HQ 960800

November 17, 1998

CLA‑2 RR:CR:GC 960800 PH

CATEGORY: Classification

TARIFF NO.: 8108.10.50; 9817.00.90

Port Director

U.S. Customs Service

511 NW Broadway

Portland, OR 97209

RE: Protest 2904‑97‑100109; titanium ingot; slab; ring; billet;
electrode; disk; casting; defective or damaged; scrap; wrought;
unwrought; remelt statement; Additional U.S. Note 1, Section XV; U.S.
Note 1, Chapter 98; 19 CFR 10.112; 19 CFR 54.6; HQ 958806

Dear Port Director:

This is in response to protest 2904‑97‑100109, which pertains to the
tariff classification of titanium under the Harmonized Tariff Schedule
of the United States (HTSUS). Pictorial representations were submitted
for our examination. Consideration was given to the presentation of
counsel for the protestant in a meeting with representatives of this
office on June 23, 1998, and a follow-up supplemental submission by
counsel dated July 27, 1998.

FACTS:

Twenty entries, of which two were filed in 1995 (listed below as entry
\# \-\--289-5 and \-\--748-0) and the remainder were filed in 1996, are
included in the protest (four other entries were originally included in
the protest but, at the request of the protestant two were deleted; two
other entries were reliquidated duty-free and duties were refunded). The
protest is against the merchandise classified in subheading 8108.10.50
or 8108.90.60, HTSUS. The merchandise liquidated with classification in
either of these subheadings is listed below (entries for which there is
a statement that the merchandise will be remelted are marked with an
asterisk (\*)):

[Entry \#]{.underline} [Invoiced as]{.underline} [Exam.
Disclosed]{.underline}

\-\--289-5 BT1 ingots

\-\--748-0 BT6 plates & bars Slabs

\-\--005-1 PT3V & VT1-0 electrodes Ingots

\-\--690-0 BT1-0 small cast slugs Large cast ingots

\-\--090-0\* VT1 electrodes Ingots

\-\--618-8\* PT3V & TL3 rings,

PT3V ingots

\-\--622-0\* BT1 slabs

\-\--624-6 BT6, PT3V & BT1 billets,

BT6, PT3V & BT1 ingots

\-\--894-5 BT5 billets & ingots Billets

\-\--896-0\* PT3V electrodes

\-\--897-8\* VT1, 3M, VT5, & VT6 Billets

square bars

\-\--898-6\* VT1, VT6, & 3M square bars Billets

\-\--899-4\* PT3V electrodes Ingots

\-\--945-5\* VT1 square bars Billets

\-\--150-1 BT1 ingots Ingots

\-\--318-4 VT1 billets

\-\--364-8\* PT3V rings & disks,

PT3V billets

\-\--467-9\* PT3V, BT6, BT5, BT1 & 3M

rings

\-\--469-5\* BT5 billets, BT5 ingots, Purchase order lists

rings, TL3 castings (if ingots & billets;

not machined or summary of shipment

processed) sheet shows only

ingots were imported.

\-\--612-0\* VT1 electrodes Ingots

The protested entries were liquidated between February 14 and April 18,
1997. On May 13, 1997, counsel for the importer filed this protest
contending that the merchandise subject to the protest is \"\...
titanium scrap for remelt purposes \... imported in various forms,
including ingots, billets, blocks, flat forgings, rings, pancakes, rods,
bars, slabs, castings, slugs, tube, plates, and disks \[and that\] they
are damaged or defective goods and are processed as scrap in the United
States by remelting.\" Citing Headquarters Ruling Letter (HQ) 958806
dated July 26, 1996, the protestant contends that the titanium under
consideration in unwrought form was \"defective or damaged\" as those
terms are used in the first part of subheading 9817.00.90, HTSUS. In
regard to the titanium in wrought form, the protestant contends that it
meets the requirements for the third part of subheading 9817.00.90,
HTSUS, in that it was to be used in remanufacture by remelt and a
\"remelt certificate\", as provided for in 19 CFR 54.6, is completed for
all of the forms of titanium for remelt.

