CLA-2 OT:RR:CTF:TCM H218910 DSR
Sandra L. Friedman, Esq.
Barnes, Richardson & Colburn
475 Park Avenue South
New York, NY 10016
RE: Ruling request concerning the tariff classification of scrap electronic circuit boards from various countries
Dear Mrs. Friedman:
This is in response to the request, from Abington Reldan Metals (hereafter “AR Metals”), for a binding ruling on the tariff classification under the Harmonized Tariff Schedule of the United States (“HTSUS”) of scrap printed circuit assemblies (“PCAs”) imported from various countries. The original request was dated January 25, 2012, and was supplemented by submissions dated February 26, 2012, and April 9, 2012, along with samples of PCAs that you claim to represent the condition of the imported PCAs. We have examined the information submitted by you and our ruling follows.
FACTS:
The articles under consideration are PCAs that you state are imported for the reclamation of certain metals contained therein. We note that in your January 25, 2012, submission, you stated that the “articles consist mainly of printed circuit boards. In some cases, the lots may also include cell phones and other discarded electronics such as motherboards, server devices and micro processors (sic).” In later communications, you indicated that the scope of the ruling request only concerns the PCAs.
You state that the articles are shipped and packed without protective wrappings in tightly stuffed textile bags or cardboard containers, and no effort is made to protect the surfaces or integrity of the articles during packing and shipping. The submitted samples are stated to be representative of the articles under consideration and contain various mounted components, e.g., transistors, diodes, integrated circuits, in various stages of disrepair.
Such disrepair ranges from components that are cracked and partially separated from what appear to be fiberglass circuit board substrates, to components (and the components’ connectors) that are partially or completely covered with a corrosive, rust-like substance. In addition, the substrates are themselves cracked and frayed, with printed circuits that are pitted and corroded. You have submitted no evidence that the imported PCAs are dedicated for use with any particular electronic good or for a particular function.
You state that AR Metals is not engaged in the sale of electronic devices or parts and that the articles are mulched at AR Metals’ domestic plant, where all components of the articles are destroyed and the metals are recovered for remelting either at the plant or at an alternate site. The articles are priced, traded and sold based on their recoverable metal content.
In terms of weight, copper is the principal metal recovered, with submitted assay reports showing that copper represents approximately nine to thirty-six percent of the total weight of the printed circuit assemblies, with plastics and other metals such as iron, steel, gold, silver, palladium accounting for the remainder of the total weight. With regard to the iron, steel, and plastic, you state that those materials have very little value in the reclamation market and efforts to recover those materials are mainly geared towards environmental protection rather than for the recovery of revenue. The recovered gold, silver and palladium, while much more expensive per ounce compared to the copper, are said to make up a miniscule percentage of the total weight of the articles and, as with iron, steel and plastics, recovery efforts are not concentrated on those metals.
ISSUE:
Whether the imported articles are classifiable under (1) heading 3915, as waste, parings and scrap, of plastics; (2) heading 7112, HTSUS, as waste and scrap of precious metal or of metal clad with precious metal; (3) heading 7204, HTSUS, as ferrous waste and scrap; (4) heading 7404, HTSUS, as copper waste and scrap; (5) heading 8533, HTSUS, as electrical resistors (including rheostats and potentiometers), other than heating resistors; (6) heading 8534, HTSUS, as printed circuits; (7) heading 8537, HTSUS, as other boards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of heading 8535 or 8536, for electric control or the distribution of electricity … other than switching apparatus of heading 8517; or (8) heading 8542, HTSUS, as electronic integrated circuits?
LAW AND ANALYSIS:
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRI's). 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 based on GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRI’s 2 through 6 may then be applied in order. The following HTSUS provisions are under consideration:
3915 Waste, parings and scrap, of plastics:
* * *
7112 Waste and scrap of precious metal or of metal clad with precious metal; other waste and scrap containing precious metal or precious metal compounds, of a kind used principally for the recovery of precious metal:
* * *
7204 Ferrous waste and scrap; remelting scrap ingots of iron or steel:
* * *
7404 Copper waste and scrap:
* * *
8533 Electrical resistors (including rheostats and potentiometers), other than
heating resistors; parts thereof:
* * *
8534 Printed circuits:
* * *
8537 Boards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of heading 8535 or 8536, for electric control or the distribution of electricity … other than switching apparatus of heading 8517:
* * *
8542 Electronic integrated circuits; parts thereof:
* * * *
In addition, 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 (August 23, 1989). EN 39.15 states, in relevant part:
The products of this heading may consist of broken or worn articles of plastics, clearly not usable for their original purposes, or of manufacturing waste (shavings, dust, trimmings, etc.). Some waste can be reused as moulding material, varnish base, fillers, etc.
