CLA-2 OT:RR:CTF:TCM H312779 NVF
Center Director, Machinery Center of Excellence and Expertise
U.S. Customs and Border Protection
Laredo Field Office
109 Shiloh Drive, Suite 300
Laredo, TX 78045
ATTN: Waiyin Lee, Import Specialist
RE: Application for Further Review of Protest 140120104117; Classification of a tube mill
Dear Center Director:
This is in response to the Application for Further Review (AFR) of Protest No. 1401-20-104117, dated July 27, 2020, filed on behalf of Dundee Products (Dundee) in response to your classification of a Direct Forming Hollow Section Line or “tube mill,” model number FCF 240.3.3-100, under the Harmonized Tariff Schedule of the United States (HTSUS). The tube mill was entered on May 20, 2019, and liquidated on January 31, 2020. In deciding this request for further review, we considered Dundee’s protest filing, emails exchanged with the import specialist, supplemental arguments filed by Dundee on March 29, 2021, and additional information provided by Dundee via email.
FACTS:
The tube mill consists of a series of connected components that form strip steel into a square or rectangular tube. The full machine is 300 feet long, and is comprised of a strip uncoiler and accumulator, a direct flexible cold forming (FCF) line, a tube welding section, an FCF tube sizing section, a cut off, a finishing line, and integrated control electronics. Of these, all but the tube welding section and the cut off were imported together, in a single entry. Dundee states that both the welding section and the cut-off were sourced domestically. Each of these components is described in detail below. Once assembled, the machine can be programmed to form tubing of different dimensions, from ¾ inch to 2 ½ inches.
The strip uncoiler and accumulator comprise the first segment of the tube mill. The rotating double uncoiler feeds steel strip from a large coil to the strip accumulator. The strip accumulator sustains a constant supply of strip, allowing the tube mill to operate continuously, even while a new coil of strip is being loaded. From the accumulator, the strip is sent to the direct-forming FCF line, where it is shaped into a square or rectangular tube using a series of rollers to crease and fold the steel into the desired square or rectangular shape, without the need to first form a round tube. Each set of rollers is angled to bend the strip incrementally, creating a “forming flower” and ultimately resulting in a square or rectangular tube. The tube mill is numerically controlled, with rollers that can be programmed to create tubing from ¾ into to 2 ½ inches without changing any parts.
Next, the unfinished or “slit” tubing is sent to the high-frequency welding apparatus, which seals and fully encloses the tube. From there, the tube proceeds to the sizing apparatus and the cut-off, which measure and cut the tube to the desired length. Finally, the tube proceeds to the finishing apparatus, consisting of a run-out and stacking table.
ISSUE:
Whether Dundee’s tube mill is classified under heading 8455, HTSUS which provides for “Metal-rolling mills and rolls therefor; parts thereof,” or heading 8462 HTSUS which provides for “Machine tools (including presses) for working metal by forging, hammering or die-stamping.”
LAW AND ANALYSIS:
Initially, we note that the matter is protestable under 19 U.S.C. §1514(a)(2) as a decision pertaining to classification. The protest was timely filed, within 180 days of liquidation of the entry. Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, § 2103(2) (B) (ii), (iii) (codified as amended at 19 U.S.C. § 1514(c) (3) (2006). Further Review of Protest No. 1401-20-104117 is properly accorded pursuant to 19 C.F.R. § 174.24(c). Dundee alleges that the protest involves matters previously ruled upon by Customs and Border Protection (CBP) or by the courts but facts are alleged or legal arguments are presented here which were not considered at the time of the original ruling. Specifically, Dundee argues that the 2019 industry-accepted definition of a “tube mill” denotes a machine like the one at issue, and that the machines at issue in Headquarters Ruling letter (“HQ”) 965296 (July 9, 2001) and HQ 965198, (May 1, 2002) differ from Dundee’s tube mill.
Classification under the HTSUS is determined in accordance with the General Rules of Interpretation (“GRIs”). 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. Only those subheadings at the same level of indentation are comparable.
GRI 2(a) states:
Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled.
The 2019 HTSUS provisions under consideration are as follows:
8455 Metal-rolling mills and rolls therefor; parts thereof:
* * * * *
8462 Machine tools (including presses) for working metal by forging, hammering or die-stamping; machine tools (including presses) for working metal by bending, folding, straightening, flattening, shearing, punching or notching; presses for working metal or metal carbides, not specified above:
Note 4 to Section XVI, HTSUS, which includes Chapter 84, provides as follows:
Where a machine (including a combination of machines) consists of individual components (whether separate or interconnected by piping, by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defined function covered by one of the headings in chapter 84 or chapter 85, then the whole falls to be classified in the heading appropriate to that function.