In a July 27, 1998, supplemental submission, the protestant contends
that the titanium in unwrought form is considered defective or damaged
for the following reasons:

> \... First, the inability to trace the origins and input materials for
> the product gives rise to the presumption that it contains a defect.
> The history of the product is essential to ascertaining whether the
> product is acceptable for the particular application. If the titanium
> product cannot be traced, the worst must be assumed. \... Second,
> since the product is being sold as remelt scrap there is a high
> probability that the product contains one of the following three
> defects: \[there follows a description of the three defects, \"high
> interstitial defects\", \"high aluminum defects\", and \"high density
> inclusions\"\]\[.\] In fact, the probability that the imported
> merchandise contains one of these defects is born out by \[the
> protestant's\] experience with its imported scrap for remelt. Common
> defects include tungsten contamination \....

The HTSUS subheadings under consideration, are as follows:

> 8108.10.50: Titanium and articles thereof, including waste and scrap:
> \[u\]nwrought titanium; waste and scrap; powders: \... \[o\]ther.
>
> 8108.90.60: Titanium and articles thereof, including waste and scrap:
> \... \[o\]ther: \... \[o\]ther.

The 1995 and 1996 general column one rate of duty for goods classifiable
under subheading 8108.10.50 or 8108.90.60 is 15% [ad
valorem]{.underline}.

> 9817.00.90: Unwrought metal including remelt scrap ingot(except
> copper, lead, zinc and tungsten) in the form of pigs, ingots or
> billets (a) which are defective or damaged, or have been produced from
> melted down metal waste and scrap for convenience in handling and
> transportation without sweetening, alloying, fluxing or deliberate
> purifying, and (b) which cannot be commercially used without
> re‑manufacture; relaying or rerolling rails; and articles of metal
> (except articles of lead, of zinc or of tungsten, and not including
> metal‑bearing materials provided for in section VI, chapter 26 or
> subheading 8548.10 and not including unwrought metal provided for in
> chapters 72‑81) to be used in remanufacture by melting or to be
> processed by shredding, shearing, compacting or similar processing
> which renders them fit only for the recovery of the metal content:
> \... \[o\]ther.

Goods classifiable under subheading 9817.00.90 receive duty-free
treatment.

ISSUE:

Whether the titanium, in the form of ingots, slabs, rings, billets,
electrodes, disks, or castings, qualifies for duty-free entry under
subheading 9817.00.90, HTSUS, as either (1) unwrought metal in the form
of pigs, ingots, or billets which is defective or damaged and cannot be
commercially used without re-manufacture; or (2) articles of metal not
including unwrought metal to be used in remanufacture by melting.

LAW AND ANALYSIS:

Initially, we note that the protest was timely filed (i.e., within 90
days after but not before the notice of liquidation; see 19 U.S.C.
1514(c)(3)(A)) and the matter protested is protestable (see 19 U.S.C.
1514(a)(2) and (5)).

The classification of merchandise under the HTSUS is governed by the
General Rules of Interpretation (GRI\'s). GRI 1, HTSUS, states, in
pertinent part, that for legal purposes, classification shall be
determined according to the terms of the headings and any relative
section or chapter notes.

U.S. Note 1, Chapter 98, HTSUS, provides that:

> The provisions of this chapter are not subject to the rule of relative
> specificity in \[GRI\] 3(a). Any article which is described in any
> provision in this chapter is classifiable in said provision if the
> conditions and requirements thereof and of any applicable regulations
> are met.

Thus, if the merchandise qualifies for classification in subheading
9817.00.90, HTSUS, it is classifiable in that provision regardless of
whether it is also described in subheading 8108.10.50 or 8108.90.60,
HTSUS. For purposes of the issue under consideration, subheading
9817.00.90, HTSUS, describes three forms of metal: (1) unwrought metal
including remelt scrap ingot in the form of pigs, ingots or billets; (2)
relaying or rerolling rails; and (3) various articles of metal not
including unwrought metal ([i.e.]{.underline}, wrought metal). The
second of these forms is not applicable. If in the first category
(unwrought), the metal must be defective or damaged or have been
produced from melted down metal waste and scrap and be incapable of
being commercially used without re-manufacture. If in the third category
(wrought), the metal must be for use in remanufacture by melting or
processing by shredding, shearing, compacting or similar process.