…
The heading also excludes waste, parings and scrap, of plastics, containing precious metal or precious metal compounds, of a kind used principally for the recovery of precious metal (heading 71.12).
There is no definition of waste and scrap in the text or ENs to Chapter 39. However, several cases have discussed the definition of waste and scrap. For instance, in Latimer v. United States, 223 U.S. 501 (1912), the Court held that broken tobacco leaves used in making a cheaper grade of tobacco products were not waste because they were used for the main purpose of making tobacco products. Likewise, in Mawer-Gulden-Annis (Inc.) v. United States, 17 C.C.P.A. 270, T.D. 43689 (1929), the court held that imperfect or broken olives, not salable as perfect or whole or stuffed olives, were not waste. The court reached its decision by noting that while inferior to perfect or whole olives, they nevertheless possessed the same food qualities and some of the uses of whole, pitted green olives. In citing these cases, the court in United States v. David Studner, et al., 57 C.C.P.A. 122, 427 F.2d 819, 821, C.A.D. 990 (1970), approved the following definition of waste: "[T]hat which has no original value or no value for the ordinary or main purpose of manufacture." This reading comports with the language of EN 39.15. These definitions center on the inability of the waste or scrap to retain any of its original purpose.
Note 8(a) to Section XV, HTSUS defines “waste and scrap” as “[m]etal waste and scrap from the manufacture or mechanical working of metals, and metal goods definitely not usable as such because of breakage, cutting-up, wear or other reasons.” Further, EN 72.04 provides in pertinent part:
(A) WASTE AND SCRAP
…
Waste and scrap is generally used for the recovery of metal by remelting or for the manufacture of chemicals.
But the heading excludes articles which, with or without repair or renovation, can be re-used for their former purposes or can be adapted for other uses; it also excludes articles which can be refashioned into other goods without first being recovered as metal […]
Chapter 71, Additional U.S. Note 1(c), HTSUS, in part defines the phrase “waste and scrap” to include materials and articles of metals which are second-hand or waste or refuse, or are obsolete, defective or damaged, and which are fit only for the recovery of the metal content. EN 71.12(E) states that heading 7112, HTSUS, includes waste and scrap of electronic circuit boards and similar carriers containing precious metal (e.g., gold or silver).
If the subject articles fit within any of the above waste and scrap provisions, then they would necessarily be excluded from classification within the other headings under consideration.
You state that AR Metals is not engaged in the sale of electronic devices or parts and that the articles are mulched at AR Metals’ domestic plant, where all components of the articles are destroyed and the metals (mainly copper) are recovered for remelting either at the plant or at an alternate site. Further, you have supplied sample invoices that show certifications from the suppliers of the printed circuit boards confirming the accuracy of the invoice descriptions of the merchandise as scrap no longer suitable for their intended purpose. Most tellingly, the submitted samples contain various mounted components, e.g., transistors, diodes, integrated circuits, in various stages of disrepair. Such disrepair ranges from components that are cracked and partially separated from what appear to be fiberglass circuit board substrates, to components (and the components’ connectors) that are partially or completely covered with a corrosive, rust-like substance. In addition, the substrates are themselves cracked and frayed, with printed circuits that are pitted and corroded. Considering the information you have submitted and our examination of the representative samples, we are satisfied that merchandise in a condition represented by the samples would be waste and scrap – the question that remains is what type of waste and scrap.
The subject waste and scrap articles are composed of plastics and certain metals. They constitute composite goods under the HTSUS. GRI 3(b) states the following:
[m]ixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.
The EN to GRI 3(b) (VIII) states the following:
[t]he factor which determines essential character will vary as between different kinds of good. It may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of the constituent material in relation to the use of the goods.
You have submitted documentation that shows the recovered copper greatly predominates by weight over other metals and plastic recovered for processing, with most of the recovery efforts expended by AR Metals being expended upon extraction of the copper. Therefore, it is our position that the essential character of the subject merchandise is provided by the copper.
As noted above, heading 7404, HTSUS, provides for “Copper waste and scrap.” Therefore, the applicable subheading for the subject merchandise will be 7404.00.60, HTSUS, which provides for “Copper waste and scrap: Other.”
We also recognize that the question as to whether damaged or worn-out articles are waste and scrap involves variable facts that can only be determined by inspection at the time of importation. Both the condition of the merchandise and its subsequent disposition are subject to verification by the Port Director at his/her discretion. See 19 C.F.R. 177.9(b).
HOLDING:
By application of GRI 3, the subject articles are classified in heading 7404, HTSUS, specifically in subheading 7404.00.60, HTSUS, which provides for “Copper waste and scrap: Other.” The column one, general rate of duty is “Free.”
Duty rates are provided for your convenience and subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided at www.usitc.gov.
Sincerely,
Ieva O’Rourke, Chief
Tariff Classification and Marking Branch