In addition, 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 (August 23, 1989). EN 84.55 states in pertinent part that:
Rolling mills are metal working machines consisting essentially of a system of rollers between which the metal is passed; the metal is rolled out or shaped by the pressure exerted by the rollers, and at the same time the rolling modifies the structure of the metal and improves its quality.
Rolling mills are of various types according to the particular rolling operations for which they are designed, viz.:
(A) Rolling out to reduce the thickness with a corresponding increase in length (e.g., in the rolling of ingots into blooms, billets or slabs; rolling of slabs into sheet, strip, etc.).
(B) Rolling of blooms, billets, etc., to form a particular cross-section (e.g., in the production of bars, rods, angles, shapes, sections, girders, railway rails).
(C) Rolling tubes.
(D) Rolling of wheel blanks or wheel rim blanks (e.g., to shape the flanges of railway wheels).
Most rolling mills are designed for the operations indicated at (A) or (B) above.
Other roller machines, bending, folding, straightening or flattening machines (heading 84.62) are not regarded as rolling mills in the sense described above and are therefore also excluded from this heading.
EN 84.62 states in pertinent part that the heading covers:
(2) Bending machines. These include machines for working flat products (sheets, plates and strips) which, by passing the products through three or four sets of rollers, give them a cylindrical curve (for this the rollers are parallel as with tube forming machines) or else a conical shape (in which the rollers are not parallel); machines for working non flat products (bars, rods, angles, shapes, sections, tubes). These machines work either by means of forming rollers, by press bending, or, for tubes (and, in particular, oil pipes), by drawing their ends while the main section is held by a fixed cylinder.
As an initial matter, we note that the instant tube mill, though incomplete and disassembled at the time of importation, retains the essential characteristics of a finished tube mill, and is therefore classified as a completed machine pursuant to GRI 2(a). Moreover, the instant tube mill is a functional unit under Note 4 to Section XVI, in that each of its components contributes to a “clearly defined function” covered by a heading of Chapter 84. As a result, we will consider the proper classification of the tube mill in its entirety.
We have previously considered the classification of various tube mills that shape metal into tubes. In HQ 965296 (July 9, 2001), HQ 965198 (May 1, 2002), and HQ 229216 (May 21, 2002) we have classified tube mills in heading 8462, HTSUS, despite variations in the mill components, rather than heading 8455, HTSUS. The rationale Customs applied to arrive at that classification is nearly identical in all three rulings: Customs determined that “the function of the welded tube mill is essentially a metal forming operation which involves a bending of the metal so as to impart a cylindrical curve to the metal sheet to form a tube.” HQ 965198. Moreover, Customs found that the welded tube mills were not akin to the machines described in sections (A) through (D) of EN 84.55, noting that the examples of the rolling mills in EN 84.55 vary considerably from the welded tube mills under consideration. Customs also noted that EN 84.62 describes the process employed by “bending machines,” and concluded that the operation of the welded tube mills at issue did, in fact, rely on bending the strip into a tubular form. Accordingly, Customs concluded in each case that the tube mill at issue was described by heading 8462, HTSUS.
The tube mill imported by Dundee uses a series of rollers to crease and fold steel into the desired tubular shape. Each set of rollers in the mill is angled to bend the strip incrementally. While rollers are used to work the metal and form tubes, the mere presence of rollers does not necessitate classification as a “rolling machine” of heading 8455, HTSUS. For instance, the EN to heading 8455 distinguishes between rolling machines of 8455 and machines that may happen to be outfitted with rollers but are classified elsewhere. Rolling machines of 8455 are used to improve the grain structure and quality of the metal. Therefore, the purpose of the tube mill becomes relevant to our analysis, not merely how the mill operates and the presence of rollers.
The instant tube mill is used to work metal into a different shape; the structure and quality of the metal remain unchanged. Indeed, Dundee repeatedly refers to the tube mill process as a “direct forming line,” which supports our finding that the tube mill is used to change the shape of the metal. While rollers are used in the reshaping procedure, they are used for a different purpose than the rolling machines of heading 8455, HTSUS. The tube mill is not used to improve the grain structure and quality of the metal and does not share the same purpose as any of the exemplars listed in EN 84.55 but instead has a purpose similar to the metalworking machines listed in EN.84.62. In light of these facts, we conclude that the instant tube mill is classified under heading 8462, HTSUS.
