CLA-2 OT:RR:CTF:CPMM H317528 CKG
Mr. Paul Aberly
The Aberly Group
7934 North 54th Place
Paradise Valley, AZ 85253
RE: Revocation of HQ H027436; forged titanium billets; Additional U.S. Note 1 to
Section XV
Dear Mr. Aberly:
This is in reference to Headquarters Ruling Letter ("HQ") H027436, issued to you on April 16, 2009, in which the tariff classification of forged titanium billets was determined under the Harmonized Tariff Schedule of the United States ("HTSUS"). Through HQ H027436, U.S. Customs and Border Protection ("CBP") revoked HQ 966570, dated November 7, 2003, which in turn revoked New York Ruling Letter ("NY") A84786, dated July 12, 1996. In HQ 966570, CBP classified the titanium billets under subheading 8108.90.60, HTSUS, as "other" titanium and articles thereof, and in HQ H027436, CBP reclassified the subject merchandise under subheading 8108.20, HTSUS, as unwrought titanium. We have reconsidered HQ H027436 and determined that the tariff classification of the articles described therein is not correct. For the reasons set forth below, we hereby revoke HQ H027436.
FACTS:
The merchandise at issue was described in NY A84786 and HQ 966570 as being imported in billet form and thereafter to be melted down for use in the manufacture of recreational equipment. The chemical analysis of the product was stated to be 90 percent titanium, 6 percent aluminum, and 4 percent vanadium, by weight. The product was not further described.
ISSUE:
Whether the forged titanium billets should be classified under subheading 8108.20 as "Unwrought titanium" or under subheading 8108.90.60 as "Other."
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.
GRI 6 provides that the classification of goods in the subheading of a heading shall be determined according to the terms of those subheadings on the understanding that only subheadings at the same level are comparable.
The HTSUS provisions under consideration are as follows:
8108 Titanium and articles thereof, including waste and scrap:
8108.20 Unwrought titanium; powders ....
8108.20.0091 Other ....
8108.90 Other:
8108.90.60 Other ....
Additional U.S. Note 1 to Section XV, HTSUS, in which Chapter 81 is located, provides:
For the purposes of this section, the term "unwrought" refers to metal, whether or not refined, in the form of ingots, blocks, lumps, billets, cakes, slabs, pigs, cathodes, anodes, briquettes, cubes, sticks, grains, sponge, pellets, flattened pellets, rounds, rondelles, shot and similar manufactured primary forms, but does not cover rolled, forged, drawn or extruded products, tubular products or cast or sintered forms which have been machined or processed otherwise than by simple trimming, scalping or descaling. (emphasis added)
In construing the provisions of this Note, the Court of International Trade has found that:
The definition of unwrought contained in Additional U.S. Note 2 [now Note 1] connotes a stage in a manufacturing process which eventually results in a different ultimate product. The Court concludes that the phrase "manufactured primary forms" refers to forms that have undergone some processing but must undergo further processing before they appear in an eventual final product. This definition provides a unifying characteristic for the otherwise disparate enumerated forms.
Anval Nyby Powder AB v United States, 20 Ct. Int'l Trade 608, 616; 927 F. Supp. 463, 471 (citations omitted) (1996).
In HQ H027436, CBP concluded that "it is clear from the statements of the court that the term "unwrought" is in no way tied to a particular manufacturing process (such as hot rolling or forging). Rather, it refers to a product at an intermediate stage of a manufacturing process...Based on the above meanings of "unwrought", we find that subheading 8108.20, HTSUS, provides for, without limitation, titanium that has not been worked into a finished condition. Accordingly, we find that the titanium billets are classified under subheading 8108.20, HTSUS, as "unwrought titanium" because they have not been worked into a finished condition." (emphasis added)
HQ H027436 no longer reflects the views of CBP on the classification of the subject forged titanium billets, or the legal definition of "unwrought" pursuant to Additional US Note 1 to Section XV.
As noted in HQ H027436, the Court in Anval concluded that the phrase "manufactured primary forms" refers to forms that have undergone some processing but must undergo further processing before they appear in an eventual final product. However, the Court did not address whether the exclusion in Additional Note 1 of "rolled, forged, drawn or extruded products" also limited the scope of the term "unwrought" for tariff purpose. This exclusion was simply not pertinent to the classification of the merchandise at issue before the court, which was neither rolled nor forged nor drawn nor extruded. Rather, the merchandise before the court had been produced via an "inert gas atomization process"-i.e, the cobalt alloy was melted in a furnace, then forced out through a nozzle into a stream of either nitrogen or argon, which turned the metal into liquid droplets. When the droplets cooled down, they solidified into powder. This process does not fall under any of the production processes listed in Additional Note 1, and therefore the court did not opine on the limitations imposed by this exclusion on the scope of unwrought products.
Because the Court did not preclude the application of the exclusion in Additional US Note 1, the Anval decision and analysis are in no way inconsistent with the obvious interpretation of the Note-i.e., that forged products are not unwrought, regardless of their stage of production. The proper interpretation of the term "unwrought" must therefore include both the definition provided by the Court in Anval and the express terms of Additional US Note 1, Thus, unwrought products (manufactured primary forms) are characterized both by the stage of processing and by the specific production processes applied to them, as follows: 1. Manufactured primary forms must be in an intermediate stage of production, not yet in final form, and 2. Manufactured primary forms cannot be forged, rolled, drawn or extruded, nor can they include tubular products or cast or sintered forms which have been machined or processed otherwise than by simple trimming, scalping or descaling.
Therefore, HQ H027436 erred both in declaring that the Anval Court decision should be interpreted to mean that "subheading 8108.20, HTSUS, provides for, without limitation, titanium that has not been worked into a finished condition", and in finding that forged titanium billets can be classified as unwrought products of subheading 8108.20, against the clear terms of Additional US Note 1.
Accordingly, we find that the titanium billets are classified under subheading 8108.90, HTSUS, as other articles of titanium.
HOLDING:
By application of GRI 1 through the provisions of GRI 6, the titanium billets are correctly classified under heading 8108, HTSUS. They are specifically provided for in subheading 8108.90.60, HTSUS, which provides for "Titanium and articles thereof, including waste and scrap: Other: Other." The 2022 column one, general rate of duty is 15%.
EFFECT ON OTHER RULINGS:
HQ H027436, dated April 16, 2009, is hereby revoked.
Sincerely,
Yuliya A. Gulis, Director
Commercial and Trade Facilitation Division