CLA-2 CO:R:C:M 957139 KCC
Steven B. Lehat, Esq.
26 Ironbark Way
Irvine, California 92715
RE: NY 899828 affirmed; Titanium scrap fines; waste and scrap;
Note 6(a), Section XV; Additional U.S. Note 2, Section XV;
unwrought; sponge; EN 81.08; ASTM specifications; HRL 951568
and 951469; Nippon Kogasku (USA), Inc. v. U.S.; C.J. Tower &
Sons v. U.S.; Royal Business Machines, Inc., et al v. U.S.
Dear Mr. Lehat:
This is in response to your letter dated August 17, 1994, on
behalf of Calport Resources, Inc., requesting reconsideration of
New York Ruling (NY) 899828 dated July 12, 1994, regarding the
tariff classification of titanium scrap fines under the
Harmonized Tariff Schedule of the United States (HTSUS). A copy
of NY 899828 and the request for a binding ruling to the Regional
Commissioner of Customs, New York, dated June 16, 1994, were
submitted.
FACTS:
In NY 899828 the Area Director of Customs, New York Seaport,
classified titanium scrap fines (TSF) under subheading
8108.10.5010, HTSUS, as other unwrought titanium, sponge. This
classification was based on the opinion that the TSF is unwrought
titanium in its primary form, and that it is not waste or scrap
for tariff classification purposes. The subject merchandise was
described as follows:
The TSF is generated in the production of titanium sponge.
It is our understanding that the TSF is titanium obtained by
either, a sodium reduction process, or by a magnesium
reduction process.
You state that the TSF are manufactured from a crushing
operation, not a sodium or magnesium reduction process as
described in NY 899828. Therefore, you contend that the TSF
meets the definition of waste and scrap in Note 6(a), Section XV,
HTSUS. Additionally, you state that the TSF do not meet the
American Society for Testing Materials (ASTM) standards (ASTM B-299-92) for titanium sponge and the International Trade
Administration, Department of Commerce, found that the TSF were
not titanium sponge. Therefore, the TSF are not classifiable as
titanium sponge under subheading 8108.10.5010, HTSUS.
The competing subheadings are as follows:
8108 Titanium and articles thereof, including waste and
scrap...Unwrought titanium; waste and scrap; powders...
8108.10.10 Waste and scrap.
8108.10.50 Other....
8108.10.5010 Sponge.
ISSUE:
Are the titanium scrape fines classified as titanium waste
and scrap under subheading 8108.10.10, HTSUS, or as other
unwrought titanium, sponge under subheading 8108.10.50, HTSUS?
LAW AND ANALYSIS:
The classification of merchandise under the HTSUS is
governed by the General Rules of Interpretation (GRI's). GRI 1,
HTSUS, states, in part, that "for legal purposes, classification
shall be determined according to the terms of the headings and
any relative section or chapter notes...."
Heading 8108, HTSUS, falls within Section XV, making the
Section XV notes applicable to the tariff classification of the
TSF. Note 6, Section XV, HTSUS, states that "[i]n this section,
the following expressions have the meanings hereby assigned to
them:
(a) Waste and scrap
Metal waste and scrap from the manufacture or mechanical
working of metals, and metal goods definitely not usable as
such because of breakage, cutting-up, wear or other
reasons."
Additional U.S. Note 2, Section XV, HTSUS, states:
For the purposes of this section, the term "unwrought"
refers to metal, whether or not refined, in the form of
ingots, blocks, lumps, billets, cakes, slabs, pigs,
cathodes, anodes, briquettes, cubes, sticks, grains, sponge,
pellets, flattened pellets, rounds, rondelles, shot and
similar manufactured primary forms....
The TSF in this case are unwrought titanium because they are
either imported in the form of grains or fines. We must
determine whether the TSF are "waste and scrap" or "sponge" for
tariff classification purposes. In understanding the language of
the HTSUS, the Harmonized Commodity Description and Coding System
ENs may be utilized. The ENs, although not dispositive, provide
a commentary on the scope of each heading of the HTSUS and are
generally indicative of the proper interpretation of the HTSUS.
See, T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989). EN
81.08 (pgs. 1095-1096), states that:
Titanium is obtained by reduction of the oxide ore rutile
and brookite, and from ilmenite (titaniferous iron ore).
According to the process used, the metal may be obtained in
compact form, as a powder for sintering (as in the case of
tungsten), as ferro-titanium (Chapter 72) or as titanium
carbide....
...the metal is also alloyed with aluminum, copper, nickel,
etc.
Titanium is principally used in the aircraft industry, in
shipbuilding, for making, e.g., vats, agitators, heat
exchangers, valves and pumps for the chemical industry, for
the desalination of seawater and for the construction of
nuclear power stations.
This heading covers titanium in all forms: in particular
sponge, ingots, powder, anodes, bars and rods, sheets and
plates, waste and scrap....
EN 81.08 does not provide a more detailed discussion of titanium
waste and scrap. We note that other ENs for base metals provide
further guidance regarding a description of waste and scrap for
those particular headings. Additionally, the ENs often do not
repeat the same information for each heading, but they use the
term mutatis mutandis to indicate that previous information
applies to the heading at issue. EN 81.08 does not use mutatis
mutandis to refer back to a previous base metal EN for
information regarding the classification of titanium waste and
scrap. Without further guidance regarding titanium waste and
scrap from the ENs, we apply the definition of waste and scrap in
Note 6(a), Section XV, HTSUS.
