CLA-2 OT:RR:CTF:TCM H249997
Port Director
U.S. Customs & Border Protection
2nd & Chestnut Streets
Room 102
Philadelphia, PA 19106
ATTN: Leslie Aita, Import Specialist
RE: Protest and Application for Further Review of Protest No. 1101-13-100007, Tariff Classification of Iron Shells and Spherical Washers.
Dear Port Director,
We are writing in response to the above-referenced protest and AFR forwarded to our office, regarding the tariff classification of iron shells and spherical washer castings. In our evaluation, we have also considered the substance of your September 11, 2015 submission and our teleconference on December 3, 2015. Our response follows.
FACTS:
Between June 1, 2011 and July 5, 2011, VS Guss A.G. (“VS Guss”) filed three entries of iron shells and spherical washer castings. The stated classification on the entry documents was 7316.00.0000 under the Harmonized Tariff Schedule of the United States (“HTSUS”). U.S. Customs and Border Protection (“CBP”) issued a Notice of Action on May 21, 2012 stating that entries were properly classified under subheading 7326.90.8588 HTSUS. On July 13, 2012, CBP liquidated the entries under 7326.90.8588 HTSUS and assessed duties at the rate of 2.9% ad valorem.
The iron shells and spherical washer castings form part of an anchor assembly in the roof of mines. The shell and plug are assembled onto a thin bar that has been threaded on one end and headed on another. This assembly is inserted into a borehole in the roof of a mine. The bar is then spun, causing the plug to engage the shell. As it spins, the plug wedges into the shell and leaves the shell in the borehole made in the roof of the mine. A steel plate is also used to help disperse the load which is placed on the bar between the roof of the mine and the forged head. The spherical washer casting is used to tighten and fasten the plate to the mine roof and protect the plate.
The shells and washers are cast in Germany. The shells and washers then undergo a cleaning process whereby minor imperfections are removed. After casting, the shells and washers undergo an annealing process that softens the cast iron in order to make them malleable enough for their intended use. The shells are then “calibrated” after cleaning. During the calibration process, the shells are bent into shape so that they will fit over threaded rebar. After the aforementioned processes are complete, the shells and washers are imported into the United States.
VS Guss asserts that the processes that the shells and washer castings undergo are incidental, and that they should be therefore classified under heading 7325 HTSUS as cast articles of iron. Alternatively, VS Guss asserts that the spherical washer castings should be classified under heading 7318 as “other washers.”
ISSUE:
What is the tariff classification of the iron shells and spherical washers?
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 January 8, 2013, within 180 days of liquidation, pursuant to 19 U.S.C. §1514(c)(3). Further Review of Protest No. 1101-13-100007 is properly accorded to Protestant pursuant to 19 C.F.R § 174.24(b) because the decision against which the protest was filed is alleged to involve questions of law or fact which have not been ruled upon by the Commissioner of Customs or by the Customs Courts. Further review is warranted as CBP has not previously ruled upon the tariff classification of cast iron spherical washers and shells that have been subjected to annealing and calibration processes.
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (“GRI’s”). 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. GRI 6 requires that the classification of goods in the subheadings of headings shall be determined according to the terms of those subheadings, any related subheading notes and mutatis mutandis, to the GRIs 1 through 5.
The Explanatory Notes (EN) to the Harmonized Commodity Description and Coding System represent the official interpretation of the tariff 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).
The HTSUS provisions at issue are as follows:
7318 Screws, bolts, nuts, coach screws, screw hooks, rivets, cotters, cotter pins, washers (including spring washers) and similar articles, of iron or steel:
7318.22 Other washers
* * *
7325 Other cast articles of iron or steel:
7325.99 Other:
7325.99.10 Of cast iron
* * *
7326 Other articles of iron or steel:
7326.90 Other:
7326.90.85 Other:
Heading 7325, HTSUS, covers “[o]ther cast articles of iron or steel.” The applicable chapter and section notes do not provide a definition for “cast articles.” Generally, casting is characterized by molten blast furnace iron being bottom poured into a mold. After sufficient time for solidification and cooling, the castings are removed from the mold by a shakeout machine. The casting process is considered complete when surface imperfections are removed by blast cleaning, chipping, burning or combinations of these processes. See Headquarters Letter Ruling (HQ) 960783 (May 13, 1998, citing HQ 959315 (Oct. 1, 1996)). With regard to advancements to castings beyond the casting process, CBP has consistently found that independent and additional processes not merely incidental to general foundry work are considered to advance an article beyond casting. Id.
