OT:RR:CTF:CPMMA H304529 TJD
Mr. John B. Pellegrini, Esq.
McGuireWoods
1251 Avenue of The Americas
20th Floor
New York, NY 10020-1104
RE: Revocation of HQ 965520 and NY 898929; Tariff classification of Steel T-sections
Dear Mr. Pellegrini:
This is to inform you that U.S. Customs and Border Protection (“CBP”) has reconsidered Headquarters’ Ruling Letter (“HQ”) 965520, dated July 9, 2002 (issued to Yamato Kogyo (USA) Corporation), and New York Ruling Letter (“NY”) 898929, dated July 6, 1994 (issued to Tricoastal Industries, Inc.), regarding the tariff classification of steel T-sections under the Harmonized Tariff Schedule of the United States (“HTSUS”). In HQ 965520 and NY 898929, CBP classified the T-sections in heading 8431, HTSUS, specifically in subheading 8431.31.00, HTSUS, which provides for “parts suitable for use solely or principally with the machinery of headings 8425 to 8430: Of machinery of heading 8428: Of passenger or freight elevators other than continuous action, skip hoists or escalators.” We have determined that the two CBP rulings are in error and that the correct tariff classification is in heading 7216, HTSUS, specifically under subheading 7216.50.00, HTSUS, which provides for “Angles, shapes and sections of iron or nonalloy steel: Other angles, shapes and sections, not further worked than hot-rolled, hot-drawn or extruded.” Accordingly, for the reasons set forth below, we hereby revoke HQ 965520 and NY 898929.
Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. § 1625(c)(1)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat. 2057), a notice of the proposed action was published in the Customs Bulletin, Volume 55, No. 51, on December 29, 2021. One comment, which is addressed below, was received in response to this notice.
FACTS:
HQ 965520 describes the subject non-alloy steel T-sections as follows:
The merchandise … is six types of elevator guide rails: EG 8K, EG 13K, EG 18K, EG 24K, EG 30K and EG 50K. The merchandise consists of T-shaped sections of hot-rolled, non-alloy steel. The guide rails will be imported in various dimensions (height and width) but in a single standard length of 16,437 feet … [sic] The merchandise is used to guide elevator cars as they travel up and down the elevator shaft. The merchandise will be sold in its condition as imported with minor modifications … [sic] As imported, the articles are cut to length and essentially have the same shape as the finished article. The imported articles have no practical use other than as elevator rail guides.
[T]he post-importation modifications will consist of the following: creating a notch in one side of the guide; creating a groove along the opposite side; boring eight bolt holes in the bottom; chamfering the bolt holes; machining the top to adjust the dimensions; and machining to smooth the sides of the vertical runner.
NY 898929 describes the low carbon steel T-sections as follows:
Elevator guide rails are T-shaped rails used to guide elevator cars as they travel up and down the elevator shaftway. The merchandise in question will be imported in two conditions - unfinished and finished.
In the finished condition, a hot rolled “T” section of ordinary low carbon structural steel has undergone processing prior to importation to produce an article to be solely used as an elevator guide rail. Processing includes machining operations such as straightening, planing [sic], and milling and painting to prevent rust. The rails weigh from 8 to 30 pounds per foot. Lengths vary from 10 to 20 feet depending upon customer specifications but are generally 16 feet for most applications.
ISSUE:
Whether the subject steel T-sections are classifiable in heading 7216, HTSUS, as angles, shapes and sections of nonalloy steel; or heading 8431, HTSUS, as parts suitable for use solely or principally with elevators.
LAW AND ANALYSIS:
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. Pursuant to GRI 6, classification at the subheading level uses the same rules, mutatis mutandis, as classification at the heading level.
GRI 2(a) states:
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 2024 HTSUS provisions under consideration are as follows:
7216 Angles, shapes and sections of iron or nonalloy steel:
7216.50.00 Other angles, shapes and sections, not further worked than hot-rolled, hot-drawn or extruded
Other:
7216.99.00 Other
8428 Other lifting, handling, loading or unloading machinery (for example, elevators, escalators, conveyors, teleferics)
8431 Parts suitable for use solely or principally with the machinery of headings 8425 to 8430:
Of machinery of heading 8428:
8431.31.00 Of passenger or freight elevators other than continuous action, skip hoists or escalators
Note 1(f) to section XV, HTSUS, states that, “[t]his section does not cover: … Articles of section XVI (machinery, mechanical appliances and electrical goods).”
Note 2(b) to section XVI, HTSUS, states that parts that are “suitable for use solely or principally with a particular kind of machine … are to be classified with the machines of that kind or in heading … 84.31 ….”
