PRD 5301-97-100387; Cobalt Samarium Slurry; Base Metals and Rare Earth Elements in a Water Solution, HQ 960205; Scrap Residue From Ground Up Magnets, Subheading 8105.10.90; Cobalt Alloys, Section XV, Note 5 and 6; Unwrought Cobalt, Additional U.S. Note 1, Similar Manufactured Primary Forms, Anval Nyby v. U.S.

HQ 962049 FEBRUARY 16, 1999 CLA-2 RR:CR:GC 962049 JAS CATEGORY: Classification TARIFF NO.: 8105.10.30 Port Director of Customs 2350 North Sam Houston Parkway East, # 1000 Houston, Texas 77032 RE: PRD 5301-97-100387; Cobalt Samarium Slurry; Base Metals and Rare Earth Elements in a Water Solution, HQ 960205; Scrap Residue From Ground Up Magnets, Subheading 8105.10.90; Cobalt Alloys, Section XV, Note 5 and 6; Unwrought Cobalt, Additional U.S. Note 1, Similar Manufactured Primary Forms, Anval Nyby v. U.S. Dear Port Director: This is our decision on Protest 5301-97-100387, filed against your classification under the Harmonized Tariff Schedule of the United States (HTSUS) of cobalt samarium slurry. The entry was liquidated on September 26, 1997, and this protest timely filed on October 9, 1997. FACTS: The merchandise, invoiced as cobalt oxides and hydroxides, is a slurry or sludge containing the following, all by weight: 40% cobalt, up to 17.5% iron, small amounts of the base metals copper, zirconium, hafnium, 20% of the rare earth element samarium, and between 6.7% and 15.4% of other rare earth elements including praseodymium. The product is said to be a scrap residue from the grinding up of cobalt magnets, and is suitable only for recovery of the cobalt. Occupational Safety and Health Administration (OSHA) regulations require that the product be shipped as a slurry because in dry powder form it is highly toxic and combustible. The merchandise was entered under a tariff provision for cobalt oxides. Your office determined the product was unwrought cobalt under a provision of heading 8105, and liquidated the - 2 -  entry accordingly. Protestant agrees that the product is not an oxide, but asserts that it is a scrap/residue from the grinding up of magnets. The claim is that the provision in heading 8105 for cobalt waste and scrap represents the correct classification. The provisions under consideration are as follows: 8105 Cobalt mattes and other intermediate products of cobalt metallurgy; cobalt and articles thereof, including waste and scrap: 8105.10 Cobalt mattes and other intermediate products of cobalt metallurgy; unwrought cobalt; waste and scrap; powders: Unwrought cobalt: 8105.10.30 Alloys 8105.10.60 Other 8105.10.90 Other ISSUE: Whether base metals combined with rare earth elements in a water solution is unwrought cobalt for tariff purposes. LAW AND ANALYSIS: Merchandise is classifiable under the Harmonized Tariff Schedule of the United States (HTSUS) in accordance with the General Rules of Interpretation (GRIs). GRI 1 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, and provided the headings or notes do not require otherwise, according to GRIs 2 through 6. Section XV, Note 6, HTSUS, states in part that any reference in the tariff schedule to a base metal includes a reference to alloys which, by virtue of Section XV, Note 5, are to be classified as alloys of that metal. Under Note 5(a), an alloy of base metals is to be classified as an alloy of the metal which predominates by weight over each of the other metals. Under Note 5(b), an alloy composed of base metals of Section XV and of elements not falling within that section is to be treated as an - 3 -  alloy of base metals of Section XV if the total weight of such metals equals or exceeds the total weight of the other elements present. Finally, Section XV, Additional U.S. Note 1, HTSUS, defines the term “unwrought” in part as referring to metal, whether or not refined, in the form of ingots, blocks, lumps, billets, among other named forms, and includes manufactured primary forms similar to the named exemplars. Initially, the combined base metal and rare earth material is imported in solution only because of Federal regulations which for health and safety reasons require that it be shipped that way. The water acts as a carrier only and does not change the overall properties of the product which, in dry form, is a powder. For classification purposes, therefore, the water content may be disregarded. See HQ 960205, dated February 12, 1998. Alloys of unwrought cobalt are classifiable in subheading 8105.10.30, HTSUS, while cobalt waste and scrap is classifiable in subheading 8105.10.90, HTSUS. Thus, protestant’s claim under the latter provision cannot prevail if the merchandise - a dry powder containing one or more base metals combined with one or more rare earth elements - qualifies as an unwrought alloy of cobalt. Under Section XV, Note 5(b), because the combined weight of the cobalt, iron, copper, hafnium and zirconium exceeds the combined weight of the samarium, praseodymium and other rare earth elements, the merchandise under protest is an alloy of base metals of Section XV. Because cobalt predominates by weight over each of the other metals, the merchandise is considered a cobalt alloy under Note 5(a). To be classified in heading 8105 as a cobalt alloy, the merchandise, in powder form, must first be “unwrought” for tariff purposes. The classification of cobalt alloy powders used in plasma arc welding and thermal spraying or coating applications was before the Court of International Trade in Anval Nyby Powder AB, v. United States, Slip Op. 96-80 (Ct. Int’l Trade, decided May 21, 1996). The Court decided that the phrase manufactured primary forms, for purposes of Section XV, Additional U.S. Note 1, HTSUS, refers not to a product’s shape, but to forms that have undergone some processing but must undergo further processing before they appear in an eventual final product. In concluding that the cobalt alloy powders were manufactured primary forms - 4 - similar to the ones enumerated in the cited legal note, the Court noted that the cobalt powder used in both applications must first be melted to form a solid mass, either in the shape of the weld (in a plasma arc welding application) or the shape of a valve or other article to be coated (in a thermal spraying application). In neither case was the powder itself a final good. It was later processed so as to become a part of or subsumed into a finished good, and that apart from that finished good, the powder had no apparent utility. The merchandise in this case has undergone some processing but is not itself a final product. The cobalt must be later processed to become part of a finished good and apart from that finished good, the cobalt powder has no apparent utility. We conclude that the merchandise in issue is a manufactured primary form similar to the exemplars in Section XV, Additional U.S. Note 1, HTSUS. It is unwrought cobalt for tariff purposes. HOLDING: Under the authority of GRI 1, the cobalt samarium slurry is provided for in heading 8105. It is classifiable in subheading 8105.10.30, HTSUS. The protest should be DENIED. In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, 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 or entries in accordance with the decision must be accomplished prior to mailing the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.ustreas.gov, by means the Freedom of Information Act, and other methods of public distribution. Sincerely, John Durant, Director Commercial Rulings Division