Similarly, the EN for heading 73.25 provides:
This heading covers all cast articles of iron or steel, not elsewhere specified or included.
* * *
This heading does not cover castings which are products falling in other headings of the Nomenclature (e.g., recognisable parts of machinery or mechanical appliances) or unfinished castings which require further working but have the essential character of such finished products.
(Emphasis added).
Thus, the EN provides guidance stating that the heading covers cast articles that may not be classified elsewhere in the HTS, but does not cover unfinished castings which require further work.
If a product is prima facie classifiable in a different heading of the Nomenclature, classification under heading 7325 is precluded. The term “washer” is not defined in the chapter or section notes of the HTSUS. However, the EN for heading 73.18 describes washers as “usually small, thin discs with a hole in the centre; they are placed between the nut and one of the parts to be fixed to protect the latter. They may be plain, cut, split (e.g., Grower’s spring washers), curved, cone shaped, etc.” The washers at issue are spherical discs with a hole in the center. The washers are placed between the bolt and the plate, and help tighten and fasten the plate to the mine roof and distribute the load evenly. Consequently, the spherical washer castings at issue here fit the physical description of what is commonly understood to be a washer, and their use is consistent with that of a washer. Based on the foregoing, we find that the spherical washer castings are classifiable under heading 7318 HTSUS. Consequently, classification under heading 7325 is precluded.
The iron shells at issue are cast and cleaned. Subsequently, the shells are annealed to soften the iron and increase the ductility to customer specification. After the annealing process, the shells are “calibrated,” or bent, so that they will fit over threaded rebar. Because heading 7325 HTSUS covers cast articles of iron or steel that have not undergone additional processing not merely incidental to foundry work, classification in heading 7325 HTSUS depends on whether annealing and calibrating the shells is merely incidental.
VS Guss states that the annealing and calibrating process are minor, incidental processes that should not preclude classification under heading 7325 HTSUS. In support of its position, VS Guss cites Headquarters’ Ruling HQ 563131, dated Feb. 11, 2005, which stated that “CBP has held that annealing, which is not extensive or complex, and does not transform or narrow the uses of the article, is not a substantial transformation.” We note that the holding in HQ 563131 involved the issue of whether a product underwent a “substantial transformation” for the purposes of qualifying for treatment under the Generalized System of Preferences. The test for determining whether a substantial transformation has occurred is whether an article emerges from a process with a new name, character, or use different from that possessed by the article prior to the processing. See Texas Instruments v. United States, 69 CCPA 152, 156, 681 F.2d 778, 782 (1982). The “substantial transformation” analysis is different than the analysis required for classification under 7325 HTSUS, which simply precludes “further work” beyond the casting process. Thus, the analysis in HQ 563131 is inapplicable to the issue of classification under heading 7325 HTSUS.
The shells at issue here undergo two separate processes after they are cast and cleaned: they undergo an annealing process, and they are bent or “calibrated.” The malleability, or ductility, of the iron shell is changed through the annealing process. Further, the shape of the shells are changed through the calibration process. Each process is required to make the shells usable for their intended purpose in an anchor assembly in a mine roof, and can be characterized as “further work.” Consequently, we find that the combination of the annealing process and calibration amount to more than merely incidental processes and amount to “further work” beyond casting. Therefore, the shells may not be classified under heading 7325 HTSUS.
HOLDING:
By application of GRI 1, the iron shells are classified under heading 7326 HTSUS, and specifically in subheading 7326.90.8588, which provides for “Other articles of iron or steel: Other, other.” The column one, general rate of duty is 2.9% ad valorem. You are instructed to DENY the protest with respect to the iron shells.
By application of GRI 1, the spherical washers are classified under heading 7318 HTSUS, and specifically in subheading 7318.22.0000, which provides for “Screws, bolts, nuts, coach screws, screw hooks, rivets, cotters, cotter pins, washers (including spring washers) and similar articles, of iron or steel: Other washers.” The column one, general rate of duty is “Free.” You are instructed to GRANT the protest with respect to the spherical washers.
Duty rates are provided for your convenience and subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov.
You are to mail this letter 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 this letter, the Office of International Trade will make the decision available to CBP personnel, and to the public on the CBP Home Page at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Joanne Roman Stump, Acting Director
Commercial and Trade Facilitation Division