CLA-2 OT:RR:CTF:TCM H217701 AMM
Port Director
U.S. Customs and Border Protection
Service Port – Minneapolis
330 2nd Ave. South, Suite 560
Minneapolis, MN 55401
Attn: Beverly Baer
RE: Tariff classification of high speed steel drill blanks; Protest Number
3501-12-100032
Dear Port Director:
This is in reply to an application for further review (AFR) of protest number
3501-12-100032, dated February 14, 2012, filed on behalf of Viking Drill & Tool, Inc. (Protestant) against U.S. Customs and Border Protection’s (CBP) reclassification and subsequent liquidation of one entry at the Service Port of Minneapolis (the Port) of various high speed steel drill blanks, under the Harmonized Tariff Schedule of the United States (HTSUS). We have also considered samples of the instant merchandise submitted for review.
FACTS:
The instant products are identified as “high speed steel drill blanks.” They consist of cold drawn steel bars, produced to ASTM A600 Grade M2 standards, imported in various diameters and lengths. The raw material is melted in an electric arc furnace, poured into an ingot, rotary forged, coil drawn and machined to size. Although Protestant asserts that the imported merchandise has a uniform cross section along its whole length, the samples submitted for review show that the products have been processed such that one end is pointed and the other is beveled, prior to importation. After importation, the products are further processed by rough centerless grinding, fluting, black oxide coating, finish centerless, clearing, pointing, split pointing, flatting, low temperature stress relief, marking, and packing. Protestant asserts that the instant merchandise may be further processed into high speed drill bits, taps, chucking reamers, car reamers, annular cutters, hobs, end mills, and countersinks. According to information submitted by the Protestant, the instant products contain, by weight, over 4% each molybdenum and tungsten, and over 1% vanadium. The products also contain, by weight, more than 0.6% but less than 1.2% carbon, and more than 3% but less than 6% chromium.
The entries took place at the Port between May 26, 2010 and July 6, 2011, and were liquidated on September 16, 2011. The merchandise was entered in heading 7228, HTSUS, which provides in pertinent part for “Other bars and rods of other alloy steel; angles, shapes of alloy or non-alloy steel”. The Port liquidated the merchandise under heading 8207, HTSUS, specifically under subheading 8207.50.20 HTSUS, which provides for “Interchangeable tools for handtools, whether or not power operated, or for machine-tools …: Tools for drilling, other than for rock drilling, and parts thereof: With cutting part containing by weight over 0.2 percent of chromium, molybdenum, or tungsten or over 0.1 percent of vanadium”.
A photo of one sample is included below, to illustrate how the rod is pointed on one end and beveled on the other:
ISSUE:
Whether the instant high speed steel drill blanks can be described as “rods” of heading 7228, HTSUS, or have assumed the character of a drill bit of heading 8207, HTSUS.
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 February 14, 2012, within 180 days of liquidation, pursuant to 19 U.S.C. §1514(c)(3).
Further review of Protest 3501-12-100032 was properly accorded to protestant pursuant to 19 C.F.R. §174.24. Specifically, in accordance with Section 174.24(a), the decision against which the protest was filed is alleged to be inconsistent with a ruling of the Commissioner of Customs or his designee. Protestant alleges that the Port’s decision is inconsistent with New York Ruling Letters (NY) H80079, dated May 3, 2001, and NY A81652, dated April 2, 1996.
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:
7228 Other bars and rods of other alloy steel; angles, shapes of alloy or non-alloy steel:
7228.10.00 Bars and rods, of high-speed steel
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8207 Interchangeable tools for handtools, whether or not power operated, or for machine-tools (for example, for pressing, stamping, punching, tapping, threading, drilling, boring, broaching, milling, turning or screwdriving), including dies for drawing or extruding metal, and rock drilling or earth boring tools; base metal parts thereof:
8207.40 Tools for tapping or threading, and parts thereof:
8207.40.30 With cutting part containing by weight over 0.2 percent of chromium, molybdenum, or tungsten or over 0.1 percent of vanadium
8207.50 Tools for drilling, other than for rock drilling, and parts thereof:
8207.50.20 With cutting part containing by weight over 0.2 percent of chromium, molybdenum, or tungsten or over 0.1 percent of vanadium
8207.60.00 Tools for boring or broaching, and parts thereof
8207.70 Tools for milling, and parts thereof:
8207.70.30 With cutting part containing by weight over 0.2 percent of chromium, molybdenum, or tungsten or over 0.1 percent of vanadium
8207.90 Other interchangeable tools, and parts thereof:
Other:
8207.90.30 Cutting tools with cutting part containing by weight over 0.2 percent of chromium, molybdenum, or tungsten or over 0.1 percent of vanadium
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.
