CLA-2-71:OT:RR:NC:N4:433
Fredric D. Van Arnam, Esq.
Barnes, Richardson & Colburn, LLP
475 Park Avenue South
New York, NY 10016
RE: The tariff classification and status under the United States-Korea Free Trade Agreement (UKFTA) of a course powder form of elemental palladium from Korea.
Dear Mr. Van Arnam:
In your letter received by the National Commodity Specialist Division on December 23, 2013, on behalf of BASF Corporation, you requested a ruling on the classification and status of a course powder form of elemental palladium, specifically identified by you as palladium black, from Korea under the UKFTA.
The following is a general process description of the merchandise: (1) exhausted catalytic converters from automobiles are removed and collected in Korea; (2) in Korea the cans of the catalytic converters are broken open and the spent catalysts are removed therefrom, extracting the honeycomb-shaped substrates impregnated with various precious metals; (3) the spent catalysts are then subject to a pyro-metallurgical smelting process, resulting in the ceramic substrates being incinerated and only the precious metals remaining; (4) to extract the various metals from the alloy it is subject to a hydro-metallurgical chemical refining process, which, in turn, separates and purifies the various recovered metals into precious metal colloids, including palladium colloid; and (5) the palladium colloid is dried and concentrated giving rise to the form of palladium known as palladium black. BASF Corporation contemplates importing the palladium black from Korea into the United States.
Additional company information received, as to, the description of the merchandise, a certificate of analysis of the merchandise and photos of the merchandise, indicates that palladium black is a black color powder that can pass through a mesh size of =0.5 mm and is 99.95% pure palladium. Accordingly, the merchandise meets the parameters set by Subheading Note 1 to Chapter 71 of the Harmonized Tariff Schedule of the United States (HTSUS) to be designated as a powder.
The applicable tariff provision for the palladium black, powder, will be 7110.21.0000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Platinum, unwrought or in semimanufactured forms, or in powder forms: Palladium: Unwrought or in powder. The general rate of duty will be free.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at http://www.usitc.gov/tata/hts/.
BASF Corporation suggests that the palladium black to be imported is an originating good under the UKFTA, and as such is entitled to benefits under the agreement which includes preferential duty treatment that eliminates the merchandise processing fee assigned to the entry. 19 Code of Federal Regulations, 19 CFR 24.23 (c) (12) exempts originating goods of the UKFTA from the ad valorem fee surcharge. It is your belief that the merchandise concerned, the palladium black, is an originating good under UKFTA either as a good “wholly obtained or produced” in Korea or, alternatively, as a good produced in Korea because each of the non-originating materials used in the production undergoes an “applicable change in tariff classification.”
The provisions of the Korea FTA were adopted by the United States with the enactment of the United States – Korea Free Trade Agreement Implementation Act (the “Act”), Pub. L. 112-41, 125 Stat. 428 (19 U.S.C. § 3805 note), on October 21, 2011. On March 6, 2012, President Barack H. Obama signed the Presidential Proclamation (8783) to implement the provisions of the Korea FTA. The proclamation was published in the Federal Register on March 19, 2012, (77 Fed. Reg. 15943), modifying the HTSUS. The modifications to the HTSUS included the addition of a new General Note, GN 33, with regards to the Korea FTA and the insertion throughout the HTSUS of the preferential duty rates under the Korea FTA, in which the code “KR” appears in parenthesis in the “Special” rate of duty subcolumn.
GN 33 (b), HTSUS, sets forth the criteria for determining whether a good is originating under the UKFTA. GN 33 (b), HTSUS, (19 U.S.C. § 1202) states:
For the purposes of this note, subject to the provisions of subdivisions (c), (d), (n) and (o) thereof, a good imported into the customs territory of the United States is eligible for treatment as an originating good of a UKFTA country under the terms of this note if–
(i) the good is wholly obtained or produced entirely in the territory of Korea or of the United States, or both;
(ii) the good is produced entirely in the territory of Korea or of the United States, or both, and- -
(A) each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in subdivision (o) of this note; or
(B) the good otherwise satisfies any applicable regional value-content or other requirements set forth in such subdivision (o); and
satisfies all other applicable requirements of this note and of applicable regulations; or
(iii) the good is produced entirely in the territory of Korea or of the United States, or both, exclusively from materials described in subdivision (i) or (ii), above.
For the purpose of this note, the term “UKFTA country” refers only to Korea or to the United States.
Further meaning, delineating the expression “wholly obtained or produced entirely in the territory of Korea or of the United States, or both,” is provided at GN 33 (c) (i), A through L. In pertinent part and relevant to the discussion at hand, under GN 33 (c) (i) (J) (2) waste and scrap derived from “used goods collected in the territory of Korea or of the United States, or both, fit only for the recovery of raw materials,” falls within the meaning of the expression wholly obtained or produced entirely in the territory of Korea or of the United States, or both.
With regard to the exhausted catalytic converters removed and collected from automobiles in Korea, we find that the incinerated ceramic substrates extracted from spent catalysts subject to pyro-metallurgical smelting is the initial process in the recovery of the raw materials, which happens to be, foremost in this case, the precious metal alloy of palladium and other platinum group metals. Notwithstanding pyro-metallurgical smelting, further processing in the form of hydro-metallurgical chemical refining is required to separate and purify the various recovered precious metals, ultimately recovering and producing the merchandise known as palladium black. Consequently, we find that the incinerated ceramic substrates extracted from spent catalysts from automobile catalytic converters fall within the meaning of GN 33 (c) (i) (j) (2), because these substrates obtained and collected in Korea from spent catalytic converters will only be used in the recovery of their precious metals to produce palladium black. Therefore, we conclude that the palladium black is a product of Korea, which is wholly obtained or produced entirely in the territory of Korea. No merchandise processing fee is required.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Neil H. Levy at (646) 733-3036.
Sincerely,
Gwenn Klein Kirschner
Acting Director
National Commodity Specialist Division