DRA-4-RR:CR:DR 229650DR
Karen L. Schmidt, Esq.
Attorney-in-fact for ThyssenKrupp Steel, N.A.
Sandler & Travis Trade Advisory Services, Inc.
38345 Ten Mile Road, Suite 200
Farmington Hills, MI 48335
RE: Ruling request of commercial interchangeability of electrogalvanized steel imported from Germany; 19 U.S.C. 1313(j)(2)
Dear Ms. Schmidt:
This letter is in response to a request by your client, ThyssenKrupp Steel North America, Inc. (“Thyssen”), for a binding ruling of commercial interchangeability. Our decision follows.
FACTS:
There are two types of imports and corresponding exports that are the subject of this request. The first type involves alloy steel, while the second involves carbon steel. Both types are flat-rolled steel that is galvanized or electrolytically coated with zinc, with the appellation “alloy” dependent on the titanium content of the steel.
The designated imported alloy steel was imported under entry 016-XXXX251-9 of August 15, 2000. The steel is described on the CF 7501 as a “flat rolled further worked electrolytic steel product with zinc” and classified in subheading 7225.91.0000, HTSUS. The import invoice 25540.01 describes the steel as electrogalvanized coils with a minimum titanium content greater than or equal to 0.05% and meeting the specification ASTM A 917. The width is 64.57 inches and the thickness is .047 inch (1640 mm wide and 1 mm thick). The steel is made up of two different heat numbers: 208464 and 208454. The metallurgical certificate states that heat number 208464 steel contains (in percentages) Carbon 0.001, Silicon 0.030, Manganese 0.120, Phosphorus 0.008, Sulfur 0.0070, Aluminum 0.031 and Titanium 0.056. Heat number 208454 steel contains (in percentages) Carbon 0.002, Silicon 0.030, Manganese 0.130, Phosphorus 0.012, Sulfur 0.0080, Aluminum 0.037, Titanium 0.075. The certificate also includes the results of a tensile test and states that heat number 208464 steel coating varies from 65 g/m2 on one side to 79 g/m2 on the other, and the heat number 208454 steel coating varies from 72 g/m2 on one side to 77 g/m2 on the other. The imported steel weighed 122,800 kilograms and the invoice value was approximately $80,XXX.
The exported alloy steel is described on the export invoice as electrogalvanized covered by DCO5 75/75. That invoice covered 474,648 kilograms and the price was about $49X,XXX. The steel was classified under 7225.91, HTSUS. The size of the steel is described as “1.74 x 1667 (.0688 x 65.613).” We presume that describes a width of 65.613 inches and thickness of 0.0688 inches (1667 mm width and 1.74 mm thickness). There was an export metallurgical test report that stated the chemical analysis to contain (in percentages) Carbon.003, Manganese .12, Phosphorus .009, Sulfur .008, Silicon .005, Copper .020, Aluminum .041, Columbium .001, Vanadium .004, Nickel .016, Chromium .019, Titanium .059, Nitrogen .0021, Molybdenum .007 and Boron .000. The report included tensile test results as well.
The designated carbon steel was entered under entry 016-XXXX956-2 of December 14, 1999. The merchandise is described on the Entry Summary as a flat-rolled ferrous product, electrolytically coated with zinc of other than high-strength steel classified in subheading 7210.30.0060, HTSUS (Harmonized Tariff Schedule of the U.S. (19 U.S.C. 1202)). The steel is said to be 68.1 inches wide and 0.444 inch thick (1730 mm wide and 11 mm thick). While the description includes a reference to an invoice number 21936, the inquirer's broker has explained that the number is a company tracking number rather than an invoice number. That explanation is confirmed by a listing of tracking numbers following the CF7501. The actual invoice is 22586.02 DT.
The link to the various import entry documents is the purchase order number 5106367. The import purchase order states that the steel is to have a minimum coating thickness of 47grams per square meter on both sides, and meet ASTM specification A568. There is also a reference to “DIN EN 10152,” which is a European steel standard. The invoice price of the steel is approximately $19,XXX and the net weight is 35,910 kg. The invoice describes the steel as electrogalvanized coils, “ZSTE 220 BH ZE.” The import mill certificate describes the steel as electrolytically zinc coated steel in coils. The import mill certificate also states the chemical composition for heat number 764464 steel as (in percentages) Carbon 0.003, Silicon 0.006, Manganese 0.280, Phosphorus 0.065, Sulfur 0.0090 and Aluminum 0.022. Heat number 771014 steel (also listed in the mill certificate) had a chemical composition of Carbon 0.002, Silicon 0.005, Manganese 0.210, Phosphorus 0.058, Sulfur 0.0100, and Aluminum 0.043. The report also includes the results of a tensile test, and the average coating thickness of the heat number 771014 steel ranged from 51 to 56 grams per square meter. There is no information concerning the coating thickness of the heat number 774464 steel.
