CLA-2 OT:RR:CTF:TCM H095100 RM
Assistant Port Director
Port of Detroit
U.S. Customs and Border Protection
477 Michigan Avenue
Room 200
Detroit, MI 48226
RE: Classification of Reject Copper Anodes; Application for Further Review of Protest No. 3801-08-100526
Dear Assistant Port Director:
The following is our decision regarding the Application for Further Review (“AFR”) of Protest No. 3801-08-100526, timely filed on behalf of Xstrata Canada Corporation (“Xtrata” or “Protestant”), concerning the classification of certain “reject” copper anodes under the Harmonized Tariff Schedule of the United States (“HTSUS”).
FACTS:
Protestant owns and operates a copper refinery. As relevant here, Protestant purchases copper anodes and subjects them to electrolytic refining in its facility in Canada to produce copper cathodes. The refining process involves submerging the anodes in cells containing a liquid electrolytic solution, opposite a thin starting sheet of stainless steel which serves as the cathode. An electric current is then passed through the cell (from the anode to the starting sheet), causing the copper ions from the impure anode and the refining solution to attach to the cathode. The process yields a pure copper cathode and a “spent” copper anode, from which most but not all metal has been removed.
Copper anodes are generally produced by smelting copper concentrates and other sources of copper. Smelting involves the heating or the raw materials until they reach the molten stage and the addition of oxygen to remove deleterious elements. The molten copper is then poured into rectangular molds with two handles or “lugs” at the top to create uniform copper anodes. The lugs enable the anodes to be lifted mechanically, both at the smelter and at the refinery. Protestant uses anodes that are 1,049 meters long, 879 millimeters wide and 46 millimeters thick, and weigh approximately 347 kilograms.
Protestant obtains copper anodes from various smelters in Chile and Canada. Upon arrival at the Protestant’s facility, the anodes are inspected physically to ensure that the two lugs are intact and that their chemical composition meets the refinery’s tolerances for specific impurities. Anodes that are rejected upon inspection are referred to as “reject” anodes.
This Protest concerns twelve entries involving shipments of the reject anodes. Protestant entered the merchandise on various dates between December 15, 2005, and January 10, 2006, as ‘Copper waste and scrap” under subheading 7404.00.00, HTSUS. CBP liquidated the merchandise on May 2, 2008, as “Refined copper and copper alloys, unwrought (other than master alloys of heading 7405): Refined Copper: Other,” under subheading 7403.19.00, HTSUS. Protestant filed the instant Protest on October 3, 2008.
ISSUE:
What is the correct tariff classification under the HTSUS of the subject reject copper anodes?
LAW AND ANALYSIS:
Initially, we note that the matter is protestable under 19 U.S.C. § 1514(a)(2) as a decision on classification. The Protest was timely filed, within 180 days of liquidation for all involved entries. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L.108-429, §2103(2)(B)(ii), (iii) (codified as amended at 19 U.S.C. § 1514(c)(3) (2006)).
Further Review of Protest No. 3801-08-100526 was properly accorded to Protestant pursuant to 19 C.F.R. § 174.24(a) because the decision against which the Protest was filed is alleged to be inconsistent with a ruling of the Commissioner of CBP or his designee, or with a decision made at any port with respect to the same or substantially similar merchandise. Specifically, Protestant alleges that the decision is inconsistent with Headquarters Ruling Letter (“HQ”) 955769, dated May 27, 1994, wherein CBP determined that “spent” copper anodes (i.e., metal goods no longer commercially usable as anodes because of wear) were classified in subheading 7404.00.00, HTSUS, as copper waste and scrap.
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.
The 2010 HTSUS provisions at issue are the following:
7403 Refined copper and copper alloys, unwrought (other than master alloys of
heading 7405):
Refined copper:
7403.19.00 Other …
* * *
7404 Copper waste and scrap:
7404.00.60 Other:
* * *
Note 8(a) to Section XVI, HTSUS, defines “waste and scrap” as:
Metal 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.
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 these headings. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
EN 72.04, which applies mutatis mutandis to the goods of heading 7404, HTSUS, provides in pertinent part:
WASTE AND SCRAP
…
Waste and scrap is generally used for the recovery of metal by remelting of 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 […]
…
Protestant argues that the reject anodes are properly classified in heading 7404, HTSUS, specifically in subheading 7404.00.60, as “Copper waste and scrap,” because they are defective – generally because of a broken lug – and are thus unfit for their intended use (i.e., as copper anodes for electrolytic refining). According to Protestant, they must be re-melted and re-cast into new anodes if they are to be adapted for other uses (e.g., as copper tubes, wire, rod, plates or sheets). In support of the above, Protestant submitted letters from copper rod, brass, and tube manufacturers which attest to the fact that, due to its high levels of impurities, reject copper anodes cannot be used for those purposes. One of the consulted manufacturers explained that “[t]he reason for this is the cooling characteristics of copper and lead. In a continuous cast mill, as you are casting the bar prior to rolling, there would be cracking and even possibly the bar would fall apart.” Protestant added that it would not be cost-effective to refashion the reject anodes into other goods because their impurities contain recoverable precious metals and therefore have a higher value per pound than pure copper cathodes.
Our research supports the conclusion that reject copper anodes are generally re-melted and cast into new anodes and fed back to the electrorefinery. They cannot be adapted for other uses (e.g., as bars, rods or wire) without first being refined because their impurities inhibit their drawing and forming capabilities. See A.K Biswas and W.G. Davenport, Extractive Metallurgy of Copper (4th Ed., pg. 381) (“Copper used for [casting, rolling and drawing to fine wire] must have high electrical conductivity, good drawability, and good annealability”). Therefore, as the reject anodes are metal goods which can no longer be used for their intended purpose because of breakage, nor refashioned into other goods without first being recovered as metal, they are classified in heading 7404, HTSUS, as “Copper waste or scrap.” See Note 8(a), Section XVI. See also EN 72.04.
HOLDING:
By application of GRI 1, the reject copper anodes are classified in subheading 7404.00.60, HTSUS, as: “Copper waste and scrap: Other.” The 2010 column one, general rate of duty is: Free.
Since reclassification of the merchandise as indicated above would result in a lower duty rate, you are instructed to allow the protest in full.
Sixty days from the date of the decision the Office of International Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public, on the CBP website located at www.cbp.gov, by means of the Freedom of Information Act and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division