The merchandise in controversy is in the following forms (based on
Customs examination, or invoice description if the merchandise was not
examined): ingots (including \"large cast\" ingots), slabs, rings,
billets, electrodes, disks, \"castings\" (the last form is the invoiced
form in entry \# \-\--469-5; the purchase order and summary shipment
sheet for this entry do not include \"castings\").

Initially, we must determine which of the provisions of subheading
9817.00.90, HTSUS, are applicable to these forms. To be included in the
first provision, the metal must be unwrought [and]{.underline} in the
form of pigs, ingots, or billets. See [Luria Bros. & Co. v. United
States]{.underline}, 64 Cust. Ct. 261, C.D. 3988 (1970), interpreting
item 911.12, Tariff Schedules of the United States (TSUS), in which the
pertinent provisions were the same as in subheading 9817.00.90, HTSUS.

The Court in [Luria]{.underline}, [supra]{.underline}, applied the
definition of \"unwrought\" in headnote 3(a), schedule 6, part 2, TSUS,
to determine whether the metal forms in that case were unwrought. That
definition is virtually identical to Additional U.S. Note 1., Section
XV, HTSUS, which provides that:

> 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, but does not cover
> rolled, forged, drawn or extruded products, tubular products or cast
> or sintered forms which have been machined or processed otherwise than
> by simple trimming, scalping or descaling.

Customs has applied the above definition to subheading 9817.00.90, HTSUS
(see, [e.g.]{.underline}, Headquarters Ruling Letter (HQ) 958806 dated
July 26, 1996; note also that the third provision of subheading
9817.00.90, HTSUS, refers to unwrought metal provided for in chapters
72-81).

In HQ 958806, we held certain titanium ingots to be \"unwrought\", for
purposes of subheading 9817.00.90, HTSUS. This is consistent with the
court cases interpreting these tariff provisions and their predecessors,
as well as the manufacturing processes for titanium. See, in addition to
[Luria]{.underline}, [supra]{.underline}, [United States v.
Wells]{.underline}, 1 Ct. Cust. App. 158, T.D. 31211 (1911); [Erie
Technological Products, Inc. v. United States]{.underline}, 65 Cust. Ct.
538, C.D. 4134 (1970); [Anval Nyby Powder AB v. United
States]{.underline}, 927 F. Supp. 463 (CIT 1996), [affirmed]{.underline}
CAFC App. No. 96-1438, September 11, 1998, in which the meaning of the
term \"unwrought\" has evolved from \"merchandise \... not in its crude
state\" ([Wells]{.underline}) to \"primary forms\" or \"initial or
relatively primitive forms\" ([Luria]{.underline} and [Erie
Technological]{.underline}) to \"forms that have undergone some
processing but must undergo further processing before they appear in an
eventual final product\" ([Anval Nyby]{.underline}).

The manufacturing process of titanium, or the winning of metallic
titanium is described as follows:

> \...
>
> **Winning**. All commercial titanium metal is produced from titanium
> tetrachloride \.... The process \... involves chlorination of ore
> concentrates \[to form\] impure titanium tetrachloride\[,\] \[and\]
> \... purification of the raw tetrachloride \.... The purified titanium
> tetrachloride is \... reacted \... to form the pure metal called
> sponge, because of its porous cellular form. \... The sponge \... is
> cleaned \....
>
> **Consolidation**. \... A mass of sponge, alloy additions, and scrap
> are mixed, then compressed into compacts and welded together to form a
> sponge electrode. This is melted \... to form an ingot. \... To attain
> commercially acceptable uniformity, the first ingot is remelted at
> least once and sometimes twice. \...
>
> **Forming**. The conversion of the titanium ingot into mill products,
> such as forging billet, plate, sheet, and tubing, is accomplished for
> the most part on conventional metalworking equipment. Mills designed
> to roll and shape stainless or alloy steel are used with only slight
> modifications. \...
>
> **Shaping**. Fabricating titanium mill products into finished parts is
> performed on conventional metal-working equipment with only a few
> exceptions. \...