The purchase order specifies that the exported carbon steel is to conform to the “DCO4 ZE 75/75 A O 10152 DIN EN” specification. The export invoice refers to the steel as “DC04 75/75 Electrogalvanized” and covered 466,085 kilograms of steel with a price of about $47X,XXX. The dimensions are said to be 59.289 inches wide and .0593 inch thick (1506 mm wide and 2 mm thick). The Export Packing List dated August 17, 2000, shows that the tariff classification of the exported carbon steel is 7210.30. According to the bill of lading the steel was reported clean on board on August 8, 2000.
ISSUE:
Whether the imported alloy steel and substituted alloy steel are commercially interchangeable for purposes of 19 U.S.C. §1313(j)(2).
Whether the imported carbon steel and substituted carbon steel are commercially interchangeable for purposes of 19 U.S.C. §1313(j)(2). LAW AND ANALYSIS:
Under 19 U.S.C. §1313(j)(2), as amended, drawback may be granted if, among other requirements, there is, with respect to imported duty-paid merchandise, any other merchandise that is commercially interchangeable with the imported merchandise.
Congress has stated that in determining whether two articles are commercially interchangeable, the criteria to be considered would include, but not be limited to governmental and recognized industrial standards, part numbers, tariff classification, and relative values. See House Report 103-361, 103d Cong., 1st Sess., 131 (1993).
The Senate Report for the NAFTA Act contains similar language and states that the same criteria should be considered by Customs in determining commercial interchangeability. See S. Rep. No. 103-189, 103d Cong., 1st Sess., 81-85 (1993); see also Texport Oil Co. v. United States, 185 F.3d 1291, 1295. In addition, the Senate Report states that Customs “should evaluate the critical properties of the substituted merchandise, rather than basing its determination on subjective standards.” Senate Report, at page 83.
In order to determine commercial interchangeability, Customs adheres to the Customs regulations, which implement the operational language of the legislative history. The best evidence whether those criteria are used in a particular transaction is the claimant’s transaction documents. Underlying purchase and sales contracts, purchase invoices, purchase orders, and inventory records show whether a claimant has followed a particular recognized industry standard, or a governmental standard, or any combination of the two, and whether a claimant uses part numbers to buy, sell, and inventory the merchandise in issue. The purchase and sale documents also provide the best evidence with which to compare relative values. Also, if another criterion is used by the claimant to sort the merchandise, the claimant’s records would show that fact which will enable Customs to follow the Congressional directions. Customs has promulgated 19 C.F.R. 191.2(e) and 191.32(c), which identified the above criteria. We have reviewed the submitted information and our analysis follows.
I. ALLOY STEEL
Part numbers
Based upon our review of the documents, part numbers are not used for the purchase or sale of the merchandise. Also, Thyssen has stated in its request that it does not use part numbers to identify its import and exports, but rather uses other criteria. Therefore, this criterion is inapplicable.
Tariff classification
IMPORT
EXPORT
Document
Criteria
Criteria
Document
Entry Summary
7225.91.0000, HTSUS
((Flat-rolled products of other alloy steel, of a width of 600 mm or more, electrolytically plated or coated with zinc)
7225.91, HTSUS
Export invoice
Based upon the above information, we conclude that the tariff classification criterion has been met.
Relative Values
IMPORT
EXPORT
Document
Criteria
Criteria
Document
Import Invoice 25540.01
$79,XXX per 122,800 kg
$48X,XXX per 474,648 kg
Export Packing List
There is a nearly 60% increase between the invoice price of the imported and exported carbon steel. We have held that a variance in price does not necessarily preclude a finding of commercial interchangeability, when other criteria of commercial interchangeability have been met or when sufficient evidence is provided to support the material difference in value. See HQ 227220 (February 10, 1997) (holding that although the price difference of the imported and exported merchandise was in excess of 24%, the imported and exported merchandise qualified under the applicable industry standards and thus, relative value did not have as much weight when determining commercial interchangeability); HQ 226995 (June 4, 1997) (holding that the 35% difference in value was a result of market conditions at the time of import and export). Here, the only “evidence” submitted in support of its assertion that the values are comparable is a statement that briefly outlines additions to the base price, such as profit margin and a “rush order” premium. However, no commercial documents have been submitted which would allow us to confirm that assertion. Therefore, we cannot determine that the value criterion has been met.
