OT:RR:CTF:TCM HQ H199996 AMM
Mr. Eiichi (Ethan) Tanaka
Marubeni-Itochi Steel America, Inc.
1000 Town Center, Suite 2430
Southfiled, MI 48075
RE: Classification and Country of Origin Marking of Stainless Steel Strapping
Dear Mr. Tanaka:
This is in response to your ruling request, dated November 14, 2011, filed on behalf of Marubeni-Itochi Steel America, Inc. (MISA), regarding the classification and country of origin marking of stainless steel strapping imported from Canada to the United States.
FACTS:
MISA imports Cold Rolled Stainless Steel Strapping in Oscillated Coils, Grade: NTK D7 2B, into the United States from Canada. The intended use in the United States is for the bending of transformer cores before they are sent to the annealing furnace. The strapping has a finished thickness between 0.4 mm and 1.0 mm, and a width of either 15.875 mm or 19.05 mm. The inner diameter of the coil is 16 inches, and the outer diameter is approximately 23 inches. Coils of strapping weigh between 60 and 110 pounds.
The manufacturing process for the strapping is as follows: First, the “master coils” of stainless steel are shipped from a mill in Japan to MISA’s site in Canada. The master coils are between 0.4 mm and 1.0 mm thick, and 1219 mm wide. They are composed of stainless steel, containing less than 0.12% carbon, 16% chromium, and between 2 and 4% nickel. The master coils undergo a slitting operation, reducing the width from 1219 mm to either 15.875 mm or 19.05 mm. After slitting, the edges are ground down and a hot wax coating is applied to the strapping. The strapping is then oscillated rewound onto smaller coils and exported to the United States.
You state that the master coils are classified under heading 7219, of the Harmonized Tariff Schedule of the United States (HTSUS), and that strapping is classified under heading 7223, HTSUS, specifically under subheading 7223.00.50 HTSUS. You have asked whether the strapping would be considered a product of Canada for country of origin marking purposes.
ISSUES:
What is the correct tariff classification of the stainless steel strapping upon importation into the United States?
What is the country of origin of the stainless steel strapping?
LAW AND ANALYSIS:
I. Classification
Classification of goods under the HTSUS is governed by the General Rules of Interpretation (GRI). GRI 1 provides that classification 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 may then be applied.
The 2012 HTSUS provisions under consideration are:
7219 Flat-rolled products of stainless steel, of a width of 600 mm or more:
Not further worked than cold-rolled (cold-reduced):
7219.34.00 Of a thickness of 0.5 mm or more but not exceeding 1 mm:
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7219.35.00 Of a thickness of less than 0.5 mm:
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7220 Flat-rolled products of stainless steel, of a width of less than 600 mm:
7220.20 Not further worked than cold-rolled (cold-reduced):
Of a width of less than 300 mm:
7220.20.70 Of a thickness exceeding 0.25 mm but not exceeding 1.25 mm:
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7223 Wire of stainless steel:
7223.00.50 Flat wire
Note 1 to Chapter 72, HTSUS, states, in pertinent part:
In this chapter and, in the case of notes (d), (e) and (f) below throughout the tariff schedule, the following expressions have the meanings hereby assigned to them:
* * *
(e) Stainless steel
Alloy steels containing, by weight 1.2 percent or less of carbon and 10.5 percent or more of chromium, with or without other elements.
* * *
(k) Flat-rolled products
Rolled products of solid rectangular (other than square) cross section, which do not conform to the definition at (ij) above in the form of:
- coils of successively superimposed layers, or
- straight lengths, which if of a thickness less than 4.75 mm are of a width measuring at least 10 times the thickness or if of a thickness of 4.75 mm or more are of a width which exceeds 150 mm and measures at least twice the thickness.
* * *
(o) Wire
Cold-formed products in coils, of any uniform solid cross section along their whole length, which do not conform to the definition of flat-rolled products.
* * *
Additional U.S. Note 2 to Chapter 72, HTSUS, states:
For the purposes of this chapter, unless the context provides otherwise, the term “further worked” refers to products subjected to any of the following surface treatments: polishing and burnishing; artificial oxidation; chemical surface treatments such as phosphatizing, oxalating and borating; coating with metal; coating with nonmetallic substances (e.g., enameling, varnishing, lacquering, painting, coating with plastics materials); or cladding.
In the first stage of the process, “master coils” are shipped from a steel mill in Japan to MISA’s site in Canada. The master coils consist of stainless steel, containing less than 0.12% carbon, 16% chromium, and between 2 and 4% nickel, as well as other constituents. See Note 1(e) to Chapter 72, HTSUS. The steel is imported with a width of 1219 mm, and thicknesses between 0.4 mm and 1.0 mm. These coils are not further worked other than cold-rolled before importation to Canada, and conform to the definition of “flat-rolled” contained in Note 1(k) to Chapter 72, HTSUS, in that they are rolled products of a solid rectangular cross section, in the form of coils of successively superimposed layers. MISA asserts that these master coils would be properly classified under heading 7219, HTSUS, which provides for “Flat-rolled products of stainless steel, of a width of 600 mm or more”. CBP does not dispute this assertion.
