Steel Special Profiles; New York Ruling N293371; 19 U.S.C. § 1516; 19 C.F.R. Part 175; Domestic Interested Party Petition

HQ H303762 June 28, 2019 OT:RR:CTF:CPMM H303762 APP CATEGORY: Classification TARIFF NO.: 7216.50.0000; 9903.80.01 Ms. Tamara Browne Schagrin Associates 900 Seventh Street N.W., Suite 500 Washington, D.C. 20001 RE: Steel Special Profiles; New York Ruling N293371; 19 U.S.C. § 1516; 19 C.F.R. Part 175; Domestic Interested Party Petition Dear Ms. Browne: This letter is in response to the Petition by Domestic Interested Party, dated October 2, 2018, filed on behalf of Steel of West Virginia, Inc., pursuant to 19 U.S.C. § 1516 and 19 C.F.R. Part 175. In accordance with 19 C.F.R. § 175.21(a), U.S. Customs and Border Protection (“CBP”) published a Notice titled “Receipt of Domestic Interested Party Petition Concerning the Tariff Classification of Steel Special Profiles for the Manufacture of Forklift Truck Masts and Carriages” in the Federal Register, Volume 84, Number 64 on April 3, 2019. The Notice solicited comments, which were due by May 3, 2019. We have reviewed all comments and our decision follows. FACTS: The subject of the Petition is the merchandise in New York Ruling Letter (“NY”) N293371, dated February 8, 2018, issued to counsel for Mannstaedt GmbH. The merchandise in NY N293371 is described as follows: The merchandise in question is described as incomplete steel mast rails and finger bars. The articles are imported either (1) cut to a fixed length in accordance with customer instructions or (2) in lengths designed to fit within the transporting cargo container. You indicate that, in their condition as imported, the mast rails and finger bars are not ready for direct use in fork-lifts. However, the imported articles do have the approximate final shapes of the finished articles. Each article is said to be “manufactured to a single customer’s specifications for use in the lift system of a specific fork-lift truck.” Minor modifications may be made to the articles subsequent to importation but the value of such operations is said to be estimated substantially lower than the value of the actual imported articles. The mast rails are the vertical components responsible for lifting, lowering and positioning the loads carried by the fork-lift. The contoured channels in the mast rails are manufactured to fit the specific mast guide bearings used in the fork-lifts. The finger bars are the crossbars to which the forks of a fork-lift are attached. They attach to the mast rails and travel the length of the mast rails during the lifting operations. A process flow diagram submitted with the ruling request for NY N293371 describes the steps in manufacturing the imported “forklift section” as: purchase, receipt, inspection and transportation of blooms to furnace for heating and reheating in preparation for rolling, descaling, rolling, hot saw to remove crop ends, saw to straightening length, test samples and cool, in line and press straightening, detwisting, recut, bundle, weigh and pack for shipment. The control plan submitted with the ruling request notes that the product at the rolling stage is a “profile shape” and the sample size for inspection is the “whole bar.” In NY N293371, CBP classified Mannstaedt’s mast rails and finger bars (also known as carriage bars) in subheading 8431.20.00, Harmonized Tariff Schedule of the United States (“HTSUS”), as parts suitable for use solely or principally with forklifts of heading 8427, HTSUS. Petitioner contends that the proper classification for the steel special profiles is under heading 7216, HTSUS, and specifically under subheading 7216.50.00, HTSUS, which covers angles, shapes and sections of iron or nonalloy steel. The column one, general rate of duty for both subheadings is free. On March 8, 2018, pursuant to section 232 of the Trade Expansion Act of 1962 (19 U.S.C. § 1862), Presidential Proclamation 9705 (83 FR 11625) imposed additional duties on steel products of Germany of subheading 7216.50.00, HTSUS, and steel products of this subheading are currently subject to additional 25 percent duties under subchapter III, chapter 99, U.S. note 16(b), HTSUS. Importers of products classified under subheading 7216.50.00, HTSUS, must also identify subheading 9903.80.01, HTSUS, at entry. Products of subheading 8431.20.00, HTSUS, on the other hand, are not subject to section 232 duties. SUMMARY OF COMMENTS: In the April 3, 2019 Notice, CBP informed the public of the filing of your Petition and invited interested parties to submit comments on or before May 3, 2019. During the comment period, CBP received a total of 14 comments. Seven comments support Petitioner’s position and seven comments are opposed to Petitioner’s position. Comments were received from steel special profiles manufacturers and suppliers, law firms, Members of the