HQ H121476
November 16,2010
CLA-2 OT:RR:CTF:VS H121476 KSG
Port Director
U.S. Customs and Border Protection
9 North Grand Avenue
Nogales, AZ 85621
Re: Protest No. 2604-10-100002; activated carbon absorbing gold and silver; NAFTA eligibility
Dear Port Director:
This is response to the Application for Further Review of Protest 2604-10-100002 submitted by counsel on behalf of Metals Research Corporation asking whether activated carbon containing gold and silver imported from Mexico into the U.S is eligible for preferential tariff treatment under the North American Free Trade Agreement (“NAFTA”) based upon its tariff classification.
FACTS:
The protestant classified the imported good in subheading 7112.91.00 of the Harmonized Tariff Schedule of the United States (“HTSUS”). CBP disputed the classification.
Activated carbon classified in subheading 3802.10 was imported into Mexico in 500 kilo super sacks in shipments of 14,000-19,000 kgs. Mineral ore containing gold and silver was mined in an open pit mine in Sonora, Mexico. Rocks which contain gold and silver were hauled to jaw crushers and cone crushers, which reduced the size of the rocks. The smaller rocks were conveyed by a belt to a yard which contained leaching pads, where the ore was irrigated with a cyanide solution which dissolved the gold and silver into it and which was recovered in a pond called the “rich solution pond.” The cyanide solution was then pumped from the rich solution pond into five tanks, each of which contained a 4.5-5 ton column of activated carbon. The gold and silver was absorbed into the activated carbon, which is called “rich carbon.” The rich carbon was transferred to closed tanks which were heated to a high temperature for a 12-hour period. This released most of the gold and silver. The fine carbon remaining still contained some gold and silver which was not recovered by the processing described above. The fine carbon was placed in 200 liter drums and imported into the U.S. The U.S. importer further processed the fine carbon to remove remaining gold and silver by burning the carbon in the U.S.
CBP issued a CF Request for Information dated December 21, 2009, asking for descriptive literature and pictures in order to confirm the tariff classification of the imported good. CBP subsequently issued a CBP Form 29 Notice of Action proposing to classify the imported good in subheading 3802.10, HTSUS and rate-advancing the imported good.
ISSUE:
Whether the imported fine carbon containing gold and silver is eligible for preferential tariff treatment under the NAFTA
LAW AND ANALYSIS:
General Note 12, HTSUS, incorporates Article 401 of NAFTA into the HTSUS. General Note 12(a)(ii) provides, in pertinent part:
(ii) Goods that originate in the territory of a NAFTA party under the terms of subdivision (b) of this note and that qualify to be marked as goods of Mexico under the terms of the marking rules set forth in regulations issued by the Secretary of the Treasury (without regard to whether the goods are marked), when such goods are imported into the customs territory of the United States and are entered under a subheading for which a rate of duty appears in the “Special” subcolumn followed by the symbol “MX” in parentheses, are eligible for such duty rate, in accordance with section 201 of the NAFTA Implementation Act.
General Note 12(b), HTSUS, provides, in pertinent part:
For the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as "goods originating in the territory of a NAFTA party" only if—
(i) they are goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States; or
(ii) they have been transformed in the territory of Canada, Mexico and/or the United States so that—
(A) except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein, or
(B) the goods otherwise satisfy the applicable requirements of subdivisions (r), (s) and (t) where no change in tariff classification is required, and the goods satisfy all other requirements of this note; or
(iii) they are goods produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials;
Because the imported fine carbon is not produced entirely in Mexico and/or the United States, pursuant to GN 12(b)(i), we must determine whether GN 12(b)(ii) is met. In order to make this determination, the imported good must be properly classified under the HTSUS.
Subheading 3802.10, HTSUS, provides for Activated carbon; activated natural mineral products; animal black; including spent animal black.
The other subheadings under consideration are subheadings 7106.91, 7108.12, or 7112.91, HTSUS, which provide as follows:
7106.91…..Silver (including silver plated with gold or platinum), unwrought or in semimanufactured forms, or in powder form: Unwrought.
7108.12…..Gold (including gold plated with platinum) unwrought or in semimanufactured forms, or in powder form: Other unwrought forms.
7112.91…..Waste and scrap of precious metal or of metal clad with precious metal; other waste and scrap containing precious metal or precious metal compounds, of a kind used principally for the recovery of precious metal: Of gold, including metal clad with gold but excluding sweepings containing other precious metals.
General Rule of Interpretation (“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 GRI 2-6 may then be applied.
Goods classifiable in more than one heading are classified pursuant to GRI 3(b).
GRI 3(b) provides, in relevant part, that composite goods consisting of
different materials or made up of different components shall be classified as if
they consisted of the material or component that gives them their essential
character. Explanatory Note Viii to GRI 3(b) explains that the factor which determines
essential character will vary as between different kinds of goods. It may, for
example, be determined by the nature of the material or component, its bulk,
quantity, weight or value, or by the role of the constituent material in relation to
the use of the good.
The Explanatory Notes (“EN”) to the Harmonized Commodity Description and
Coding System, which represent the official interpretation of the tariff at the
International level, facilitate classification under the HTSUS by offering guidance in understanding the scope of the headings and GRI.
Additional U.S. Note 1(c) defines “waste and scrap” as materials and articles which are second-had or waste or refuse, or are obsolete, defective or damaged, and which are fit only for the recovery of the metal content or for use in the manufacture of chemicals. It includes residues and ashes of a kind used principally for the recovery of precious metals, but does not include metals in unwrought form or metal-bearing materials provided for in heading 2616.
The imported fine carbon with trace amounts of gold and silver cannot be classified in Chapter 38 under GRI 1 because it does not only consist of activated carbon. It also cannot be classified in Chapter 71 under GRI 1 because it is not 2% or more by weight of gold or silver and therefore, is not considered a precious metal. The imported fine carbon is properly classified under GRI 3(b) because it is a composite good. The essential character of the imported product is determined by the precious metals because of their value as compared to the carbon material. Therefore, pursuant to GRI 3(b), the imported good would be classified in Chapter 71. Because the removal of the precious metals from the carbon is more of a processing step than waste and scrap resulting from processing, it is not properly classified as waste and scrap. Based on the above, we find that the imported good is properly classified in subheadings 7106.91 or 7108.12, HTSUS.
The GN 12(t) rule for subheading 7106.91 is as follows:
A change to subheadings 7106.10 through 7106.92 from any other subheading, including another subheading within that group; or
No required change in tariff classification to subheading 7106.91, whether or not there is also a change from another subheading, provided that the nonoriginating materials undergo electrolytic, thermal or chemical separation or alloying.
The GN 12(t) rule for subheading 7108.12 is as follows:
A change to subheadings 7108.11 through 7108.20 from any other subheading, including another subheading within that group; or
No required change in tariff classification to subheading 7108.12, whether or not there is also a change from another subheading, provided that the nonoriginating materials undergo electrolytic, thermal or chemical separation or alloying.
Since the carbon material undergoes a heading change as a result of the processing in Mexico, the tariff shift rules set forth above are met. The imported good is considered an originating good under the NAFTA. Therefore, this protest should be granted.
HOLDING:
This protest should be granted. The imported fine carbon is an originating good under the NAFTA.
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 Customs 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 & Trade Facilitation Division