We are of the opinion that the TSF are not waste and scrap
for tariff classification purposes, but are classified under
subheading 8108.10.5010, HTSUS, as other unwrought titanium,
sponge. Sponge is not defined in the HTSUS or ENs. In the
absence of any guidance in the Explanatory Notes, it is proper to
use the principal that tariff terms are construed in accordance
with their common and commercial meaning. Nippon Kogasku (USA),
Inc. v. United States 69 CCPA 89, 673 F.2d 380 (1982). Common
and commercial meaning may be determined by consulting
dictionaries, lexicons, scientific authorities and other reliable
sources. C.J. Tower & Sons v. United States, 69 CCPA 128, 673
F.2d 1268 (1982). As it relates to metals, sponge is defined as:
A form of metal characterized by a porous condition which is
the result of the decomposition or reduction of a compound
without fusion. The term is applied to forms of iron, the
platinum-group metals, titanium and zirconium.
Vol. 1, pg. 35, Metals Handbook, 8th Ed., American Society for
Metals (1961). The TSF conform with this definition of sponge.
Sponge has very distinctive characteristics. Therefore, we
are of the opinion that upon examination, if it is determined
that the product is titanium and has the characteristics of
sponge, it will be classified as other unwrought titanium, sponge
under subheading 8108.10.5010, HTSUS. There is no distinction
between ASTM titanium sponge and other unwrought titanium sponge
for tariff classification purposes. There is no indication that
the tariff intended any other meaning than the ordinary meaning
for the term "sponge", and we see no reason to require that
titanium sponge conform to a particular industry standard in
order for it to be classified in the provision for unwrought
titanium, sponge. See also, Headquarters Ruling Letter (HRL)
951568 dated July 27, 1992, which held that molybdenum bars ends
were not classified as molybdenum waste and scrap, even though
they did not meet the ASTM standards for molybdenum bars.
You contend that the TSF are the waste product from the
manufacture of titanium sponge. We do not agree with this
assertion. Although the TSF are a by-product from the
manufacture of ASTM titanium sponge, we believe that the TSF are
a product in and of itself.
Our information indicates that the production of titanium
sponge involves a process of chlorination and reduction of
titanium concentrates (ilmenite or rutile). The concentrates
react with chlorine gas and coke in a fluidized-bed reactor to
form impure titanium tetrachloride, sometimes referred to as
"tickle." The titanium tetrachloride is then combined with
magnesium, known as the Kroll process, to form titanium sponge
and a chloride salt. The salt and residual magnesium or sodium
metal must then be separated from the titanium sponge in a
purification process.
The titanium assumes the form of cake, which is in the shape
of the vessel or crucible in which the reaction took place. The
basic Kroll process results in the purest parts forming at the
center with a higher concentration of impurities forming near the
reactor pot walls. The cake is then divided into fractions. The
portion of the cake nearest the walls, which has the highest
concentration of impurities is the source of the TSF.
Our information indicates that the TSF is in fact a product
used in a manner similar to ASTM titanium sponge. Like ASTM
titanium sponge, the TSF is melted and alloyed with other
materials. It is used in the aluminum industry, not the
aerospace industry. Although ASTM titanium sponge and TSF are
used for different purposes, they are both products derived from
the manufacture of titanium as described in EN 81.08. We are of
the opinion that the TSF does not meet the definition of waste
and scrape in Note 6(a), Section XV, HTSUS, and, therefore, is
classified as other unwrought titanium, sponge under subheading
8108.10.5010, HTSUS. See, HRL 951469 dated July 21, 1992, which
classified titanium scrap fines in the form of briquettes under
subheading 8108.10.50, HTSUS.
The Customs Service is the administrative agency which has
been designated to administer the HTSUS. Therefore, the
classification of imported merchandise is a matter properly
determined by this agency. The determination of whether specific
merchandise is subject to antidumping duties is within the
purview of the International Trade Administration (ITA), U.S.
Department of Commerce. The Court of International Trade has
stated:
The Court distinguishes between the authority of the Customs
Service to classify according to tariff classifications (19
U.S.C. 1500) and the power of the agencies administering the
antidumping law to determine a class or kind of merchandise.
The determinations under the antidumping law may properly
result in the creation of classes which do not correspond to
classification found in the tariff schedules or may define
or modify a known classification in a manner not
contemplated or desired by the Customs Service.
Royal Business Machines, Inc., et al v. U.S., 1 CIT 80, 87
(1980), 507 F.Supp. 1007, aff'd 669 F.2d 692 (1982). Thus, the
Commerce Department's antidumping scope determination applies to
the merchandise named in that determination regardless of where
Customs classifies that merchandise. Therefore, the rational
stated in the final scope ruling excluding certain compacted
titanium scrap fines from the Antidumping Duty Order on Titanium
Sponge from the U.S.S.R. (A-461-008) is not determinative as to
the classification of the TSF at issue in this case.
HOLDING:
The titanium scrap fines are classified as other unwrought
titanium, sponge under subheading 8108.10.5010, HTSUS. The
corresponding duty rate for articles of this subheading is 15
percent ad valorem.
NY 899828 is affirmed.
Sincerely,
John Durant, Director
Commercial Rulings Division