gas tubes) for high or medium pressure steam or water distribution in buildings, as well as tubes for water or gas street distribution mains. In addition tubes, pipes and hollow profiles are used for the manufacture of parts for automobiles or for machinery, bicycle frames, prams, or for other structural uses, scaffolding or tubular structures or building construction. “Open seam” tubes are used, for example, as frames for metal furniture.
* * *
The heading excludes:
* * *
(c) Tube or pipe fittings of iron or steel (heading 73.07).
* * *
EN 73.07 states, in pertinent part:
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;
- 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.
* * *
Cintube begins its manufacturing process by purchasing steel pipe, which is properly classified under heading 7306, HTSUS. This pipe is then cut to a specific length and bent to specific dimensions, and exported to the United States. The instant products are concentric hollow pipes, of uniform cross-section with only one enclosed void along their whole length, having their inner and outer surfaces of the same form, such that they comply with the definition of “tubes and pipes” contained in EN(1) to 73.06. See also General EN(1) to Chapter 73. However, Exclusionary Note (c) to EN 73.06 states that the heading does not cover “Tube or pipe fittings of iron or steel (heading 73.07)”. Therefore, CBP must consider whether the instant products have been transformed by the manufacturing process into pipe fittings, and as such, are properly classified under heading 7307, HTSUS.
The term “pipe fittings” is not defined in the HTSUS. However, EN 73.07 describes a pipe fitting as a product used for connecting the bores of two tubes together, or for connecting a tube to some other apparatus, or for closing a tube aperture. See EN 73.07; New York Ruling Letter (NY) N230126, dated September 7, 2012; Headquarters Ruling Letter (HQ) 967433, dated February 9, 2005; See also HQ H076723, dated November 24, 2010 (defining the term “fitting” as “a small part used to join, adjust, or adapt other parts, as in a system of pipes”, in the context of heading 8302, HTSUS); HQ 967490, dated November 14, 2005; Mitsubishi Int’l. Corp. v. United States, 78 Cust. Ct. 4, 19 (Cust. Ct. 1977). Furthermore, EN 73.07 specifically lists “elbows and bends” as exemplars of a tube or pipe fitting.
According to the general manufacturing drawing, included as Attachment D to UPS’ request for internal advice, dated November 3, 2011, the instant products are shaped like “elbows or bends”. Each product has a straight section on the ends (of varying length, depending on the nominal pipe size), and a curved section in the middle. From the side view, the curve appears to be 90 degrees. From the top, the curve is anywhere between 3 degrees and 31 degrees, depending on the exact product. The result is a bent, elbow-shaped section of pipe. Therefore, the instant products are properly characterized as “tube or pipe fittings.” UPS further asserts that the imported products are used for boiler, pressure vessel, and pressure piping, and that their only possible use is as pipe fittings. Cintube manufactures the bend pipe such that it meets standards CSA B51, entitled “Boiler, pressure vessel, and pressure piping code” and ASME B31.3, entitled “Pressure piping”. The bend pipe is made to specific dimensions, as required by the customer, such that it will fit with specific machinery. After importation, the products are trimmed, flanges are welded on, a rubberized coating is added to the inside of the tube, and the exterior is painted.
Cintube manufactures the bend pipe to specific bend dimensions as called out in the customer’s engineering drawings. A comparison between engineering drawings showing the finished product and the engineering drawings showing the bend pipe as it is shipped to the United States indicates that the instant bend pipe has the shape of the final part, except that they are missing the end flanges. Furthermore, standard CSA B51 requires that each bend pipe be given a Canadian Registration Number so that its origin and certification can be traced. Therefore, the instant products, although not ready for direct use as pipe fittings, do have the approximate shape or outline of the finished article or part, and can only be used for completion into a finished pipe fitting. See EN(II) to GRI 2. The post importation addition of flanges, coatings, and paint does not affect this determination. As such, the instant products are unfinished pipe fittings, properly classified under heading 7307, HTSUS, by operation of GRI 2(a). See HQ 962368; EN(II) to GRI 2.
With regard to classification at the subheading level, the instant pipe fittings are properly classified under subheading 7307.99.50, HTSUS, which provides for “Tube or pipe fittings (for example, couplings, elbows, sleeves), of iron or steel: Other: Other: Other”.
By virtue of classification under heading 7307, HTSUS, as pipe fittings, the instant products are excluded from classification under heading 7306, HTSUS. See Exclusionary Note (c) to EN 73.06.
II. Country of Origin
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. §1304), provides that, unless excepted, every article of foreign origin imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the United States the English name of the country of origin of the article.
Part 134, CBP Regulations (19 C.F.R. Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. §1304. The term “country of origin” is defined as:
The country of manufacture, production, or growth of any article of foreign origin entering the United States. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the “country of origin” within this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin.
See 19 C.F.R. §134.1(b).
Section 134.1(j), CBP Regulations (19 C.F.R. §134.1(j)), provides that the “‘NAFTA Marking Rules’ are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country.” Section 134.1(g), CBP Regulations (19 C.F.R. §134.1(g)), defines a “good of a NAFTA country” as an article for which the country of origin is Canada, Mexico or the United States, as determined under the NAFTA Marking Rules, which are set out in 19 C.F.R. Part 102. Section 102.11, CBP Regulations (19 C.F.R. §102.11), sets forth the required hierarchy for determining whether a good is a good of a NAFTA country for marking purposes, and states that the country of origin of a good is the country in which:
(a)(1) The good is wholly obtained or produced;
(a)(2) The good is produced exclusively from domestic materials; or
(a)(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in Section 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
* * *
See 19 C.F.R. §102.11(a).