Note 1 to Chapter 72, HTSUS, states, in pertinent part:
In this chapter and, in the case of notes (d), (e) and (f) below throughout the tariff schedule, the following expressions have the meanings hereby assigned to them:
* * *
(d) Steel
Ferrous materials other than those of heading 7203 which (with the exception of certain types produced in the form of castings) are usefully malleable and which contain by weight 2 percent or less of carbon. However, chromium steels may contain higher proportions of carbon.
(e) Stainless steel
Alloy steels containing, by weight 1.2 percent or less of carbon and 10.5 percent or more of chromium, with or without other elements.
(f) Other alloy steel
Steels not complying with the definition of stainless steel and containing by weight one or more of the following elements in the proportion shown:
* * *
0.3 percent or more of chromium
* * *
0.08 percent or more of molybdenum
* * *
0.3 percent or more of tungsten (wolfram)
0.1 percent or more of vanadium
* * *
(m) Other bars and rods
Products which do not conform to any of the definitions at (ij), (k) or (l) above or to the definition of wire, which have a uniform solid cross section along their whole length in the shape of circles, segments of circles, ovals, rectangles (including squares), triangles or other convex polygons (including "flattened circles" and "modified rectangles", of which two opposite sides are convex arcs, the other two sides being straight, of equal length and parallel).
* * *
Subheading Note 1 to Chapter 72, HTSUS, states, in pertinent part:
In this chapter the following expressions have the meanings hereby assigned to them:
* * *
(d) High-speed steel
Alloy steels containing, with or without other elements, at least two of the three elements molybdenum, tungsten and vanadium with a combined content by weight of 7 percent or more, 0.6 percent or more of carbon and 3 to 6 percent of chromium.
* * *
The Harmonized Commodity Description and Coding System Explanatory Notes (EN), constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the EN 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:
(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 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 72 states, in pertinent part:
(IV) Production of finished products
* * *
(C) Subsequent manufacture and finishing
The finished products may be subjected to further finishing treatments or converted into other articles by a series of operations such as:
(1) Mechanical working, i.e., turning, milling, grinding, perforation or punching, folding, sizing, peeling, etc.; however, it should be noted that rough turning merely to eliminate the oxidation scale and crust and rough trimming are not regarded as finishing operations leading to a change in classification.
* * *
EN 72.15 states, in pertinent part:
The bars and rods of this heading may:
* * *
(2) have been subjected to working (such as drilling or sizing, or to further surface treatments than are allowed for products of heading 72.14, such as plating, coating, or cladding (see Part (IV) (C) of the General Explanatory Note to this Chapter), provided that they do not thereby assume the character of articles or of products falling within other headings;
* * *
EN 72.28 states, in pertinent part:
(A) OTHER BARS AND RODS; ANGLES, SHAPES AND SECTIONS
The provisions of the Explanatory Notes to headings 72.14 to 72.16 apply, mutatis mutandis, to the products of this heading.
* * *
EN 82.07 states, in pertinent part:
[T]he tools classified in this heading include:
* * *
(4) Tools for tapping or threading, such as taps and dies, chasers and chaser dies.
(5) Tools for drilling, other than for rock drilling, including drills (spiral or twist drills, centre bits, etc.), brace bits, etc.
(6) Tools for boring or broaching, including reaming.
(7) Tools for milling, e.g. milling cutters (plain, helical, staggered or angle cutters); gear cutting hobs, etc.
* * *
According to the Protestant, the instant products are worked subsequent to the rough forging process. Specifically, they are coil drawn and machined to size. Protestant further asserts that the products are in the shape of cylinders or rods, and that they have a uniform cross section along their whole length in the shape of circles. However, the samples submitted for review do not have a uniform solid cross section along their length because points have been added to one end, and bevels have been added to the opposite end.
In Headquarters Ruling Letter (HQ) 966169, dated April 3, 2003, CBP considered the classification of steel bars with chamfered ends for use as precision linear shafts. The term “chamfer” is not defined in the HTSUS. CBP stated, in this ruling, that “a chamfer is, ‘a beveled surface to eliminate an otherwise sharp corner[]’ as it relates to metalworking. Chamfering is defined in the same source, as ‘making a sloping surface on the edge of a member.’” See HQ 966169 (citing the Metals Handbook, 8th Ed. (American Society of Metals, 1964)). The steel shafts considered in HQ 966169 had chamfered ends, which reduced their diameter between 1/64th and 1/16th inch, for the purpose of removing sharp edges and giving the ends a more finished appearance. CBP found that while “chamfering” is not listed as one of the exemplars of working permitted under Chapter 72, the chamfering of these shafts was similar to rough turning, which General EN(IV)(C)(1) to Chapter 72 considers a type of mechanical working, and which is not regarded as a finishing operation that would lead to a change in classification. Therefore, CBP held that the shafts remained classified under headings 7215, 7222, and 7228, HTSUS (depending on their material composition). See HQ 966169.
