HQ 966796

November 8, 2004

CLA-2: RR:CR:TE: 966796 BtB/JAS

CATEGORY: Classification

TARIFF NO.: 7225.30.7000

Port Director

Bureau of Customs and Border Protection

423 Canal Street

New Orleans, LA 70130

Attn: Protest Office, Room 306

RE: Protest 2002-03-100581; hot-rolled flat-rolled dual-phase alloy
steel in coils

Dear Port Director:

This is our decision on Application for Further Review ("AFR") of
Protest

No. 2002-03-100581, timely filed by M.G. Maher & Co., Inc. on July 16,
2003, on behalf of Marubeni-Itochu Steel America ("protestant"),
importer of record, concerning the classification, under the Harmonized
Tariff Schedule of the United States Annotated ("HTSUSA") of certain
hot-rolled flat-rolled dual-phase alloy steel sheet in coils.

FACTS:

The merchandise at issue was entered at the Port of New Orleans under
the provision for flat-rolled products of other alloy steel, of a width
of 600 mm or more, of silicon electrical steel, other, in subheading
7225.19.0000, HTSUSA. The Bureau of Customs and Border Protection (CBP)
issued Notices of Action advising the importer that based on the mill
certificates submitted with the entries, the merchandise was properly
classified under subheading 7225.30.7000 HTSUSA, as flat-rolled products
of other alloy steel, of a width of 600 mm or more, other (other than
silicon electrical steel), not further worked than hot-rolled, in coils,
of a thickness of less than 4.75 mm, other. The Notice of Action also
rate advanced the merchandise to 1% *ad valorem* and advised that
merchandise classified in subheading 7225.30.70000, HTSUSA, was subject
to additional Section 201 steel safeguard duties under subheading
9903.72.67, HTSUSA. The entries liquidated on April 18, 2003.

On protest, an administrative ruling is cited purporting to classify
substantially similar merchandise as silicon electrical steel. Further,
the protestant claims the steel is exempted from 201 steel safeguard
duties because it is hot rolled.

Subsequently, by letter dated October 26, 2004, the protestant, now
represented by counsel, makes an additional argument, pursuant to
Section 174.28, Customs Regulations (19 CFR 174.28), that the steel at
issue is exempted from the 201 steel safeguard duties by Chapter 99,
Subchapter III, U.S. Note 11(b)(xvii)(D), HTSUSA. This exemption relates
to a hot-rolled, flat-rolled, dual-phase steel product with the
requisite percentage, by weight, of silicon, and the necessary tensile
strength and elongation percentages listed in the note.

ISSUE:

Whether the merchandise is classified under subheading 7225.19.0000,
HTSUSA, or 7225.30.7000, HTSUSA; whether it is subject to the additional
201 steel safeguard duties.

LAW AND ANALYSIS:

Classification under the HTSUSA is made in accordance with the General
Rules of Interpretation (GRI). GRI 1 provides, in part, that
classification decisions are to be \"determined according to the terms
of the headings and any relative section or chapter notes.\" In the
event that goods cannot be classified solely on the basis of GRI 1, and
if the headings and legal notes do not otherwise require, the remaining
GRI may then be applied.

The Harmonized Commodity Description and Coding System Explanatory Notes
(EN) constitute the official interpretation of the Harmonized System at
the international level (for the 4 digit headings and the 6 digit
subheadings) and facilitate classification under the HTSUSA by offering
guidance in understanding the scope of the headings and GRI. While
neither legally binding nor dispositive of classification issues, the
ENs provide commentary on the scope of each heading of the HTSUSA and
are generally indicative of the proper interpretation of the headings.
See T.D. 89-80, 54 Fed. Reg. 35127-28 (Aug. 23, 1989).

According to the mill certificates submitted with the entries, typical
dimensions for this hot-rolled steel sheet are 2.9 mm (thickness) x 1343
mm (width) x C (coil) and 3.2 mm x 1253 mm x C. Typical chemical
compositions for the steel are, by weight: carbon 0.06 %, silicon
1.18-1.24%, manganese 1.28-1.32%, phosphorous .007-009%, sulfur .001%,
and aluminum .023-.028%. The steel at issue meets the definition set
forth in Chapter 72, Note 1.(k), HTSUSA, which defines "flat-rolled
products," in part, as rolled products of solid rectangular (other than
square) cross section in the form of coils of successively superimposed
layers. The steel also meets the definition of "other alloy steel" set
forth in Chapter 72, Note 1.(f), HTSUSA, as it has a silicon content of
0.6 percent or more by weight.