Government and Recognized Industry Standards
IMPORT
EXPORT
Document
Criteria
Criteria
Document
Import Invoice 25540.01
“Electrogalvanized coils”;
“DQSK ASTM A 917”;
“oiled”;
“Titan >= 0.05%”
“DCO5 75/75” “Electrogalvanized”
Export Invoice
Mill Certificate
“Electrolytically zinc coated coils in DQSK according to ASTM A 917”
“GALV SHT 75G75G”
Export metallurgical test report
Import Packing List
“DQSK ASTM A 917”
In the Import Invoice, there is a reference to ASTM A 917 (“Standard Specification for Steel Sheet, Coated by the Electrolytic Process for Applications Requiring Designation of the Coating Mass on Each Surface (General Requirements)”). ASTM A 917 covers electrolytic coated steel sheet coated with zinc, in several classes: commercial steel, drawing steel, deep drawing steel extra-deep drawing steel, structural steel, high-strength low-alloy steel and high-strength low-alloy steel with improved formability. The standard does not, however, delve into the composition of the steel itself. Those types of specifications are apparently contained in various ASTM standards referenced in ASTM 917 and dependent on the class of steel. Thyssen has not supplied the ASTM standard that would apply to the class of imported alloy steel that is the subject of this request.
The exported alloy steel documents contain references to “DC05 75/75” and “75G/75G.” Thyssen has explained that “DC05 75/75” refers to a grade of steel described by European standard DIN EN 10152. That standard covers several subcategories of electrolytically zinc coated cold rolled steel flat products and, according to the material submitted by Thyssen’s broker, the specification generally covers cold rolled steel sheet made from mild unalloyed steel but it can be applied to other types of steel, including alloy steel. To wit: the term “DCO5” is defined within DIN EN 10152 as “non-alloy quality steel that may be supplied as alloy steel, unless otherwise agreed at the time of the inquiry and order.” It also lists the manner in which the steel that it covers must be designated, the chemical composition of the steel, types of coating, testing requirements, information to be supplied by the purchaser, and mechanical properties, as well as methods for determining physical properties such as strain ratio, strain hardening exponent, and coating mass, among other things. However, the document does not contain the complete text of the above sections.
The excerpt provided does contain a table that provides information regarding the relevant grades “DC04” and “DC05.” DC05 is described as “non alloy quality steel” with maximum percentages (Carbon) 0.06%, (Phosphorus) 0.025%, (Sulfur) 0.025%, and (Manganese) 0.35%. There is no value in the column for titanium percentage, which we assume denotes a trace amount. A handwritten notation states that DC05 “may sometimes contain enough titanium to be alloy.” Also, there are what appear to be unique parameters (apparently minimum results of certain physical tests to be performed on the different grades of steel) in EN 10152, but which are partially illegible and explained in the missing annexes to EN 10152.
Taking into account the vagaries of the information contained in these documents, i.e., non-specificity of ASTM A917 and the missing or unexplained portions of EN 10152, we cannot make an adequate comparison of the industry standards used by Thyssen in this case. Therefore, this criteria has not been met.
Other critical properties
Titanium Content
IMPORT
EXPORT
Document
Criteria
Criteria
Document
Entry Summary
7225.91.0000, HTSUS;
*Note 1(f) states that steel in this classification must contain at least 0.05% titanium
7225.91, HTSUS
Export invoice
Import Invoice 25540.01
“Titan >= 0.05%”
Metallurgical Certificate
Heat 208464: 0.056 %
Heat 208454: 0.075 %
0.059%
Export metallurgical test report
We conclude that the titanium content of the imported and exported alloy steel is sufficiently comparable and that this criterion has been met.
Carbon content
IMPORT
EXPORT
Metallurgical Certificate
Heat 208464: 0.001%
Heat 208454: 0.002%
0.003%
Export metallurgical test report
We conclude that the carbon content of the imported and exported alloy steel is comparable and that this criterion has been met.
