CLA-20T:RR:CTF:TCM H105998 DAC
U.S. Customs and Border Protection Port Director
Port of Portland
P.O. Box 55580
Portland, OR 97238-5580
RE: Application for Further Review of Protest No. 2904-09-100028; Classification of a metal casting refractory.
Dear Port Director,
This letter is in reply to the Application for Further Review (AFR) of Protest No. 2904-09-100028, filed on May 27, 2009, on behalf of the importer, hereinafter referred to as "Protestant", against U.S. Customs and Border Protection's (CBP) classification of two entries of a metal casting refractory under the Harmonized Tariff Schedule of the United States (HTSUS). In this determination, consideration was also given to the presentation, discussion and comments of our meeting with counsel to Protestant on November 30, 2010.
FACTS:
The subject merchandise is a metal casting refractory. Laboratory testing conducted by CBP determined that the metal casting refractory is a single inorganic compound (an oxide), which is created from the chemical substances yttrium and a rare earth metal. Technical literature submitted by the Protestant indicates that it contains a yttrium oxide equivalent, by weight, in excess of 85 percent, and is suitable for use in investment casting applications in the metal casting industry.
The merchandise was entered by Protestant on January 19, 2008, and May 8, 2008, under subheading 2846.90.80, HTSUS, which provides for: "Compounds, inorganic or organic, of rare-earth metals, of yttrium or of scandium, or of mixtures of these metals: Other: Other: Other". CBP liquidated the two subject entries on November 28, 2008, and March 20, 2009, under subheading 2846.90.80, HTSUS.
Protestant requests classification under subheading 3824.90.39, HTSUS, which provides for "Chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included: Other: Other: Mixtures of two or more inorganic compounds: Other."
ISSUE:
Whether the metal casting refractory is classified under heading 2846, HTSUS, as "Compounds, inorganic or organic, of rare-earth metals, of yttrium or of scandium, or of mixtures of these metals", or under heading 3824, HTSUS, as "Chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included".
LAW AND ANALYSIS:
Initially we note that the matter is protestable under 19 U.S.C. §1514(a)(2) as a decision on classification and the rate and amount of duties chargeable. The protest was timely filed on May 27, 2009, within 180 days of the above referenced liquidations, pursuant to 19 U.S.C. §1514(c)(3).
Further review is justified pursuant to Section 174.24(b) of the CBP Regulations (19 C.F.R. § 174.24(b)), as Protestant alleges that the decision involves questions of law or fact which have not been the subject of a ruling by CBP or the courts. Specifically, Protestant asserts the protest involves the classification of a substance, which has not yet been ruled upon.
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRls). 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 GRls 2 through 6 may then be applied in order.
The relevant 2008 HTSUS provisions under consideration are as follows:
2846 Compounds, inorganic or organic, of rare-earth metals, of yttrium or of scandium, or of mixtures of these metals:
2846.90 Other:
Other:
2846.90.80 Other
* * * * *
3824 Prepared binders for foundry molds or cores; chemical products
and preparations of the chemical or allied industries (including those
consisting of mixtures of natural products), not elsewhere specified or
included:
Other:
Other:
Mixtures of two or more inorganic compounds:
3824.90.39 Other
* * * * *
Section VI, Note 1, provides in pertinent part:
1. (a) Goods (other than radioactive ores) answering to a description in heading 2844 or 2845 are to be classified in those headings and in no other heading of the tariff schedule.
(b) Subject to paragraph (a) above, goods answering to a description in heading 2843, 2846 or 2852 are to be classified in those headings and in no other heading of this section.
In interpreting the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and Coding System may be utilized. The ENs, although not dispositive or legally binding, provide a commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUS. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The General ENs for Section VI, which includes heading 2846, HTSUS, provide, in pertinent part:
Note 1.
* * *
Paragraph (B) of the Note provides that goods described in heading 28.43, 28.46 or 28.52 are to be classified under whichever of those headings is appropriate and under no other heading in Section VI, provided always they are not radioactive or in the form of isotopes (in which case they are classified in either heading 28.44 or heading 28.45). This paragraph of the Note provides, therefore, that, e.g., silver caseinate is classified in heading 28.43 and not in heading 35.01, and that silver nitrate, even when put up for retail sale ready for photographic use, is classified in heading 28.43 and not in heading 37.07.
* * * * *
The ENs for Chapter 28 provide, in pertinent part:
(B) Distinction between the compounds of Chapter 28 and those of Chapter 29.
(Note 2)
The following is an exhaustive list of compounds containing carbon which are to be classified in Chapter 28, and of the headings in which they are to be classified:
Headings
* * *
28.46 * * * (iv) Rare-earth metals, yttrium or scandium.
(C) Products which remain classified in Chapter 28, even when they are not separate chemical elements nor separate chemically defined compounds.
There are certain exceptions to the rule that this Chapter is limited to separate chemical elements and separate chemically defined compounds. These exceptions include the following products:
Heading 28.46 - Compounds, inorganic or organic, of rare-earth metals, of yttrium or of scandium or of mixtures of these metals.
