HQ 955737

JULY 19, 1995

CLA-2 R:C:M 955737 JAS

CATEGORY: Classification

TARIFF NO.: 7228.50.10

District Director of Customs

610 South Canal Street

Chicago, ILL. 60607

RE: PRD 3901-93-101490; Alloy Tool Steel Bars, Hot Rolled;

Peeling, Turning, Machining; Cold Forming, Cold

Finishing; Further Working; Mechanical Descaling; Subheading

7228.40.00; NY 847047 Distinguished

Dear District Director:

This is our decision on Protest No. 3901-93-101490, filed

against your classification of certain hot rolled alloy steel

bars. The entries were liquidated on May 7, 1993, and this

protest timely filed on August 5, 1993. The file contains

submissions from counsel for protestant, dated October 21 and

December 10, 1993, and August 2 and 28, 1994. In addition,

counsel made an oral presentation at a meeting in our office on

August 3, 1994.

FACTS:

The merchandise under protest is round, rectangular or

block-shaped and flat bars of alloy tool steel, either press

forged or roll forged from blooms or billets. These bars,

designated Thyroplast, Thyrodur and Thyrotherm, are then annealed

to improve the steel\'s mechanical properties, after which the

rounds are peeled or turned and the blocks and flats machined or

milled. The dimensions of the imported product taken from

representative invoices are in 1/8 inch increments, expressed in

thousandths or ten thousandths of an inch. These processes

effectively remove between 0.01 inch to 0.1 inch of steel from

the bars\' entire external surface area, representing an

approximate 7 to 10 percent reduction by weight.

The bars were entered under the provision for other bars and

rods, not further worked than forged, in subheading 7228.40.00,

Harmonized Tariff Schedule of the United States (HTSUS). Counsel

for protestant maintains that the peeling, turning and machining

operations are mechanical descaling processes designed to remove

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scale and crust which originated during hot rolling or forging.

As such, these processes are the equivalent of rough turning

which is not regarded for tariff purposes as a finishing

operation that would lead to a change in classification. The

conclusion is that these processes are not cold forming or cold

finishing operations for tariff purposes. Counsel cites as

authority a ruling to protestant, NY 847047, dated December 5,

1989, which held in part that round and flat tool steel bars

produced by hot-rolling or forging that have been mechanically

descaled, are classifiable in subheading 7228.40.00, HTSUS, as

other bars and rods, not further worked than forged. The

concerned import specialist determined that the processes of

machining, peeling and turning, as described, were in fact cold

forming or cold finishing operations, and liquidated the entries

under subheading 7228.50.10, HTSUS, as bars and rods, not further

worked than cold-formed or cold-finished.

The provisions under consideration are as follows:

7228 Other bars and rods of other alloy steel\...:

7228.40.00 Other bars and rods, not further worked

than forged\...6 percent

\* \* \* \* \*

7228.50 Other bars and rods, not further worked

than cold-formed or cold-finished:

7228.50.10 Of tool steel (other than high-

speed steel)\...10.6 percent

ISSUE:

Whether mechanically removing between 0.01 inch to 0.1 inch

from the entire external surface area of alloy tool steel bars

constitutes cold forming or cold finishing 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.

The Harmonized Commodity Description And Coding System

Explanatory Notes (ENs) constitute the official interpretation of

the Harmonized System. While not legally binding on the

contracting parties, and therefore not dispositive, the ENs

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provide a commentary on the scope of each heading of the

Harmonized System and are thus useful in ascertaining the

classification of merchandise under the System. Customs believes

the notes should always be consulted. See T.D. 89-80. 54 Fed.

Reg. 35127, 35128 (Aug. 23, 1989).

Initially, the terms cold-formed and cold-finished are not

defined either in the text of the HTSUS or in the ENs. The sense

in which these terms are understood in the iron and steel

industry is therefore useful in understanding their meaning.

Additionally, the Chapter 72 General Explanatory Notes, at p.

981, identify types of mechanical working that are considered

finishing treatments to which products of that chapter may be

subjected. Turning, milling, grinding, perforation or punching,

folding, sizing, peeling, etc., are listed examples of such

mechanical working. The same notes state that rough turning

merely to eliminate the oxidation scale and crust, and rough

trimming are not regarded as finishing operations leading to a

change in classification. The notes continue by listing certain

surface treatments or other operations that improve the

properties or appearance of the metal that, except as provided in

the text of certain headings, do not affect the heading in which

the goods are classified. Annealing and similar heat treatments

to improve the mechanical properties of the metal and descaling

and similar processes to remove the oxide scale and crust formed

during the heating of the metal are among the listed surface

treatments and operations. Descaling is a generic term that

includes chemical processes such as pickling and mechanical

processes such as grit blasting, which are designed to remove

oxides and rust from the bars\' surface area. It appears from

these notes that the iron and steel industry regards turning and

rough turning and/or descaling as separate and distinct

operations.

The following passage concerning the finishing and shipping

of bar products appears in the United States Steel (now USX)

Corporation publication The Making, Shaping and Treating of

Steel, 10th. ed. (1985), at p. 944:

In the manufacture of bar products, the design and

type of rolling mill or the characteristics of the

steel frequently preclude the possibility of hot-

rolling a round to within precise sectional or out-

of-round limitations, or to roll a round with a surface

suitable for subsequent fabrication requirements. When

such requirements must be met, rounds are further

processed in the finishing departments by such

operations as sizing, turning, centerless grinding, or

by combinations of the latter two. Bars to be processed

by any one of these methods are hot-rolled over-size by

an amount predetermined by experience.

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Current technology does not permit bars to be hot-rolled to

precise sectional or out-of-round limitations, or hot-rolled with

a surface suitable for subsequent fabrication requirements.

Because the surface defects that appear in hot-rolled bar

products are at different places on the bars\' surface, and often

at different depths, it is sometimes necessary to remove so much

metal from the bar\'s entire surface area that a product with cold

worked tolerances results. It appears in these circumstances

that the turning, peeling and milling or machining, as described,

are processes designed not only to improve the bars\' surface

condition by removing undesirable defects, but also to impart a

desired form or shape to the bar, as evidenced by the close

dimensional tolerances. These processes are considered cold-

forming or cold-finishing operations for tariff purposes.

NY 847047, dated December 5, 1989, dealing with round and

flat tool steel bars that have been hot-rolled or forged and

mechanically descaled, is distinguished on the facts, and does

not cover the merchandise in this protest.

HOLDING:

Under the authority of GRI 1, the bars of other alloy steel,

in round, block or rectangular, and flat shapes, that have been

peeled, turned or milled, as described, are provided for in

heading 7228. They are classifiable in subheading 7228.50.10,

HTSUS.

The protest is DENIED. In accordance with Section 3A(11)(b)

of Customs Directive 099 3550-065, dated August 4, 1993, Subject:

Revised Protest Directive, you should 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

take steps to make the decision available to Customs personnel

via the Customs Rulings Module in ACS and to the public via the

Diskette Subscription Service, Lexis, the Freedom of Information

Act and other public access channels.

Sincerely,

John Durant, Director

Commercial Rulings Division