> Chapter 72, Subheading Note 1.(c) defines silicon electrical steel as:
>
> Alloy steels containing by weight at least 0.6 percent but not more
> than 6 percent of silicon and not more than 0.08 percent of carbon.
> They may also contain by weight not more than 1 percent of aluminum
> but no other element in a proportion that would give the steel the
> characteristics of another alloy steel.
>
> Although the instant merchandise contains the amounts of silicon and
> carbon specified in Chapter 72, Subheading Note 1.(c), we find that
> the steel contains other elements in such proportions as to give it
> the characteristics of another alloy steel, i.e., its proportions of
> aluminum and carbon make the steel dual- phase steel, not silicon
> electrical steel. Technical information available to us indicates the
> instant merchandise is believed to be used in making wheel rims, which
> is not a silicon electrical steel application, and is hot-rolled,
> whereas silicon electrical steel is generally supplied cold-rolled.
>
> The ruling protestant cites, NY 889389, dated September 13, 1993,
> classified a steel product said to be substantially similar to the
> merchandise under protest here as silicon electrical steel, in
> subheading 7225.10.0000, HTSUSA. We find this ruling to be
> inconclusive as to the stated classification because the percentage of
> aluminum, by weight, is not listed and it is unclear whether the other
> listed elements are by weight. In the absence of an accurate mill
> certificate as to the actual metallurgy, we are unable to confirm the
> correct classification of the product in NY 889389.

Counsel's claim of exemption from the 201 steel safeguard duties under
Chapter 99, Subchapter III, U.S. Note 11(b)(xvii)(D), HTSUSA, was made
on October 26, 2004, under Section 174.28, Customs Regulations (19 CFR
174.28). This regulation permits a reviewing officer to consider
alternative claims and additional grounds or arguments submitted in
writing with respect to a protest filed within the time allowed.
Protestant made the requisite claim of exemption in its timely filed
protest, stating as its basis that the steel was hot rolled. Hot-rolled,
flat-rolled dual-phase steel is covered by Note 11(b)(xvii)(D), cited by
counsel. This is additional grounds or, more appropriately, perfection
of a claim timely made. Note 11(b)(xvii)(D) requires, in pertinent part,
a silicon content of from 0.9 percent to 1.5 percent, by weight, and,
for thicknesses greater than or equal to 2 mm either a tensile strength
of from 540 N/mm^2^ to 640 N/mm^2^ with an elongation percentage of
greater than or equal to 26 percent, or by a tensile strength of from
590 N/mm^2^ to 690 N/mm^2^ with an elongation percentage of greater than
or equal to 23 percent. The mill certificates and documents from Nippon
Steel Corporation entitled Commodity Description, indicate to us that
the instant steel has the requisite silicon content, by weight and, for
those sizes with tensile strength in the

540 to 640 N/mm^2^ range an elongation greater than or equal to 26
percent, and for those sizes with tensile strength in the 590 to 690
N/mm^2^ range an elongation of greater than or equal to 23 percent.

HOLDING:

Under GRI 1, the steel at issue is provided for in heading 7225. It is
classifiable under subheading 7225.30.7000, HTSUSA, as flat-rolled
products of other alloy steel, of a width of 600 mm or more, other
(other than silicon electrical steel), not further worked than
hot-rolled, in coils, of a thickness of less than 4.75 mm, other.
Merchandise so classified is subject Section 201 additional duties for
steel products under subheading 9903.72.67, HTSUSA, unless exempted, as
indicated above.

The protest should be DENIED, except to the extent that applicability of
the exemption under Chapter 99, Subchapter III, U.S. Note
11(b)(xvii)(D), results in a PARTIAL ALLOWANCE.

In accordance with Section IV of the [Customs Protest/Petition
Processing Handbook]{.underline} (CIS HB, January 2002, pp. 18 and 21),
you are to mail this decision, together with the CBP Form 19, to the
protestant no later than 60 days from the date of this letter. Any
reliquidation of the entries in accordance with the decision must be
accomplished prior to mailing of the decision. No later than 60 days
from the date of this letter, the Office of Regulations and Rulings will
make the decision available to CBP personnel, and to the public on the
CBP Home Page on the World Wide Web at www.cbp.gov, by means of the
Freedom of Information Act, and by other methods of public distribution.

Sincerely,

Myles B. Harmon, Director

Commercial Rulings Division