Coating weight
IMPORT
EXPORT
Metallurgical Certificate
Heat 208464: 65 (side 1), 79 (side 2)
Heat 208454: 72 (side 1), 77 (side 2)
* g/m2
Approx. average: 86.67
*g/m2
Export metallurgical test report
DC05 75/75
Export Invoice
According to Thyssen’s metallurgist, the notation “75/75” is derived from European standards and denotes that the coating is on both sides of the steel, measuring at least 7.5 microns per side (thickness). That equals approximately 54 g/m2 (coating weight).
Note that the export metallurgical test report appears to contain a computational error. In the section labeled “Weight of coating tests,” the “AVG” (average) of the measurements of coating on the steel is stated as “173” g/m2 but it should be approximately 86.67 g/m2. With that value corrected and based upon the other measured values, we conclude that the coating weights of the imported steel are sufficiently comparable to the average coating weight of the exported steel, and that this criteria is met.
II. CARBON (“NON-ALLOY”) STEEL
Part numbers
Based upon our review of the documents, part numbers are not used for the purchase or sale of the merchandise. Also, Thyssen has stated in its request that it does not use part numbers to identify its import and exports, but rather uses other criteria. Therefore, this criterion is inapplicable.
Tariff classification
IMPORT
EXPORT
Document
Criteria
Criteria
Document
Entry Summary
7210.30.0060, HTSUS (Flat rolled products of iron or non alloy steel, of a width of 600 mm or more, electrolytically plated or coated with zinc; other)
7210.30, HTSUS
Export Packing List
Based upon the above information, we conclude that the tariff classification criterion has been met.
Relative Values
IMPORT
EXPORT
Document
Criteria
Criteria
Document
Import Invoice 22586.02
$19,XXX per 35,910 kg
$47X,XXX per 466,085 kg
Export Packing List
There is a nearly 90% increase between the invoice prices of the imported and exported carbon steel. As explained supra, we have held that a variance in price does not necessarily preclude a finding of commercial interchangeability, when other criteria of commercial interchangeability have been met or when sufficient evidence is provided to support the material difference in value. Here, the only “evidence” submitted in support of its assertion that the values are comparable is a statement that outlines the various additions to the base cost of the exported steel. However, no commercial documents have been submitted which would allow us to confirm that assertion. Therefore, we cannot conclude that the value criterion has been met.
Government and Recognized Industry Standards
IMPORT
EXPORT
Document
Criteria
Criteria
Document
Import Invoice
“Electrogalvanized coils”;
“ZSTE 220 BH ZE”;
“oiled”
DC04 75/75 Electrogalvanized
Export Invoice
Import Purchase Order
“ASTM specification A 568”;
“DIN EN 10.204/2.2”;
“ZSTE 220 BH ZE 75/75 O3 gem. SEW 094”
DCO4 ZE 75/75 A O;
DIN EN 10152
Purchase Order
On the Import Invoice, there is a reference to ASTM standard A568 (“Standard Specification for Steel, Sheet, Carbon, and High-Strength, Low-Alloy, Hot-Rolled and Cold-Rolled, General Requirements for”). This specification covers the general requirements for steel sheet in coils and cut lengths. It applies to the following specifications that describe carbon steel and high-strength, low-alloy steel (HSLA) furnished as hot-rolled sheet and cold-rolled sheet: Specifications A 414/A 414M, A 424, A 606, A 659/A 659M, A 794, A 1008/A 1008M, and A 1011/A 1011M.
The exported carbon steel documents contain references to European standard DIN EN 10152, which covers several subcategories of electrolytically zinc-coated cold rolled steel flat products. According to the material submitted by the inquirer's broker, the specification generally covers cold rolled steel sheet made from mild unalloyed steel, it can be applied to other types of steel, including alloy steel. It lists the manner in which the steel that it covers must be designated, the chemical composition of the steel, and the mechanical properties, among other things. The term “DCO4” is listed within the specification, and is also referenced in the documents. It denotes non-alloy quality steel that may be supplied as alloy steel, unless otherwise agreed at the time of the inquiry and order. DC04 is described as “non alloy quality steel” with maximum percentages (Carbon) 0.08%, (Phosphorus) 0.03%, (Sulfur) 0.03%, and (Manganese) 0.40%. However, if the maximum percentage of phosphorus is 0.03%, but the measured values of the carbon steel here are .065% and .058%, then it is unclear to us how that DC04 standard can be applicable.
Also, the designated imported steel is nearly six times thicker than the substituted export and our Office of Laboratories and Scientific Services has informed us that the increase in thickness between the steels would mean the steels could not be interchangeable for stamping operations. No information has been submitted which would contradict that conclusion.