The instant products are pointed on one end, and beveled on the other, as shown in the photo above. According to the importer, the ends of the instant products are chamfered to remove burrs/sharp edges and to give a more finished end. The large chamfer creates a sloping surface with a point on the edge of the cylinder. The importer asserts that the chamfers differ in shape for orientation purposes, so that machine operators know in which direction to place the bar for processing. The large chamfer is removed during processing, and is not the final point of the completed product. After importation, the large chamfer is ground and completely removed. It is replaced by a chisel edge angle at this end, and approximately 1/16 to 1/8 inch of steel is removed when creating this new point.
As such, the instant steel rods are “chamfered” on both ends, as that term is defined in HQ 966169. This chamfer is a type of mechanical working similar to rough turning, and as such, does not affect the classification of the instant rods. See EN(A) to 72.28; EN(2) to 72.15; General EN(IV)(C)(1) to Chapter 72. The instant rods meet the definition of “other bars and rods” contained in Note 1(m) to Chapter 72, HTSUS, because they have a uniform solid cross section along their whole length in the shape of a circle. Therefore, they are properly classified under heading 7228, HTSUS.
GRI 2, HTSUS, extends the terms of a heading to include unfinished articles. See GRI 2(a), HTSUS. According to EN(II) to GRI 2, the provisions of GRI 2, HTSUS, also applies to “blanks.” The term “blank” is defined as “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[.]” See EN(II) to GRI 2. Articles qualifying as “blanks” must possess the essential character of the complete or finished good. See HQ H136455, dated March 10, 2011; HQ H006327, dated August 28, 2007; HQ 967908, dated January 24, 2006.
The instant merchandise is not ready for direct use, as it must be further processed by rough centerless grinding, fluting, black oxide coating, finish centerless, clearing, pointing, split pointing, flatting, low temperature stress relief, marking, and packing. Protestant asserts that the instant merchandise may be further processed into one of the following products: high speed drill bits, taps, chucking reamers, car reamers, annular cutters, hobs, end mills, and countersinks. CBP notes that each product is classified under one of the subheadings of heading 8207, HTSUS, as interchangeable tools. Taps are tools for tapping or threading. See NY C83291, dated February 6, 1998; EN(4) to 82.07. High speed drill bits and annular cutters are both tools for drilling, other than rock drilling. See NY C83291; EN(5) to 82.07. Chucking reamers and car reamers are tools for boring or broaching, including reaming. See NY C83291; EN(6) to 82.07. End mills and hobs are tools for milling. See NY C83291; EN(7) to 82.07. Countersinks fall to be classified as other interchangeable tools. See HQ 086308, dated April 6, 1990.
The instant products do not qualify as “blanks.” While the large chamfer resembles the final point to be taken by the final product, this is not actually the case. As discussed above, the large chamfer is ground off; approximately 1/16 to 1/8 inch of steel is removed from this end, so that the actual point can be added after importation. Thus, the instant products do not have the approximate shape or outline of the finished part. See EN(II) to GRI 2. Therefore, the instant rods are not properly classified under heading 8207, HTSUS.
As discussed above, the instant rods are properly classified under heading 7228, HTSUS. With regard to classification at the subheading level, we note that the instant products consist of alloy steel, and contain by weight over 4% each molybdenum and tungsten, more than 0.6% carbon, and more than 3% but less than 6% chromium. Therefore, because the rods are made of “high speed steel,” as that term is defined in Subheading Note 1(d) to Chapter 72, HTSUS, the instant rods are classified under subheading 7228.10.00, HTSUS, which provides for: “Other bars and rods of other alloy steel; angles, shapes of alloy or non-alloy steel: Bars and rods, of high-speed steel”.
HOLDING:
By application of GRI 1, the instant high speed steel rods, which are the subject of protest number 3501-12-100032, are classified in heading 7228, HTSUS, specifically under subheading 7228.10.00, HTSUS, which provides for: “Other bars and rods of other alloy steel; angles, shapes of alloy or non-alloy steel: Bars and rods, of high-speed steel”. The column one, general rate of duty is free. You are instructed to GRANT the protest 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