CLA-2:CO:R:C:M 956468 JAS

Thomas J. O'Donnell, Esq.
O'Donnell, Byrne & Williams
20 North Wacker Drive, Suite 3710
Chicago, ILL 60606

RE: Bar of Alloy and Nonalloy Steel; Hot-Rolled Bar Rough Turned to Remove Scale Then Annealed; Steel Bar Not Further Worked Than Hot-Rolled, Heading 7214; Other Bars and Rods, Heading 7215, Heading 7228; Cold Forming, Cold Finishing; HQ 079807, HQ 086464 Dear Mr. O'Donnell:

In your letter of May 19, 1994, on behalf of UES Sales, Inc., you inquire as to the tariff classification of certain alloy and nonalloy steel bar from the UK.

FACTS:

Molten alloy and nonalloy steel is cast, presumably into billets, then hot-rolled in a primary rolling mill to sizes ranging from 3 to 12 inches in diameter. The bars are then rough turned to remove oxidation scale, a process which you state can result in the removal of between 6 and 10 percent, by weight, of the steel. You state this allows the bars to be delivered in imperial (inches) sizes rather that metric sizes. After rough turning the bars are annealed to bring them to their condition as imported. You further state that bars of this type can be manufactured in diameter increments of 1/8 inch, but they are commonly ordered in increments of 1/4 inch. The exact diameter increments of the bar in issue are not stated, nor is the amount of reduction in cross-sectional area resulting from this turning operation.

You assert that while the turning process to remove oxide crust inevitably reduces the surface dimensions of the bar, it does not size the bar to cold-formed or cold-finished tolerances recognized in ASTM standards for such bar. Accordingly, you maintain the nonalloy steel bar is provided for in various subheadings of heading 7214 as bars not further worked than - 2 -

hot-rolled, and that the alloy steel bar is provided for in various subheadings of heading 7228 as alloy steel bar not further worked than hot-rolled. The provisions under consideration are as follows:

7214 Other bars and rods of iron or nonalloy steel, not further worked than hot-rolled:

7214.40.00 Other, containing by weight less than 0.25 percent of carbon

7214.50.00 Other, containing by weight 0.25 percent or more but less than 0.6 percent of carbon 7214.60.00 Other, containing by weight 0.6 percent or more of carbon

The rate of duty under these provisions is 4.7 percent ad valorem

* * * *

7215 Other bars and rods of iron or nonalloy steel:

7215.20.00 Other, not further worked than cold-formed or cold-finished, containing by weight less than 0.25 percent of carbon

7215.30.00 Other, not further worked than cold-formed or cold-finished, containing by weight 0.25 percent or more but less than 0.6 percent of carbon

7215.40.00 Other, not further worked than cold-formed or cold-finished, containing by weight 0.6 percent or more of carbon

The rate of duty under these provisions is 7.5 percent ad valorem * * * *

7228 Other bars and rods of other alloy steel:

7228.30 Other bars and rods, not further worked than hot-rolled:

7228.30.80 Other...6 percent ad valorem - 3 -

7228.50 Other bars and rods, not further worked than cold-formed or cold-finished: 7228.50.50 Other...7.5 percent ad valorem

ISSUE:

Whether mechanically removing between 6 percent to 10 percent, by weight, from the entire external surface area of alloy and nonalloy steel bars, constitutes further working after hot rolling; whether this turning operation is considered a cold- forming or cold-finishing operation.

LAW AND ANALYSIS:

Merchandise is classifiable under the Harmonized Tariff Schedule of the United States (HTSUS) in accordance with the General Rules of Interpretation (GRIs). GRI 1 states in part that for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes, and provided the headings or notes do not require otherwise, according to GRIs 2 through 6.

The Harmonized Commodity Description And Coding System Explanatory Notes (ENs) constitute the Customs Cooperation Council's official interpretation of the Harmonized System. While not legally binding on the contracting parties, and therefore not dispositive, the ENs provide a commentary on the scope of each heading of the Harmonized System and are thus useful in ascertaining the classification of merchandise under the System. Customs believes the notes should always be consulted. See T.D. 89-80. 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).

Relevant ENs, at p. 981, list certain surface treatments or other operations that improve the properties or appearance of the metal that, except as otherwise provided in the text of certain headings, do not affect the heading in which the goods are classified. Annealing and similar heat treatments to improve the mechanical properties of the metal and rough turning and similar processes to remove the oxide scale and crust formed during the heating of the metal are among the listed surface treatments and operations. The notes, however, differentiate rough turning from turning, milling, grinding, perforation or punching, folding, sizing, peeling, etc., which are forms of mechanical working considered finishing treatments or processes for converting finished products into other articles. ENs at p. 1002 state, in part, that heading 7215 covers bars and rods other than those of headings 7213 or 7214 which may be obtained by cold forming or cold finishing. - 4 -

The terms cold-formed and cold-finished are not defined either in the text of the HTSUS or in the ENs. The sense of the industry in which these processes are utilized is therefore useful in understanding of their meaning. Our understanding of bar mill technology is that the design of the mill or the characteristics of the steel frequently preclude the possibility of hot rolling a bar to within precise sectional or out-of-round limitations, or to roll a round with a surface suitable for subsequent fabrication requirements. In such cases, bar product is further processed in the mill's finishing department by operations such as turning. Turning is designed to improve the bars' surface condition by removing undesirable defects. Because these defects appear at different places on the bars' surface, and are at different depths, it is sometimes necessary to remove so much metal that a product with cold worked tolerances results. Subsequent heat treatments such bars may undergo are not usually sufficient to affect the closer dimensional tolerances and shape imparted by the turning. When alloy and nonalloy steel bars are imported with diameters expressed in 1/8 inch increments, there is the suggestion that the turning to which they have been subjected is designed less for removal of surface oxides than to insure dimensional accuracy in accordance with customers' specifications. In nearly identical circumstances under the HTSUS predecessor tariff code, the Tariff Schedules of the United States (TSUS), we held that turning carbon steel and alloy steel bar to change its dimension from metric to imperial sizes is a cold-forming or cold-finishing operation. HQ 079807, dated January 22, 1988, aff'd. in HQ 086464, dated April 17, 1991.

HOLDING: The nonalloy steel bars in issue are considered not further worked than cold-formed or cold-finished, and are classifiable in appropriate subheadings of heading 7215, depending on carbon content. The alloy steel bars are also considered not further worked than cold-formed or cold-finished, and are classifiable in subheading 7228.50.50, HTSUS.


Sincerely,


John Durant, Director
Commercial Rulings Division