CLA-2 OT: RR: CTF: TCM H251148 ERB

Mr. Dennis K. Shea
Bloom Energy Corporation
1299 Orleans Drive
Sunnyvale, CA 94089

RE: Ruling Request: Classification of Scandia Stabilized Zirconia Sheets and Lanthanum Strontium Manganite Powder

Dear Mr. Shea:

This letter is in response to your request, on behalf of Bloom Energy Corporation, (Bloom) dated September 24, 2013, to U.S. Customs and Border Protection (CBP), National Commodity Specialist Division (NCSD), for a binding ruling on the tariff classification of Scandia Stabilized Zirconia Sheets (ScSz) and Lanthanum Strontium Manganite (LSM) Powder under the Harmonized Tariff Schedule of the United States (HTSUS). Your ruling request was forwarded to this office by NCSD for a response.

Samples of the two products at issue here were forwarded to CBP’s Laboratory for analysis. Additional information contained in Bloom’s emails of August 18, 2014, August 19, 2014, and October 17, 2014 were also considered. Our response regarding only the ScSz sheets follows, as it came to this office’s attention that the outcome of litigation pending in the Court of International Trade in the case of Schlumberger Technology Corp. v. United States, CIT No. 12-00287, filed February 17, 2012, could impact classification of the LSM Powder.

FACTS:

In your submission you describe the ScSz sheets as primarily a mixture of Zirconium Dioxide, Scandium Oxide and Cerium Oxide, and bears the description “Ceramic Substrate” or “Zirconium Sheet.” The item is imported in the form of sheets. The sheets are produced by tape casting, a ceramic forming technique widely used in the production of thin sheets of flexible ceramic tape. The raw materials are combined with an organic liquid solvent, organic additives (such as binders and plasticizers) and mixed into a slurry. The slurry is de-aired, typically by a vacuum to ensure homogeneity. The slurry is then pulled on a mylar sheet underneath a thick metal plate called a Doctor blade, which is set at a certain height to control the thickness of the sheets. The sheets are then dried so as to evaporate the solvents. The zirconia tapes are punched by a die and piled into stacks and aged for a few days. The stacks are then fired at 1400°C. This serves to burn off all remaining solvents and additives. The final product is sheets of solid zirconia oxide. Of note, your submission states that the sheets are fired (or sintered) after shaping. Post-importation, the ScSz sheets are used as an electrolyte in the manufacture of Solid Oxide Fuel Cells (SOFC) for Powder Generation Systems built by Bloom Energy Corporation.

CBP’s Laboratory issued Laboratory Report NY20140423 on May 7, 2014 regarding the ScSz sheet sample. The laboratory found as follows:

Laboratory analysis has found that the samples are the cubic form of zirconium dioxide stabilized by scandium. The laboratory cannot determine by inspection of the sample whether it was made in the manner of a ceramic (i.e. first shaped and then fired). The sample is white. The sample is translucent but the thickness is only 0.18mm. The sample appears to have a water absorption less than 0.5% of its weight but note that the sample is too thin and weighs too little for accurate analysis by the method called for in chapter 69 of the HTSUS. The sample is not clay based as there is no evidence of aluminum or silicon-containing phases. Cubic zirconia has a Mohs hardness less than 9.

ISSUE:

Whether the subject ScSZ sheets are classified in heading 3824, HTSUS, as a chemical product or preparation, or heading 6909, HTSUS as a ceramic ware for laboratory, chemical or other technical use.

LAW AND ANALYSIS:

Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRI).  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 may then be applied.

The HTSUS headings under consideration are the following:

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…

6909 Ceramic wares for laboratory, chemical or other technical uses; ceramic troughs, tubs and similar receptacles of a kind used in agriculture; ceramic pots, jars and similar articles of a kind used for the conveyance or packing of goods…

Note 1 to Chapter 69, states the following:

This chapter applies only to ceramic products which have been fired after shaping

Note 5(a) to Chapter 69, states the following:

The terms “porcelain,” “china” and “chinaware” embrace ceramic ware (other than stoneware), whether or not glazed or decorated, having a fired white body… which will not absorb more than 0.5% of its weight of water and is translucent in thicknesses of several millimeters.

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 at the international level. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).

The EN (B) to Heading 38.24 states, in relevant part:

This heading includes:

*** (B) CHEMICAL PRODUCTS AND CHEMICAL OR OTHER PREPARATIONS. *** The chemical products classified here are therefore products whose composition is not chemically defined, whether they are obtained as byproducts of the manufacture of other substances (this applies, for example, to naphthenic acids) or prepared directly.

The chemical or other preparations are either mixtures (of which emulsions and dispersions are special forms) or occasionally solutions. Aqueous solutions of the chemical products of chapter 28 or 29 remain classified within those Chapters, but solutions of these products in solvents other than water are, apart from a few exceptions, excluded therefrom and accordingly fall to be treated as preparations of this heading.

The preparations classified here may be either wholly or partly of chemical products (this is generally the case) or wholly of natural constituents.

The General EN, Note 1 to chapter 69 states the following, in relevant part:

This Chapter applies only to ceramic products which have been fired after shaping. *** The term “ceramic products” applies to products obtained:

By firing inorganic, non-metallic materials which have been prepared and shaped previously at, in general, room temperature. Raw materials comprise, inter alia, clays, siliceous materials, materials with a high melting point, such as oxides, carbides, nitrides, graphite or other carbon, and in some cases binders such as refractory clays phosphates.