Dundee argues that the instant tube mill cannot be properly classified in heading 8462, HTSUS, because it does not operate by bending, folding, straightening or flattening the strip metal. However, the facts on the record contradict this argument. The tube mill bends and folds metal into a different shape. While it uses rollers to achieve this result, the tube mill undeniably is used to work the metal and bend it into the desired shape. This supports rather than undermines classification in heading 8462, HTSUS.
Dundee asserts that the tube mills classified in the HQ ruling letters discussed above are different from the instant tube mill and therefore are not applicable. We acknowledge that Dundee’s tube mill differs slightly from those described in these rulings, particularly in the shape of the tube formed by the machine; however, these differences are not material to the classification of the merchandise. Like the machines at issue in the rulings above, Dundee’s tube mill is designed to bend flat strip metal into a tubular shape, in this instance a rectangular or square shape. As stated earlier, the purpose of the machine is relevant to our inquiry when headings 8455 and 8462 are at issue, rather than the types of components used to achieve its purpose. Because Dundee’s tube mill bends metal into different shapes, it is classified as a bending machine of heading 8462, HTSUS regardless of the various components it uses to achieve its purpose.
Dundee further asserts that its tube mill is a “roll forming” machine and not a bending machine as understood by the steel industry. Dundee also argues that heading 8455 refers to machines utilized by tube producers and heading 8462 covers only machines utilized by tube fabricators. These semantic distinction does not overcome the legal text of headings 8455 and 8462, by which we are bound. Furthermore, industry (and dictionary) definitions are determinative only when the textual language of the HTSUS is unclear. See Danze, Inc. v. United States, 319 F. Supp. 3d 1312 (Ct. Int’l Trade 2018). Heading 8455, HTSUS provides for metal rolling mills, and heading 8462 provides for machines for working metal. Regardless of whether the tube mill forms or bends metal into tubes, we cannot ignore that the tube mill imported by Dundee works the metal and reshapes it. This process is easily distinguishable from rolling to improve grain structure and quality. Because the text of the pertinent headings calls for us to consider the purpose of the machine at issue, general industry distinctions between “forming,” “bending” and “production” do not outweigh the facts of the specific machine under consideration.
In light of the foregoing, the tube mill is classified under heading 8462, HTSUS as a machine for working metal.
HOLDING:
The Protest is DENIED. By application of GRI 1, GRI 2(a), and Note 4 to Section XVI, the subject tube mill is classified in heading 8462, HTSUS, specifically in subheading 8462.21.00, HTSUS, which provides for “Machine tools (including presses) for working metal by forging, hammering or die-stamping; machine tools (including presses) for working metal by bending, folding, straightening, flattening, shearing, punching or notching; presses for working metal or metal carbides, not specified above: Bending, folding, straightening or flattening machines (including presses): Numerically controlled. The 2019 column one, general rate of duty is 4.4% ad valorem.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8462.21.00, HTSUS, unless specifically excluded, are subject to an additional 25 percent ad valorem rate of duty. At the time of importation, the importer must report the Chapter 99 subheading, i.e., 9903.88.01, in addition to subheading 8462.21.00, HTSUS, listed above.
The HTSUS is subject to periodic amendment, so you should exercise reasonable care in monitoring the status of goods covered by the Note cited above and the applicable Chapter 99 subheading. For background information regarding the trade remedy initiated pursuant to Section 301 of the Trade Act of 1974, including information on exclusions and their effective dates, you may refer to the relevant parts of the USTR and CBP websites, which are available at https://ustr.gov/issue-areas/enforcement/section-301-investigations/tariff-actions and https://www.cbp.gov/trade/remedies/301-certain-products-china respectively.
Duty rates are provided for convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the internet at www.usitc.gov/tata/hts/.
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. Sixty days from the date of this decision, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel and to the public on the Customs Rulings Online Search System (“CROSS”) which can be found on the U.S. Customs and Border Protection website at https://rulings.cbp.gov/ and other methods of public distribution.
Sincerely,
Yuliya A. Gulis, Director
Commercial and Trade Facilitation Division