[McGraw-Hill Encyclopedia of Science & Technology]{.underline} (1992),
vol. 18, *Titanium metallurgy*, pp. 396-400; see also, [The Encyclopedia
Americana International Edition]{.underline} (1993), vol. 26,
*Titanium*, pp. 785-787 (in this volume, the process after preparation
of the sponge is described as follows: \"The sponge, along with any
necessary additives, is melted in an electric furnace to form
ingots\[;\] \[t\]he ingots are remelted to form the final pure titanium
ingot, which can be readily drawn, forged, or rolled.\"); [Ullmann's
Encyclopedia of Industrial Chemistry]{.underline} (1996), vol. A27,
*Titanium and Titanium Alloys*, p. 95 [et seq]{.underline}.; and
[Kirk-Othmer Encyclopedia of Chemical Technology]{.underline} (1993),
vol. 23, *Titanium and Titanium Alloys*, p. 98 [et seq]{.underline}.

Thus, not only is titanium in ingots one of the forms listed in the
definition of \"unwrought\" in Additional U.S. Note 1, Section XV,
HTSUS, it is a \"relatively primitive form\" or a form that has
undergone some processing but must undergo further processing before
appearing in an eventual final product, as in the above-referenced court
decisions. Also, according to the above descriptions of the titanium
manufacturing process, titanium ingots have not been \"rolled, forged,
drawn or extruded\", consistent with the caveat in Additional U.S. Note
1, Section XV, HTSUS. In regard to titanium electrodes, in each case in
which the merchandise was invoiced as \"electrodes\" and Customs
examined the shipment, the merchandise was found to be ingots (entry \#
\-\--005-1, \-\--090-1, \-\--899-4, and \-\--612-0). Of the entries
under consideration, the merchandise was invoiced as electrodes and
there was no Customs examination only in entry

\# \-\--896-0. On the basis of the results of Customs examination of the
merchandise in four of the five entries in which the merchandise was
invoiced as electrodes, we conclude that the merchandise in entry \#
\-\--896-0 was also ingots. (Even if the merchandise in this entry was
electrodes, the protest decision for the entry would remain the same,
since, as a more primitive form of titanium than ingots (according to
the manufacturing processes as described above), the electrodes would be
\"unwrought\" and would be precluded from duty-free treatment under the
third provision of subheading 9817.00.90, HTSUS.)

Because the titanium ingots are \"unwrought\", to qualify for duty-free
treatment under subheading 9817.00.90, HTSUS, they must meet the
conditions of that provision. That is, they must be: (1) defective or
damaged, or have been produced from melted down metal waste and scrap
for convenience in handling and transportation without sweetening,
alloying, fluxing or deliberate purifying; and (2) incapable of
commercial use without remanufacture.

There is no evidence that the titanium ingots have been produced from
melted down metal waste and scrap for convenience in handling and
transportation, not does the protestant contend that this is so (in the
ruling cited by the protestant in this regard, HQ 958806, the titanium
was such \"remelt\" scrap; thus HQ 958806 may not serve as precedent for
this case and is distinguished on that basis). To qualify for
classification in subheading 9817.00.90, HTSUS, the ingots must have
been \"defective or damaged.\" The protestant contends that this
requirement is met because the origins of the titanium cannot be traced
so \"the worst must be assumed\" and further \"there is a high
probability that the product contains one of \... three defects\". The
pertinent provision of subheading 9817.00.90, HTSUS, does not require a
\"high probability\" that the metal is defective or damaged. The
requirement is that the metal actually \"\[is\] defective or damaged\".
In this regard, see [United States v. Lineiro]{.underline}, 37 CCPA 5,
10, C.A.D. 410 (1949), in which the Court stated \"\[d\]etermination of
issues in customs litigation may not be based on supposition\". The
ingots and electrodes (entry \# \-\--289-5, \-\--005-1, \-\--690-0,
\-\--090-0, \-\--618-8 (as to ingots only), \-\--624-6 (as to ingots
only), \-\--896-0, \-\--899-4, \-\--150-1, \-\--469-5 (as to ingots
only), and \-\--612-0) do not meet the terms and requirements of
subheading 9817.00.90, HTSUS, because they are not defective or damaged.
They are classified in subheading 8108.10.50, HTSUS, as articles of
unwrought titanium.