Note 1(n) to chapter 72, HTSUS, describe angles, shapes, and sections of chapter 72 as “[p]roducts having a uniform solid cross section along their whole length which do not conform to any of the definitions at (ij), (k), (l) or (m) above or to the definition of wire.”
Additional U.S. note 2 to chapter 72 provides, in pertinent part:
For the purposes of this chapter, unless the context provides otherwise, the term “further worked” refers to products subjected to any of the following surface treatments: polishing and burnishing; artificial oxidation; chemical surface treatments such as phosphatizing, oxalating and borating; coating with metal; coating with nonmetallic substances (e.g., enameling, varnishing, lacquering, painting, coating with plastics materials); or cladding.
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 (Aug. 23, 1989).
The ENs to GRI 2(a) provide, in relevant part:
(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 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” ….
EN 72.16 states, in pertinent part, the following:
Angles, shapes and sections are defined in Note 1 (n) to this Chapter.
The sections most commonly falling in this heading are H, I, T, capital Omega, Z and U (including channels), obtuse, acute and right (L) angles. The corners may be square or rounded, the limbs equal or unequal, and the edges may or may not be “bulbed” (bulb angles or shipbuilding beams).
Angles, shapes and sections are usually produced by hot rolling, hot drawing, hot extrusion or hot-forging or forging blooms or billets….
The products of this heading may have been subjected to working such as drilling, punching or twisting or to surface treatment such as coating, plating or cladding see Part IV (C) of the General Explanatory Note to this Chapter, provided they do not thereby assume the character of articles or of products falling in other headings.
The heavier angles, shapes and sections (e.g., girders, beams, pillars and joists) are used in the construction of bridges, buildings, ships, etc.; lighter products are used in the manufacture of agricultural implements, machinery, automobiles, fences, furniture, sliding door or curtain tracks, umbrella ribs and numerous other articles.
* * *
In Bauerhin Techs. Ltd. P’ship. v. United States, 110 F.3d 774 (Fed. Cir. 1997), the United States Court of Appeals for the Federal Circuit (“CAFC”) identified two distinct lines of cases defining the word “part.” Consistent with United States v. Willoughby Camera Stores, Inc., 21 C.C.P.A. 322, 324 (1933) (citations omitted), one line of cases holds that a part of an article “is something necessary to the completion of that article. . . . [W]ithout which the article to which it is to be joined, could not function as such article.” The other line of cases evolved from United States v. Pompeo, 43 C.C.P.A. 9, 14 (1955), which held that a device may be a part of an article even though its use is optional and the article will function without it, if the device is dedicated for use upon the article, and, once installed, the article will not operate without it. The definition of “parts” was also discussed in Rollerblade, Inc. v. United States, 282 F.3d 1349, 1353 (Fed. Cir. 2002), wherein the CAFC defined parts as “an essential element or constituent; integral portion which can be separated, replaced, etc.” This line of reasoning has been applied in previous CBP rulings.
However, before examining whether the goods in question satisfy one or both of the aforementioned tests, we note that they only qualify to be “parts” of the good (i.e., an elevator) if they bear a “direct relationship” to the good, such that the good is the “primary article” of which the item is a component. Otherwise, as the U.S. Court of International Trade (“CIT”) and its predecessor, the Customs Court, have held, the item will be considered merely a “part” of whatever intermediate part constitutes the primary article.
CBP has consistently adhered to this principle by excluding parts of “primary articles” from HTSUS “parts provisions” where the primary articles themselves are parts classifiable in such provisions. For example, in HQ H169057, dated September 4, 2014, CBP ruled that a front frame designed to reinforce a wind engine, which in turn constituted one of two components of a wind generator, could not be classified as part of the wind generator itself. Similarly, HQ H005091, dated January 24, 2007, excluded from heading 8708, HTSUS, which provides for motor vehicle parts, a trunk assembly that constituted one of several component parts of an automobile trunk lock. In sum, it is not enough that an item will eventually form a portion of another article. Rather the item must be processed to the point where it is no longer recognizable as a profile but instead has the character of a finished part.
As imported, the subject merchandise in HQ 965520 and NY 898929 will need to undergo a total fabrication before it will be ready for assembly in the elevator shaft and recognizable as a finished part. The subject merchandise in HQ 965520 was imported as T-shaped sections in a single standard length of 16.437 feet or 5 meters. The subject merchandise in NY 898929 was imported as T-shaped sections in lengths varying from 10 to 20 feet (generally 16 feet).