Since the bend pipe is produced in Canada from Chinese or Korean origin pipe, these goods are neither wholly obtained or produced, nor produced exclusively from domestic (in this case, Canadian) materials. Accordingly, paragraph (a)(3) of section 102.11 is the next applicable rule that must be applied to determine the origin of the bend pipe. “Foreign material” is defined in 19 C.F.R. §102.1(e) as “a material whose country of origin as determined under these rules is not the same country as the country in which the good is produced.” The bend pipe is classifiable under heading 7307, HTSUS, as discussed above. The pipe imported into Canada is classified in heading 7306, HTSUS. The applicable change in tariff classification for heading 7307, HTSUS, in 19 C.F.R. §102.20(n) requires: “A change to heading 7301 to 7307 from any other heading, including a heading within that group.”
Since the pipe imported into Canada from China or Korea is classified under heading 7306, HTSUS, and the bend pipe is classified under heading 7307, HTSUS, the requisite tariff shift set out in 19 C.F.R. §102.20(n) is met, the instant pipe fittings qualify to be marked as goods of Canada pursuant to 19 C.F.R. §102.11(a)(3).
Article 401 of the NAFTA is incorporated into General Note (GN) 12, HTSUS. GN 12, HTSUS, provides, in pertinent part, that:
(a) Goods originating in the territory of a party to the North American Free Trade Agreement (NAFTA) are subject to duty as provided herein. For the purposes of this note-
(i) Goods that originate in the territory of a NAFTA party under the terms of subdivision (b) of this note and that qualify to be marked as goods of Canada under the terms of the marking rules set forth in regulations issued by the Secretary of the Treasury (without regard to whether the goods are marked), and goods enumerated in subdivision (u) of this note, when such goods are imported into the customs territory of the United States and are entered under a subheading for which a rate of duty appears in the “Special” subcolumn followed by the symbol “CA” in parentheses, are eligible for such duty rate, in accordance with section 201 of the North American Free Trade Agreement Implementation Act.
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(b) For 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-
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(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, or
* * *
Thus, by operation of GN 12, the eligibility of a particular article for NAFTA duty preference is predicated in part upon an origin determination under the NAFTA Marking Rules of either Canada or Mexico. As demonstrated by the foregoing analysis, application of the NAFTA Marking Rules contained in 19 C.F.R. §102.11 yielded an origin determination of Canada. Goods are eligible for the “Special” “CA” rate of duty provided: (1) they are deemed to be NAFTA originating under the provisions of GN 12(b), HTSUS; and, (2) qualify to be marked as products of Canada under the NAFTA Marking Rules that are set forth in Part 102 of the Code of Federal Regulations (19 C.F.R. §102). As discussed above, the instant products qualify to be marked as products of Canada pursuant to 19 C.F.R. §102.11(a)(3).
The applicable tariff shift rule of GN 12(b)(i)(A) and GN 12(t)/(73)(6), HTSUS, requires “A change to headings 7305 through 7307 from any other chapter.” Because the instant bend pipe is classified in heading 7307, HTSUS, and the pipe imported to Canada is classified in heading 7306, HTSUS, the requisite tariff shift would not be met, the goods would not be NAFTA originating under GN 12(b), and would not be eligible for the “Special” “CA” rate of duty.
III. Antidumping and Countervailing Duties
UPS asserts that, by virtue of classification under heading 7307, HTSUS, the instant products fall outside the scope of Antidumping Duty Order A-570-910, Case No. C-570-911, and requests the refund of deposits. However, it is the International Trade Administration (ITA), U.S. Dept. of Commerce, which determines whether a product falls within the scope of this order. We further note that the ITA is not necessarily bound by a country of origin or classification determination issued by CBP, with regard to the scope of antidumping orders or countervailing duties. Written decisions regarding the scope of AD/CVD orders are issued by the Import Administration in the U.S. Department of Commerce and are separate from tariff classification and origin rulings issued by Customs and Border Protection.
In order to receive a scope ruling, UPS must contact the ITA directly at http://www.trade.gov/ia/ (click on “Contact Us”). A current list of AD/CVD cases is available at the United States International Trade Commission website at http://www.usitc.gov (click on “Antidumping and countervailing duty investigations”). Furthermore, AD/CVD deposit and liquidation messages can be searched using ACE, the system of record for AD/CVD messages, or the AD/CVD Search tool at http://addcvd.cbp.gov/index.asp?ac=home.
HOLDING:
By application of GRI 2(a), HTSUS, the instant bend pipe imported by Cintube is classified under heading 7307, HTSUS, specifically under subheading 7307.99.50, HTSUS, which provides for “Tube or pipe fittings (for example, couplings, elbows, sleeves), of iron or steel: Other: Other: Other”. The general, column one rate of duty is 4.3% ad valorem. The instant pipe fittings qualify to be marked as goods of Canada pursuant to 19 C.F.R. §102.11(a)(3). The instant bend pipe is not an originating good pursuant to GN 12, HTSUS, and is not eligible for the “Special” “CA” rate of duty.
Duty rates are provided for the internal advice applicant’s convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov.
You are directed to mail this decision to the internal advice applicant, 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 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 public methods of distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division