* * * * *
The ENs for heading 28.46 provide, in pertinent part:
This heading covers the inorganic or organic compounds of yttrium, of scandium or of the rare-earth metals of heading 28.05 (lanthanum, cerium, praseodymium, neodymium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, lutetium). The heading also covers compounds derived directly by chemical treatment from mixtures of the elements. (emphasis added.) This means that the heading will include mixtures of oxides or hydroxides of these elements or mixtures of salts having the same anion (e.g., rare-earth metal chlorides), but not mixtures of salts having different anions, whether or not the cation is the same. The heading will not therefore, for example, cover a mixture of europium and samarium nitrates with the oxalates nor a mixture of cerium chloride and cerium sulphate since these examples are not compounds derived directly from mixtures of elements, but are mixtures of compounds which could be conceived as having been made intentionally for special purposes and which, accordingly, fall in heading 38.24. (emphasis added.)
* * *
The compounds of this heading include:
* * *
(2) Other rare-earth metal compounds. Yttrium oxide (yttria), terbium
oxide (terbia), mixtures of ytterbium oxides (ytterbia) and of oxides of other
rare-earth metals of commerce are reasonably pure. The heading includes mixtures of salts derived directly from such mixtures of oxides.
* * * * *
Protestant argues that the metal casting refractory is a product classified under heading 3824, HTSUS, as "Chemical products ... not elsewhere specified or included," because it is a "yttrium oxide product that has been substantially transformed through the intentional and deliberate introduction of [a sintering aid]." The Protestant's submission of June 18, 2009, claims that the metal casting refractory is created from three ingredients in order of the most percentage by weight: yttrium oxide, a secondary chemical compound (an oxide), and a sintering aid. According to Protestant, the imported product is excluded from classification in heading 2846, HTSUS, because it is a mixture of compounds designed for a specific chemical purpose (i.e., to function as a metal casting refractory).
CBP's lab tested a sample of the metal casting refractory at issue and concluded that it is a single inorganic compound (an oxide), which is created from the chemical substances yttrium and a rare earth metal. The CBP laboratory test results showed no evidence of a second compound containing the sintering aid. Protestant asserts that the x-ray diffractometric (XRD) analysis and elemental qualitative analysis by x-ray fluorescence (XRF) used by the CBP laboratory were inadequate to test for the sintering aid. Protestant suggests that the verification test used at its own production facility (the Inductive Coupled Plasma Optical Emission Spectroscopy ("ICP-OES") analysis) would have shown the presence of the sintering aid. In support, Protestant included in its submission a sworn affidavit given by the manufacturer's Chief Operating Officer, wherein he asserts that "to the best of [his] knowledge and belief, all [of the metal casting refractory] exports to the U.S. contains [sic] a small amount of [a sintering aid], as required by our U.S. customer." The statement provided by the COO also includes a "Summary of Information" (labeled as Exhibit A), which contains his comments pertaining to XRD analysis, as well as his summary regarding ICP-OES analysis. Decl. of COO, at 2-3, Exhibit A, August 20, 2010. Based on Protestant's claims, Protestant has requested that CBP re-test a sample of the product with the ICP-OES test method, even though the CBP Laboratory did not detect a second compound containing the sintering aid.
With respect to the reliability of CBP laboratory tests, "[i]t is well settled that the methods of weighing, measuring, and testing merchandise used by [CBP] officers and the results obtained are presumed to be correct." Aluminum Company of America v.
United States, 60 C.C.P.A. 148, 151,477 F.2d 1396, 1398 (1973). Absent a conclusive showing that the testing method used by the CBP laboratory is in error, or that the CBP's laboratory results are erroneous, there is a presumption that the results are correct. See Exxon Corp. v. United States, 462 F. Supp. 378, 81 Cust. Ct. 87 (1978). The initial burden of proof in challenging the reliability of CBP's testing methods lies with the Protestant. An importer may rebut the presumption of correctness by showing that CBP's methods or results are erroneous. If a prima facie case is made out, the presumption is destroyed and the Government has the burden of going forward with the evidence. See Libas, Ltd. v. United States, 24 C.I.T. 893, 894, 118 F. Supp. 2d 1233, 1234 (Ct. Int'I Trade 2000).
There are two means in which an importer may successfully overcome the presumption of correctness afforded to a CBP laboratory report. As the court stated in American Sporting Goods v. United States, 27 C.I.T. 450, 456 (Ct. Int'I Trade 2003), "[t]hus, the plaintiff in a case such as this may make out a prima facie case either by showing that Custom's results or methods are erroneous," Consolidated Cork Corp. v. United States, 54 Cust. Ct. 83, 85 (1965), or by "submitting evidence of analysis [that the plaintiff] applied to the merchandise which gave a result different from that claimed by the Government." American Sporting Goods v. United States, 27 C.I.T. 450, 456, 259 F. Supp. 1302, 1308 (Ct. Int'I Trade 2003). See also HQ H089795, dated April 19, 2010. HQ H024861, August 4, 2009.