Post-importation, the subject merchandise in HQ 965520 will be subjected to the following operations: creating a notch in one side of the guide, creating a groove along the opposite side, boring eight bolt holes in the bottom, chamfering the bolt holes, machining the top to adjust the dimensions, and machining to smooth the sides of the vertical runner. Once these operations are completed, the subject merchandise would then be assembled in the elevator shaft.
CBP has determined that the subject merchandise in HQ 965520 and NY 898929, at importation, are T-shaped sections and not parts of elevators. Even after machining operations such as straightening, planning, milling, and painting to prevent rust, the merchandise remains a T-shaped section. It has not been combined with any other section or the fishplates, brackets, braces control elements, roller clamps or other materials that make the section dedicated to use as a guide rail. Machining operations such as straightening, planning, and milling and painting to prevent rust do not make the sections suitable for use solely with lifting equipment and do not cause the subject merchandise to assume the character of articles of heading 8431, HTSUS.
The instant merchandise, which is imported in the form of T-shaped sections of hot-rolled, non-alloy steel in various dimensions, is described by the term “angles, shapes, and sections” set forth in note 1(n) to chapter 72, HTSUS. Heading 7216, HTSUS, includes T-shapes as well as “other” shapes, such as special profiles of non-standard cross-section including those used in the manufacture of machinery and automobiles. T-shapes that have been drilled, punched, twisted, or subjected to surface treatment such as coating, plating or cladding are classifiable in heading 7216, HTSUS.
For similar reasons, the subject steel T-sections are not unfinished guiderails under GRI 2(a). The imported T-shaped sections must be further manufactured to be considered an unfinished guiderail for use with an elevator. As such, the subject T- shaped sections cannot be considered a blank of a guide rail.
Lastly, CBP has previously classified incomplete nonalloy steel profiles in subheadings 7216.50.00 and 7216.99.00, HTSUS. In NY N295858, dated May 3, 2018, and NY N295670, dated April 27, 2018, nonalloy steel profiles, which were further machined, assembled into a frame, and painted after importation, were classified under subheading 7216.50.00, HTSUS. In NY I85271, dated September 13, 2002, steel beams used in construction that did not have the essential character of the finished parts were classified in subheading 7216.99.00, HTSUS. In NY 884276, dated April 21, 1993, painted carbon steel ribbed profile sheeting cut in length ready to be used in roofing and siding applications was classified in heading 7216, HTSUS. Accordingly, the subject merchandise in both HQ 965520 and NY 898929 are properly classified in heading 7216, HTSUS.
In the comment we received, the commenter argues that guiderails are parts of elevators, i.e., solely, and principally suitable for use in elevators and classified in heading 8431, HTSUS. CBP has laid out the two tests applied to determine whether merchandise is considered a “part.” The subject merchandise, however, is neither a guiderail nor an incomplete or unfinished guiderail with the essential character of a complete or finished article. The subject merchandise is a T-section of nonalloy steel. Therefore, the subject merchandise is not classified in heading 8431, HTSUS.
Therefore, by application of GRIs 1 and 6, the subject merchandise are steel special profile shapes of heading 7216, HTSUS. The subject steel profile shapes described in HQ 965520 are classified specifically under subheading 7216.50.00, HTSUS, which provides for other angles, shapes and sections of nonalloy steel, not further worked than hot-rolled, hot-drawn or extruded. The subject steel profile shapes described in NY 898929, having been painted and thus further worked, are classified in subheading 7216.99.00, HTSUS, which provides for other angles, shapes and sections of nonalloy steel that is drilled, notched, punched or cambered.
HOLDING:
By application of GRIs 1 and 6, the subject steel T-sections are classified in heading 7216, HTSUS. Specifically, the steel profile shapes in HQ 965520 are classified under subheading 7216.50.00, HTSUS, as “Angles, shapes and sections of iron or nonalloy steel: Other angles, shapes and sections, not further worked than hot-rolled, hot-drawn or extruded.” The steel profile shapes in NY 898929 are classified under 7216.99.00, HTSUS, as “Angles, shapes and sections of iron or nonalloy steel: Other: Drilled, notched, punched or cambered” for the reasons explained above. The 2024 column one, general rate of duty is free for both subheadings.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided at https://hts.usitc.gov/.
EFFECT ON OTHER RULINGS:
HQ 965520, dated July 9, 2002, and NY 898929, dated July 6, 1994, are hereby REVOKED.
In accordance with 19 U.S.C. § 1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.
Sincerely,
Yuliya A. Gulis, Director
Commercial and Trade Facilitation Division
Cc: Mr. Tom Cleveland Tricoastal Industries, Inc. 535 Connecticut Avenue Norwalk, Connecticut 06854