This decision is consistent with [Luria]{.underline},
[supra]{.underline}. In [Luria]{.underline} the importer claimed that
the merchandise \"[may]{.underline} be defective by virtue of undersize,
fragments of pigs, they [may]{.underline} contain blow holes or other
physical defects, or they [may]{.underline} be off-grade in terms of
their chemical composition \...\" (64 Cust. Ct. at 264, emphasis added).
The Court stated that \"\[e\]ven if the disputed items were in one of
those forms \[the forms provided for in the TSUS predecessor to
subheading 9817.00.90, HTSUS\], there is nothing to establish that they
meet the condition for free entry of those forms under TSUS item 911.12
as claimed\" (64 Cust. Ct. at 266-267).

The remaining forms of titanium under consideration (slabs, rings,
billets, disks, and castings) are included within the forms of metal of
the third provision of subheading 9817.00.90, HTSUS. That is, they are
articles of metal but are not within the parenthetical exclusion of
\"unwrought metal provided for in chapters 72-81\". According to the
above descriptions of the titanium manufacturing process, these forms of
titanium have been \"rolled, forged, drawn or extruded\", and thus are
not within the definition of \"unwrought\" in Additional U.S. Note 1,
Section XV, HTSUS. We note that, in particular regard to billets, not
only do the above-referenced descriptions of the titanium manufacturing
processes indicate that billets are rolled, forged, drawn or extruded,
but other industry publications also describe billets as being produced
by such a process (see American Society for Testing and Materials (ASTM)
standard B348-95a, \"Standard Specification for Titanium and Titanium
Alloy Bars and Billets\", which describes a billet as \"a solid
semifinished section hot rolled or forged from an ingot \...\", and [The
Purchasing Guide of the Metal Industries; METAL STATISTICS
1987]{.underline}, pp. 191-193, which distinguishes between titanium
ingots and titanium mill products such as \"\[f\]orging and extrusion
billet\"). Further, in regard to billets, this is consistent with the
manufacturing process for the titanium in billet form as described by
protestant's counsel in the July 27, 1998, supplemental submission.

The forms of titanium within the forms provided for in the third
provision of subheading 9817.00.90, HTSUS, must be for use in
remanufacture by melting or processing by shredding, shearing,
compacting or similar processing which renders them fit only for the
recovery of the metal content. Procedures for compliance with this
requirement are specifically provided in the Customs Regulations. Under
19 CFR 54.6, merchandise meeting the description of the third provision
of subheading 9817.00.90, HTSUS, shall be admitted duty-free subject to
the following conditions (as applicable in this case):

> \(1\) In connection with the entry there shall be filed a statement of
> the importer that the intended use of the merchandise is one of the
> uses provided for in the subheading;
>
> \(2\) A bond, as required in 19 CFR 54.6(b) and 113.62, is filed;
>
> \(3\) Liquidation of the entry shall be suspended pending proof of use
> or other disposition of the merchandise within 3 years from the date
> of entry;
>
> \(4\) Within 3 years from the date of entry, the importer shall submit
> to the director of the port of entry a statement from the
> superintendent or manager of the plant at which the articles were used
> in remanufacture by melting, or were processed by shredding, shearing,
> compacting, or similar processing showing the information listed in 19
> CFR 54.6(c)(1) through (4).
>
> \(5\) If satisfactory proof of use of the articles in remanufacture as
> required is furnished within 3 years from the date of entry, the entry
> shall be liquidated without duty on the covered articles; if not, the
> entry shall be liquidated without any exemption from duty under
> subheading 9817.00.90, HTSUS.