In Libas, Ltd. v. United States, the court noted that challenges to the reliability of CBP's laboratory tests should be scrutinized according to the standards articulated by the United States Supreme Court in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S. Ct. 2786 (1993). See Libas, Ltd. v. United States" 193 F.3d 1361, 1366-67 (Fed. Cir. 1999), (Libas II). The Daubert standards are: (1) whether a theory or technique, such as Customs's test, has been tested; (2) whether it has been subjected to peer review and publication; (3) its known or potential rate of error; and (4) whether it is generally or widely accepted. See Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 593-94 (1993). Importantly, the Libas court counseled that the Daubert standards bear not only on whether evidence is admissible, but also on how much or how little weight the court should accord such evidence. See Libas, Ltd. v. United States, 193 F.3d 1361, 1366-67 (1999), (Libas II).
In this case, Protestant has not shown that the CBP's testing methodology, namely, XRD, (1) is a test that has not been tested; (2) is a test that is not subject to peer review and publication; (3) is a test that is known for a rate of error; or (4) that it is a test that is not generally or widely accepted. Additionally, Protestant has not shown that the CBP laboratory improperly applied the testing methods to the subject merchandise, or that CBP's laboratory testing results were erroneous, by submitting an independent laboratory test result from the subject shipment that differs from CBP’s. Accordingly, we find that the Protestant has not met the burden of proof to rebut the presumption of correctness afforded to the CBP laboratory reports conducted on the samples of merchandise subject to the instant protest.
The terms of heading 2846, HTSUS, provide for "Compounds, inorganic or organic, of rare-earth metals, of yttrium or of scandium, or of mixtures of these metals". In determining the scope of the heading 2846, HTSUS, we refer to the court in USR Optonix, Inc. v. United States, 29 C.I.T. 229, 239-40, 362 F. Supp. 2d 1365, 1374-75 (2005). In that case, the court relied on EN 28.46 to aid in defining the scope of the term "compounds" in heading 2846, HTSUS. The court found that the term "compounds" used in heading 2846, HTSUS is construed broadly and is intended to include certain products that also could be described as "mixtures." The court took into consideration the terms of heading 2846, HTSUS, the terms of the subheadings under 2846, HTSUS, as well as the ENs for heading 28.46 and determined that "the term ‘compounds’ as used in heading 2846 cannot properly be interpreted to mean ‘separate chemically defined compounds,’ and it must be read to encompass some products that also may be described as 'mixtures." USR Optonix, Inc. v. United States, 29 C.I.T. 229, 240, 362 F. Supp. 2d 1365, 1375 (2005).
Inasmuch as the CBP laboratory analysis has determined the subject merchandise is a single inorganic compound (a compound of yttrium and a rare earth metal), we find that it is classified under heading 2846, HTSUS. It is specifically provided for under subheading 2846.90.80, HTSUS, as "Compounds, inorganic or organic, of rare-earth metals, of yttrium or of scandium, or of mixtures of these metals: Other: Other: Other". The classification of such merchandise under subheading 2846.90.80, HTSUS, is consistent with several prior CBP rulings to include: NY F86530, dated May 5, 2000; HQ 962102, dated August 24, 1999; HQ 962328, dated August 24, 1999; and HQ 962329, dated August 24, 1999.
Protestant submits that the metal casting refractory is very similar in chemical composition and use to the "Yttria C" product which CBP classified under heading 3824, HTSUS, in HQ 967300, dated November 18, 2005. There, CBP determined that a substance consisting of more than 99% yttrium oxide and approximately 0.25% of a sintering aid was classified under subheading 3824.90.39, HTSUS, as a mixture of two or more inorganic compounds, because it consisted of "[a] unique mixture ... that [was] made intentionally for the special purpose of creating a larger particle yttrium oxide." In support of that conclusion, CBP cited to EN 28.46, which provides in pertinent part that" ... mixtures of compounds which could be conceived as having been made intentionally for special purposes ... fall in heading 38.24." (emphasis added.) Because the CBP laboratory's testing results of the metal casting refractory do not show evidence of a second compound, it is distinguishable from the Yttria C addressed in HQ 967300, dated November 18, 2005. The subject merchandise is distinguishable from Yttria C because it is a single inorganic compound (an oxide) of yttrium and a rare earth metal. There is no mixture of compounds within the subject merchandise as required for classification in heading 3824, HTSUS.
HOLDING:
By application of GRI 1, the metal casting refractory is classified under heading 2846, HTSUS, specifically in subheading 2846.90.80, HTSUS, as "Compounds, inorganic or organic, of rare-earth metals, of yttrium or of scandium, or of mixtures of these metals: Other: Other: Other". The column one, general rate of duty at the time of entry was 3.7 percent, ad valorem.
The protest should be denied in full. In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the Protestant no later than 60 days from the date of this letter.
Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision Regulations and Rulings of the Office of International Trade will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web 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