U.S. Senate and U.S. House of Representatives, unions, and local government officials. Six commenters in favor of the Petition point out that Petitioner and its employees are negatively affected by Mannstaedt’s imports from Germany and that the United States is deprived of section 232 duties, and urge CBP to remedy the situation by reconsidering NY N293371. One commenter opposing the Petition states that some of the comments politicize tariff classification and disregard tariff classification principles. All seven commenters opposing the Petition claim that the profiles have the shape or outline of finished beams and bars, are intended for use as forklift parts at the time of importation and have no other practical use, and the processing after importation is minor and accounts for a relatively small percentage of the total value of the merchandise. They also explain that the imported profiles have non-standard shapes and are manufactured to the customer’s specifications and meet the exacting tolerances and quality standards for forklift manufacturing. Two commenters in opposition to the Petition argue that the profiles cannot be classified solely based on General Rule of Interpretation (“GRI”) 1, and that under GRI 2(a), unfinished parts, provided they have the essential character of the finished parts, are classified as if they are finished parts. The commenters argue that the incomplete mast rails and finger bars have the same form and basic structure as the complete beams/bars and should therefore be considered “blanks.” One commenter states that steel profiles are often made of alloy steel and the profiles may be ineligible for heading 7216, HTSUS, which applies only to iron and nonalloy steel. However, heading 7228, HTSUS, contains the same legal language, “angles, shapes and sections,” for profiles of “other alloy steel.” Therefore, the analysis as to whether the instant merchandise is an unfinished part of a forklift truck is unaffected whether the rails and bars are made of nonalloy or alloy steel, and references to heading 7216, HTSUS, for nonalloy steel will include identical merchandise when made of alloy steel of heading 7228, HTSUS. ISSUE: Whether the subject nonalloy steel mast rails and finger bars are classified under heading 7216, HTSUS, as angles, shapes and sections of iron or nonalloy steel, or under heading 8431, HTSUS, as parts suitable for use solely or principally with forklifts. LAW AND ANALYSIS: Merchandise imported into the United States is classified under the HTSUS, in accordance with the GRIs. GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule and any relative section or chapter notes and, unless otherwise required, according to the remaining GRIs taken in order. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the heading and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order. Pursuant to GRI 6, classification at the subheading level uses the same rules, mutatis mutandis, as classification at the heading level. 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 entered, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), entered unassembled or disassembled. The HTSUS provisions under consideration are as follows: 7216 Angles, shapes and sections of iron or nonalloy steel: 7216.50.00 Other angles, shapes and sections, not further worked than hot-rolled, hot-drawn or extruded . . . 8427 Fork-lifts; other works trucks fitted with lifting or handling equipment: . . . 8431 Parts suitable for use solely or principally with the machinery of headings 8425 to 8430: 8431.20.00 Of machinery of heading 8427 Note 1(f) to section XV, HTSUS, states that, “This section does not cover: … Articles of section XVI (machinery, mechanical appliances and electrical goods).” Note 2(b) to section XVI, HTSUS, states that parts that are “suitable for use solely or principally with a particular kind of machine … are to be classified with the machines of that kind or in heading … 8431 ….” In interpreting the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”) may be utilized. The ENs, though not dispositive or legally binding, provide commentary on the scope of each heading of the HTSUS, and are the official interpretation of the Harmonized System at the international level. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989). The ENs to GRI 2(a) provide, in relevant part: (I) The first part of Rule 2 (a) extends the scope of any heading which refers to a particular article to cover not only the complete article but also that article incomplete or unfinished, provided that, as presented, it has the essential character of the complete or finished article. (II) The provisions of this Rule also apply to blanks unless these are specified in a particular heading. The term “blank” means an article, not ready for direct use, having the approximate shape or outline of the finished article or part, and which can only be used, other than in exceptional cases, for completion into the finished article or part (e.g., bottle preforms of plastics being intermediate products having tubular shape, with one closed end and one open end threaded to secure a screw type closure, the portion below the threaded end being intended to be expanded to a desired size and shape). Semimanufactures not yet having the essential shape of the finished articles (such as is generally the case with bars, discs, tubes, etc.) are not regarded as “blanks” …. The General ENs to chapter 72, note 1(n) describe angles, shapes, and sections of chapter 72 as “[p]roducts having a uniform solid crosssection along their whole length which do not conform to any of the definitions at (ij), (k), (l) or (m) above or to the definition of wire.” EN 72.16 states, in pertinent part, the following: Angles, shapes and sections are defined in Note 1 (n) to this Chapter. The sections most commonly falling in this heading are H, I, T, capital omega, Z and U (including channels), obtuse, acute and right (L) angles. The corners may be square or rounded, the limbs equal or unequal, and the edges may or may not be “bulbed” (bulb angles or shipbuilding beams). Angles, shapes and sections are usually produced by hotrolling, hotdrawing, hotextrusion or hot-forging or forging blooms or billets …. The products of this heading may have been subjected to working such as drilling, punching or twisting or to surface treatment such as coating, plating or cladding  see Part IV (C) of the General Explanatory Note to this Chapter, provided they do not thereby assume the character of articles or of products falling in other headings. The heavier angles, shapes and sections (e.g., girders, beams, pillars and joists) are used in the construction of bridges, buildings, ships, etc.; lighter products are used in the manufacture of agricultural implements, machinery, automobiles, fences, furniture, sliding door or curtain tracks, umbrella ribs and numerous other articles. Petitioner is requesting that CBP reconsider the classification of the nonalloy steel mast rails and finger bars described in NY N293371. Petitioner contends that the merchandise is merely nonalloy steel special profile shapes classifiable under heading 7216, specifically under subheading 7216.50.00, HTSUS. Petitioner asserts that the use of GRI 2(a) is inappropriate because the merchandise is a semi-manufactured article, which meets the definition of an angle, shape, or section in note 1(n) to chapter 72, HTSUS. Moreover, Petitioner contends that the profiles must undergo significant manufacturing after importation to create a part suitable for use in the mast or carriage of a forklift. The instant merchandise, which is imported in bundles of beams and bars of various sizes and shapes, is certainly described by the term “angles, shapes, and sections” set forth in note 1(n) to chapter 72, whether or not the product is a standard shape or a special shape designed for a particular application such as use in a lifting mast for a forklift truck. Heading 7216 includes U, I, H, L and T shapes as well as “other” shapes, such as special profiles of non-standard cross-section including those used in the manufacture of machinery and automobiles. See EN 72.16. In Headquarters Ruling Letter (“HQ”) 966522, dated December 22, 1994, CBP concluded that, “it is not disputed that … S-shaped steel profiles [also known as upper carriage bars] are classified in subheading 7216.50.00, HTSUS.” CBP has also classified similar incomplete nonalloy steel profiles in subheading 7216.50.00, HTSUS. In NY N295858, dated May 3, 2018; NY N295670, dated April 27, 2018; and NY J82683, dated April 18, 2003, CBP classified nonalloy steel profiles used in the manufacture of forklift truck attachments under subheading 7216.50.00. Like the products at issue, the profiles in NY N295858 and NY N295670 were further machined, assembled into a frame, and painted after importation. Similarly, in NY I85271, dated September 13, 2002, CBP classified steel beams used in construction that did not have the essential character of the finished parts in heading 7216, HTSUS. Accordingly, the merchandise at issue here is classifiable in heading 7216, HTSUS, by virtue of being worked, unless it has assumed the character of a part of a forklift. In defining a “part” for tariff classification purposes, the courts have fashioned two distinct, but not inconsistent, tests for determining whether a particular item qualifies as such. See Bauerhin Techs. Ltd. P’ship v. United States, 110 F.3d 774, 778-79 (Fed. Cir. 1997). Under the first test, articulated in United States v. Willoughby Camera Stores, Inc. (“Willoughby”), 21 C.C.P.A. 322, 324, T.D. 46851 (1933), an imported item is a part only if it is “something necessary to the completion of that article without which the article to which it is to be joined, could not function as such article.” The second test, set forth in United States v. Pompeo, 43 C.C.P.A. 9, 14, C.A.D. 602 (1955), equates “part” to “an imported item dedicated solely for use with another article.” Bauerhin, 110 F.3d at 779 (citing Pompeo, 43 C.C.P.A. at 13). However, before examining whether the goods in question satisfy one or both of the aforementioned tests, we note that they only qualify to be “parts” of the good (a forklift) if they bear a “direct relationship” to the good, such that the good is the “primary article” of which the item is a component. See HQ 255855, dated May 27, 2015. Otherwise, as the Court of International Trade (“CIT”) and its predecessor, the Customs Court, have held, the item will be considered merely a “part” of whatever intermediate part constitutes the primary article. See Mitsubishi Elecs. Am. v. United States, 19 CIT 378, 383 n.3, 882 F. Supp. 171, 175 n.3 (1995) (“[A] subpart of a particular part of an article is more specifically provided for as a part of the part than as a part of the whole.”); Liebert v. United States, 60 Cust. Ct. 677, 686-87, 287 F. Supp. 1008, 1014, Cust. Dec. 3499 (1968) (holding that parts of clutches, which clutches are in turn parts of winches, are more specifically provided for as parts of clutches than as parts of winches). CBP has consistently adhered to this principle by excluding parts of “primary articles” from HTSUS “parts provisions” where the primary articles themselves are parts classifiable in such provisions. For example, in HQ H169057, dated September 4, 2014, CBP ruled that a front frame designed to reinforce a wind engine, which in turn constituted one of two components of a wind generator, could not be classified as part of the wind generator itself. Similarly, HQ H005091, dated January 24, 2007, excluded from heading 8708, which provides for motor vehicle parts, a trunk assembly that constituted one of several component parts of an automobile trunk lock. See also HQ 020958, dated November 28, 2008; HQ 963325, dated September 15, 2000. In sum, it is not enough that an item will eventually form a portion of another article. Rather the item must be processed to the point where it is no longer recognizable as a profile but instead has the character of a finished part. In the instant case, finished mast beams and finger bars are eventually welded to other components of a forklift mast, a complex assembly of interlocking weldments formed of beams, bars, plates and tubing containing, rollers, bearings, brackets, chains and pulleys, and ultimately a hydraulic ram. For instance, as described by one forklift retailer, “… the mast is the vertical assembly on the front of the forklift that does the work of raising, lowering, and tilting the load. Most masts are ‘three stage’ meaning there are three channels on each side. The channels are similar in appearance to I-Beams.” Another states that, “The mast is the vertical structure of a forklift that provides a supporting pathway for the carriage rollers and allows the forklift to raise and lower the forks and material it’s carrying”. From these descriptions, it is clear that a vertical lifting mast is comprised of much more than beams. The finger bars are horizontal cross bars that are components of the carriage assembly and attach to the mast beams across the front of the lift truck. The carriage assembly is fitted with the forks. Even though the full mast and carriage assembly may be classifiable under heading 8431, HTSUS, as a part of a forklift, heading 8431, HTSUS, does not cover parts of parts of machines of headings 8425 to 8430. Furthermore, we note that the instant beams and bars are not joined to form the mast weldments in their condition as imported. Moreover, they do not contain the necessary angular cuts for clearance of the rollers, drilled holes for brackets, anchors, and other attachments for pulleys and chains. More importantly, they are not welded to the plates and bars necessary to create the shape and dimensions of an inner, intermediate or outer weldment of a mast. It is the weldments, which are assembled to slide smoothly against the rollers and are sold as a replaceable part. Similarly, the finger bars are not welded to the frame for attachment between the carriage and mast. Rather, the instant merchandise is simply the beams necessary to compose the weldments that form the inner, intermediate, or outer uprights of the completed mast and crossbars necessary to compose a portion of the carriage. Accordingly, while the subject merchandise may ultimately be destined for incorporation into a forklift, it is not identifiable as such based on its condition as imported. Indeed, to the extent a weldment constitutes a part of a f