Of the entries of forms provided for in the third provision of
subheading 9817.00.90, HTSUS, the statement of intended use to be filed
by the importer in connection with the entry was filed for entry \#
\-\--618-8, \-\--622-0, \-\--897-8, \-\--898-6, \-\--945-5,

\-\--364-8, \-\--467-9, and \-\--469-5. There is no such statement for
entry \# \-\--748-0, \-\--624-6, \-\--894-5, and \-\--318-4, each of
which is of forms provided for in the third provision of subheading
9817.00.90, HTSUS. However, we understand, based on a November 13, 1998,
telephone conversation between the Customs officer in your office
handling this protest and the case-handler in this office, that such
statements now have been filed with your office for these entries.

The statement of intended use required by 19 CFR 54.6(a) is required to
be filed \"in connection with the entry\". Pursuant to section 54.6(d),
this term means \"any time before liquidation of the entry or within the
period during which a reliquidation may be completed \....\" See also,
19 CFR 10.112; [Aviall of Texas, Inc. v. United States]{.underline}, 18
CIT 727, 861 F. Supp. 100 (1994), [affirmed]{.underline}, 70 F.3d 1248
(Fed. Cir. (T) 1995); [Gulfstream Aerospace Corp. v. United
States]{.underline}, 981 F. Supp. 654 (CIT 1997). Because the entries
under consideration have been protested, the statements have been filed
\"within the period during which a reliquidation may be completed\".

Accordingly, pursuant to 19 CFR 54.6, duty-free admission under
subheading 9817.00.90, HTSUS, should be allowed for entry \# \-\--748-0,
\-\--618-8 (not including ingots), \-\--622-0, \-\--624-6 (not including
ingots), \-\--894-5, \-\--897-8, \-\--898-6, \-\--945-5,

\-\--318-4, \-\--364-8, \-\--467-9, and \-\--469-5 (not including
ingots), **[provided that within the time allowed the importer submits
the required statement under 19 CFR 54.6(c)]{.underline}**, and provided
that, in regard to entry \# \-\--469-5, in which the invoice, purchase
order, and summary of shipment sheet may be inconsistent as to the
merchandise imported, the protestant satisfactorily establishes the form
of the imported merchandise.

HOLDINGS:

\(1\) The titanium in the form of ingots, including that invoiced as
electrodes, is unwrought titanium but does not qualify for duty-free
entry under subheading 9817.00.90, HTSUS, because it is not defective or
damaged; it is classified in subheading 8108.10.50, HTSUS, as articles
of unwrought titanium.

\(2\) The titanium in the form of slabs, rings, billets, disks, or
castings qualifies for duty-free entry under subheading 9817.00.90,
HTSUS, as articles of metal not including unwrought metal to be used in
remanufacture by melting, **subject to compliance with 19 CFR 54.6**.

**The protest should be DENIED IN PART (entry \# \-\--289-5,**

**\-\--005-1, \-\--690-0, \-\--090-0, \-\--618-8 (as to ingots only),**

**\-\--624-6 (as to ingots only), \-\--896-0, \-\--899-4, \-\--150-1,**

**\-\--469-5 (as to ingots only), and \-\--612-0) and ALLOWED IN PART
(as to entry \# \-\--748-0, \-\--618-8 (not including ingots),**

**\-\--622-0, \-\--624-6 (not including ingots), \-\--894-5,
\-\--897-8,**

**\-\--898-6, \-\--945-5, \-\--318-4, \-\--364-8, \-\--467-9, and
\-\--469-5 (not including ingots), [provided that within the time
allowed the importer submits the required statement under 19 CFR
54.6(c)]{.underline}, and provided that, in regard to entry \#
\-\--469-5, the protestant satisfactorily establishes the form of the
imported merchandise). In accordance with Section 3A(11)(b) of Customs
Directive 099 3550‑065, dated August 4, 1993, Subject: Revised Protest
Directive, you are directed 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, by means of
the Freedom of Information Act, and other public methods of
distribution.**

Sincerely,

John Durant, Director,

Commercial Rulings Division