The EN to 69.09 states, in relevant part:

This heading covers a rage of very varied articles usually made from vitrified ceramics (stoneware, porcelain or china, steatite ceramics, etc.), glazed or unglazed. …

This heading covers in particular:

Laboratory wares (e.g., for research or industrial use) such as crucibles … Ceramic wares for other technical uses, such as pumps, valves; retorts, vats, chemical baths and other static containers with single or double walls (e.g. for electroplating, acid storage); taps for acids; coils, … [Emphasis added] Containers of the kind used for commercial transport or packing of goods… Troughs, tubs and similar containers of the type used in agriculture.

The Subheading Explanatory Note states, in relevant part:

This subheading covers high-performance ceramic articles. These articles are composed of a crystalline ceramic matrix (e.g. of alumina, silicon carbide, zirconia, or nitrides of silicon, boron or aluminum, or of combinations thereof); whiskers or fibres of reinforcing material (e.g. of metal or graphite) may also be dispersed in the matrix to form a composite ceramic material. *** The Mohs scale mentioned in this subheading rates a material by its ability to scratch the surface of the material below it on the scale. Materials are rated from 1 (for talc) to 10 (for diamond). Most of the high-performance ceramic materials fall near the top of the scale. Silicon carbide and aluminum oxide, both of which are used in high-performance ceramics, fall at 9 or above on the Mohs scale. To distinguish among harder materials, the Mohs scale is sometimes expanded with talc as 1 and diamond as 15. On the expanded Mohs scale, fused alumina has a hardness equivalent to 12, and silicon carbide has a hardness equivalent to 13.

Bloom states that the subject merchandise is described by heading 3824, HTSUS. However, heading 3824, HTSUS, is a “basket provision” which provides for chemical products or preparations not elsewhere specified or included. Heading 3824, HTSUS is therefore “trumped” by heading 6909, HTSUS, another heading which describes the merchandise more specifically. See Pomeroy Collection v. United States, 26 C.I.T. 624, 630 (Ct. Int’l Trade 2002) (citing, Franklin v. United States, 289 F.3d 753 (Fed. Cir. 2002).

Bloom states in its submission that the ScSz product bears the description “Ceramic Substrate” that it is fired (or sintered) after shaping. The CBP Laboratory report was unable to determine by inspection of the sample whether it was made in the manner of a ceramic. After careful consideration of this matter, we find that Bloom has satisfactorily established that the ScSz sheets are made in the manner of a ceramic (i.e. fired or sintered after shaping) by including in its submission an explanation of the tape casting method of processing and manufacture. That is, the components are mixed into a slurry, which is ball milled for tuning the particle size of the powder to maximize sintering of the particles later down the process. Once vacuumed, the slurry is poured into the tape casting line underneath the Doctor blade to control the thickness of the sheet. After casting, the tape is dried and aged. Thereafter, it is punched into smaller sheets, stacked in a furnace and sintered at 1400°C. The purpose of the sintering is to ensure the organic solvents (binders, plasticizer) added at the beginning of the process are fully evaporated, so they will not be present in the final product. Pursuant to Note 1 to chapter 69, the subject merchandise is classified as a ceramic of Chapter 69.

The CBP laboratory report was able to confirm that the samples were cubic form of zirconium dioxide stabilized by scandium which are inorganic, rare earth materials. Further, they are high-performance ceramics, given that once manufactured they are stacked as columns and integrated with other components to form a fuel cell module, with one side acting as a cathode and the other side acting as an anode, forming the whole cell. After considering the Subheading EN, a crystalline ceramic matrix of zirconia is covered by heading 6909, HTSUS. This is consistent with a previous CBP holding on a similar product. See Headquarters Ruling (HQ) 964811, dated May 1, 2002 (classifying ceramic substrates in heading 6909, HTSUS).

The CBP laboratory report confirmed that the sample is not clay, and thus precludes classification in subheading 6909.11.20, HTSUS. The laboratory report also confirmed that the cubic zirconia at issue has a Mohs hardness less than 9, and thus precludes classification in subheading 6909.12, HTSUS.

Ceramic wares “for other technical uses” classified in heading 6909, HTSUS, was discussed in Apex Universal, Inc., v. United States, 22 C.I.T. 465 (Ct. Int’l Trade 1998). There, the CIT noted that “technical” has a dictionary definition as, “having specially practical knowledge especially of a mechanical or scientific subject[,]” citing Webster’s Third New International Dictionary, 2,348 (unabridged 1993), and “1a), appropriate or peculiar to, or characteristic of, a particular art, science, profession, or occupation; also, of or pertaining to the mechanical arts and applied sciences generally,” citing Oxford English Dictionary at 703 (2d. ed. 1989). Here, the ScSz sheets at issue are designed as a specific technical component for the specified use in SOFCs for heat exchangers. As Bloom’s submission clarifies, due to the high ionic conductivity exhibited by the ScSz sheets at the operating temperature of the SOFCs, they act as an electrolyte to conduct electrons, with one side acting as a cathode and the other side as an anode. Thus, it is a ceramic for a technical use. The product is therefore classified in subheading 6909.19.50, HTSUS, which provides for, “Ceramic wares for laboratory, chemical or other technical uses; ceramic troughs, tubs and similar receptacles of a kind used in agriculture; ceramic pots, jars and similar articles of a kind used for the conveyance or packing of goods: Ceramic wares for laboratory, chemical or other technical uses: Other: Other.”

By application of GRI 1, the subject merchandise ScSZ sheets are classified in subheading 6909.19.50, HTSUS, which provides for, “Ceramic wares for laboratory, chemical or other technical uses; ceramic troughs, tubs and similar receptacles of a kind used in agriculture; ceramic pots, jars and similar articles of a kind used for the conveyance or packing of goods: Ceramic wares for laboratory, chemical or other technical uses: Other: Other.” The column one rate of duty is 4 percent ad valorem.

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are 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,

Myles B. Harmon, Director
Commercial & Trade Facilitation Division