Based upon an analysis of the supplied information and the referenced standards, we cannot conclude that this criteria has been met. If the maximum percentage of phosphorus is 0.03%, but the measured values of the carbon steel here are .065% and .058%, then it is unclear to us how that DC04 standard can be applicable. Also, the differences in thickness between the imported and exported steels make it improbable that the steels are interchangeable.
Other critical properties
According to the ruling request, Thyssen uses the categories of titanium content, carbon content, total weight, and coating weight to buy and sell its steel products. The Import Entry Summary and Mill Certificates allow Thyssen to deduce the titanium content of its steel, by way of the tariff classification of the steel and, due to its stated business practices, i.e., whether or not the Mill Certificate contains any reference to titanium content. Thyssen does not list titanium content if the content is less than 0.05%. The term “DC04” denotes non-alloy quality steel that may be supplied as alloy steel, unless otherwise agreed at the time of the inquiry and order. See DIN EN 10152, Notes to Table 1.
Titanium Content
IMPORT
EXPORT
Document
Criteria
Criteria
Document
Mill Certificate
not listed
Specifies that the exported carbon steel is to conform to the “DCO4 ZE 75/75 A O 10152 DIN EN”
Purchase order
The European standard DIN EN 10152 covers several subcategories of electrolytically zinc-coated cold rolled steel flat products. According to the material submitted, the specification generally covers cold rolled steel sheet made from mild unalloyed steel, it can be applied to other types of steel, including alloy steel. The term “DCO4” is listed within the specification, and denotes non-alloy quality steel that may be supplied as alloy steel, unless otherwise agreed at the time of the inquiry and order. However, there is nothing in the submitted information which would allow this office to deduce the actual titanium content of the exported steel, confirm that it is in fact less than 0.05%, nor compare it to the titanium content of the imported steel. Therefore, we cannot conclude that this criteria has been met.
Carbon content
IMPORT
EXPORT
Mill certificate
Heat 764464: 0.003%
Heat 771014: 0.002%
No information
No information
Note that the maximum allowable carbon content of the exported “DC04” steel is 0.08%, according to EN 10152. However, because there is nothing in the submitted information that would allow us to deduce the actual carbon content of the steel, we cannot conclude that this criteria has been met.
Coating weight (g/m2)
IMPORT
EXPORT
Purchase Order
47 g/m2 (minimum per side)
DCO4 ZE 75/75 A O 10152 DIN EN
Purchase Order
Mill Certificate
Heat 771014: 51 (side 1), 56 (side 2) *g/m2
Heat 774464: no values listed
DC04 75/75 Electrogalvanized
Export Invoice
The notation “75/75” means that the coating is on both sides of the steel, measuring at least 7.5 microns per side, which equals approximately 54 g/m2. However, without explicit measurements of the coating weight of both the imported and exported carbon steel, we cannot conclude that they are comparable. Therefore, this criteria has not been met.
* * * *
In conclusion, we find that the imported alloy steel is commercially interchangeable with the exported alloy steel. Although there are questions regarding the relative values of the steel, and the industry standards used to buy and sell the steel, we note that the criteria of tariff classification, titanium content, coating weight and carbon content have been sufficiently met in order for us to reach this decision.
By contrast, we do not believe that Thyssen has presented information which would allow us to determine that the imported and exported carbon steel are commercially interchangeable. The criterion of relative value has not been met due to lack of documentation. The documents lack measurements of titanium content, coating weight and carbon content which would allow us to conclude that those criterion have been met. Finally, the measurements that have been provided, i.e., phosphorus content of the imported carbon steel, exceed the maximum value allowed by EN 10152. Because EN 10152 is the industry standard used by Thyssen’s European customer to order the exported steel, and the exported steel is supposed to be commercially interchangeable with the imported steel, then it is imperative that the imported steel’s characteristics fall within the limits of EN 10152. This problem is compounded by the fact that there are no measurements of the chemical composition of the exported steel that could allow a direct comparison between the imported and exported steel. Therefore, we cannot conclude that the imported carbon steel is commercially interchangeable with the exported steel.
HOLDING:
The imported alloy steel and exported alloy steel are commercially interchangeable for purposes of 19 U.S.C. §1313(j)(2). The imported carbon steel and the exported carbon steel are not commercially interchangeable for purposes of 19 U.S.C. §1313(j)(2).
Sincerely,
Myles Harmon
Director, Commercial Rulings Division