The next stage of the manufacturing process creates “straps” from these coils. The master coils undergo a slitting process, which reduces their width to between 15.875 mm (5/8 in) and 19.05 mm (3/4 in). The edges are rolled (burs on the strap edges are ground down), and a hot wax coating is applied. These thinner straps are then wound onto coils in an oscillating pattern, before importation to the United States from Canada.
Heading 7220, HTSUS, provides for “Flat-rolled products of stainless steel, of a width less than 600 mm”. Note 1(k) to Chapter 72, HTSUS, requires that flat-rolled products be in the form of coils of successively superimposed layers, or in straight lengths. The straps imported to the United States do not meet this definition. They are imported in oscillated wound coils, rather than in coils of successively superimposed layers. See New York Ruling Letter (NY) R03189, dated February 23, 2006. See also NY M84656, dated July 14, 2006; NY M81146, dated April 5, 2006; NY M80204, dated February 23, 2006. Therefore, because the instant straps are not flat-rolled, they are not properly classified under heading 7220, HTSUS.
Heading 7223, HTSUS, provides for “wire of stainless steel”. The instant straps meet the definition of “wire” as defined in Note 1(o) to Chapter 72, HTSUS, because they are cold-formed products in coils, of a uniform rectangular solid cross section along their whole length, and do not conform to the definition of flat-rolled products contained in Note 1(k) to Chapter 72, HTSUS. Therefore, the instant straps are properly classified under heading 7223, HTSUS, specifically under subheading 7223.00.50, HTSUS, which provides for “Wire of stainless steel: Flat wire”.
II. Country of Origin
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. §1304), requires that, unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or its container) will permit in such manner as to indicate to the ultimate purchaser the English name of the country of origin of the article. The regulations implementing the requirements and exceptions to 19 U.S.C. §1304 are set forth in Part 134, CBP Regulations (19 C.F.R. Part 134).
Section 134.1(b), CBP Regulations (19 C.F.R. §134.1(b)), defines "country of origin" as:
The country of manufacture, production, or growth of any article of foreign origin entering the United States. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the "country of origin" within this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin.
Part 102, Customs and Border Protection Regulations (19 C.F.R. Part 102), sets forth the NAFTA Marking Rules. Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes. See 19 C.F.R. §102.11. Applied in sequential order, the required hierarchy establishes that the country of origin of a good is the country in which:
(a)(1) The good is wholly obtained or produced;
(a)(2) The good is produced exclusively from domestic materials; or
(a)(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in Section 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
* * *
Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because the imported steel strap is neither wholly obtained or produced exclusively from “domestic” (Canadian, in this case) materials. Because the analysis of sections 102.11(a)(1) and 102.11(a)(2) does not yield a country of origin determination, we look to section 102.11(a)(3). “Foreign material” is defined in 19 C.F.R. §102.1(e) as “a material whose country of origin as determined under these rules is not the same country as the country in which the good is produced.” The applicable rule for headings 7223, HTSUS, in section 102.20 requires “a change to heading 7223 from any other heading, except from heading 7221 through 7222.”
As discussed above, the master coils which are imported to Canada from Japan would be classified under heading 7219, HTSUS. MISA’s manufacturing process converts the master coils to stainless steel straps, which are classified under heading 7223, HTSUS. Therefore, the materials undergo an applicable change in tariff classification as set out in 19 C.F.R. §102.20, and thus the stainless steel straps qualify to be marked as a good of Canada.
The merchandise in question may be subject to antidumping duties or countervailing duties. We note that the International Trade Administration is not necessarily bound by a country of origin or classification determination issued by CBP, with regard to the scope of antidumping orders or countervailing duties. Written decisions regarding the scope of AD/CVD orders are issued by the Import Administration in the Department of Commerce and are separate from tariff classification and origin rulings issued by Customs and Border Protection. You can contact them at http://www.trade.gov/ia/ (click on “Contact Us”). For your information, you can view a list of current AD/CVD cases at the United States International Trade Commission website at http://www.usitc.gov (click on “Antidumping and countervailing duty investigations”), and you can search AD/CVD deposit and liquidation messages using ACE, the system of record for AD/CVD messages, or the AD/CVD Search tool at http://addcvd.cbp.gov/index.asp?ac=home.
HOLDING:
Based upon the information presented, the country of origin of the instant Cold Rolled Stainless Steel Strapping in Oscillated Coils, Grade: NTK D7 2B, will be Canada. Furthermore, this product is properly classified under heading 7223, HTSUS, specifically under subheading 7223.00.50, HTSUS, which provides for “Wire of stainless steel: Flat wire”. The column one, general rate of duty is free.
A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Ieva O’Rourke, Chief
Tariff Classification and Marking Branch