HQ 088116

February 27, 1991

CLA-2 CO:R:CV:G 088116 JLV

CATEGORY: Classification

TARIFF NO.: 7218.90.00

District Director of Customs

40 South Gay Street

Baltimore, Maryland 21202

RE: Internal Advice 62/90; sheet bar; semifinished; primary

hot-rolling; rough appearance; flat-rolled; stainless;

continuous cast slab

Dear Mr. Beikirch:

In a memorandum of August 30, 1990, you forwarded a request

for internal advice that was submitted by counsel for Avesta,

Inc., New Castle, Indiana, concerning the classification of

certain hot-rolled stainless steel products. This ruling is our

decision on the classification issue.

FACTS:

The merchandise consists of flat-rolled stainless steel

products that have been hot-rolled from continuous cast slab.

The processing operations performed prior to importation are

described as follows: 1) continuous cast slab, measuring 50

inches wide and 5.5 to 8 inches thick as cast, is cut to

specified lengths, such as 98.5 inches; 2) the lengths of slab

are heated to approximately 2300oF; and 3) they are then

longitudinally hot-rolled (reduced) to thicknesses of 0.750 to

2.00 inches in such a manner that the width of the slabs becomes

the length. The hot-rolled products are called \"sheet bars\" and

are described as having \"rough surfaces\" and rounded ends and

rounded edges, and as having only been longitudinally rolled.

They are not rolled to any tolerances established by the importer

other than the approximate thickness, (e.g., one inch).

After importation, the sheet bar is cut, heated to hot

working temperature, hot-rolled to final gauges ranging from

0.187 to 1.00 inch, and edge worked. The plate or sheet products

are then annealed, shot blasted to remove scale, roller or roller

and stretcher flattened, cut to size, pickled, and ground.

ISSUE:

Are the hot-rolled stainless steel products considered to be

\"semifinished products\" and, therefore, classifiable as

semifinished products of stainless steel in subheading

7218.90.00, Harmonized Tariff Schedule of the United States

(HTSUSA), or are they \"flat-rolled products\" classifiable as

flat-rolled products of stainless steel, of a width of 600 mm or

more, not further worked than hot-rolled, not in coils, of a

thickness exceeding 10 mm, in subheading 7219.21.00, HTSUSA?

LAW AND ANALYSIS:

Legal note 1(ij), Chapter 72, HTSUSA, defines \"semifinished

products\" as follows:

1\. In this chapter \* \* \* the following

expressions have the meanings hereby

assigned to them:

\* \* \* \* \*

(ij) Semifinished products

Continuous cast products of

solid section, whether or not

subjected to primary hot-rolling

\[emphasis added\]; and

Other products of solid section,

which have not been further

worked than subjected to primary

hot-rolling or rough shaped by

forging, including blanks for

angles, shapes or sections.

These products are not presented in

coils.

Semifinished products of stainless steel fall within heading

7218, HTSUSA.

Legal note 1(k), Chapter 72, HTSUSA, defines \"flat-rolled

products,\" in pertinent part, as the following:

\(k\) Flat-rolled products

Rolled products of solid

rectangular (other than square)

cross section, which do not

conform to the definition at

(ij) above in the form of:

\* \* \* \* \*

\- straight lengths, which if of a

thickness less than 4.75 mm are of

a width measuring at least 10 times

the thickness or if of a thickness

of 4.75 mm or more are of a width

which exceeds 150 mm and measures

at least twice the thickness.

\* \* \* \* \*

Flat-rolled products of stainless steel, of a width of 600 mm

or more, fall in heading 7219, HTSUSA.

The hot-rolled stainless steel is not in coils, measures

more than 10 mm in thickness and 600 mm in width, and has not

been further worked than hot-rolled. The definitions for

\"semifinished\" and \"flat-rolled\" do not define the terms

\"primary hot-rolling\" and \"rolling\" which are used to describe

the condition of the steel products that result from those

processes. The Explanatory Notes (EN) to the Harmonized

System, however, do provide some guidance for the construction

and scope of these terms. The EN to headings 7218 and 7219

refer to the EN found at headings 7207 and 7208, pages 991 to

995, Explanatory Notes to the Harmonized Commodity Description

and Coding System, Supp. 1 to 5 (1990), mutatis mutandis. The

EN to heading 7207 states the following:

\* \* \* For purposes of this Note, the

expression \"subjected to primary hot-

rolling\" applies to products which have been

subjected to a rolling operation which has

given them a rough appearance.

The heading covers \* \* \* sheet bars \* \*

\* and all products obtained by continuous

casting.

\(A\) BLOOMS, BILLETS, ROUNDS, SLABS,

AND SHEET BARS

All these products are obtained by

hot-rolling or forging the ingots, puddled

bars or pilings classified in heading 72.06.

They are semi-finished products intended for

further hot-rolling or forging. They are

therefore not required to be made exactly to

size; the edges are not accurate and the

surfaces are often convex or concave and may

retain marks cause during the manufacturing

processes (e.g., roller marks).

\* \* \* \* \*

Slabs and sheet bars are also

rectangular \* \* \* in section \* \* \* have

widths considerably greater than their

thicknesses, slabs being thicker than sheet

bars. Slabs are therefore usually re-rolled

to plates, while sheet bars are normally

used to produce sheets or strip. \* \* \* With

regard to the distinction between slabs and

sheet bars and certain plates, see the

Explanatory Note to heading 72.08 below.

\* \* \* \* \*

\(D\) SEMI-FINISHED PRODUCTS

OBTAINED BY CONTINUOUS CASTING

This group covers all semi-finished

products of iron or non-alloy steel, under

any form, obtained by continuous casting.

\* \* \* \* \*

The references to the EN at heading 7208 refer to the

following EN:

This heading covers, inter alia, \"wide

coils\", \"sheets\" and \"plates\".

\* \* \* \* \*

Certain \"sheets\" and \"plates\" may have

dimensions similar to those of slabs and

sheet bars. However, they can be

distinguished from slabs and sheet bars

since:

\(1\) They are most often cross-rolled

(longitudinally and transversely) and

sometimes oblique-rolled whereas slabs

and sheet bars are roughly rolled

longitudinally only (in the slabbing or

roughing mill).

\(2\) Their edges are normally sheared or

flame-cut and show traces of the

shears or flame whereas slabs and

sheet bars have round edges.

\(3\) Tolerances as to thickness and surface

defects are very strict whereas slabs

and sheet bars are not of uniform

thickness and show various surface

defects.

In summary, we conclude there are general principles which may

be drawn from these legal notes and EN. In this respect, the

following general principles may be considered in determining

whether certain hot-rolled steel products are semifinished or

flat-rolled: a primary hot-rolling is a rolling process that

\(1\) reduces the dimensions of an ingot or other primary form

or continuous cast product and (2) leaves the resulting

product with a rough appearance; a rough appearance (this term

is not the same as roughly shaped) is one that is identified

by convex or concave surfaces, presence of roller marks and

other surface defects, and lack of strict, uniform dimensional

tolerances (usually with reference to tolerances for

thickness, flatness, or cross-section); products which have

been subjected to a primary hot-rolling are usually intended

for further hot working and they do not meet the industry

tolerances (or comparable end-user dimensional requirements)

for flat-rolled products; and hot-rolled flat-rolled products

are rolled to tolerances which meet recognizable industry

standards or comparable end-user standards for hot-rolled

plate, sheet, wide coils, wide flats, and similar finished

products.

Applying these principles to the facts in issue, we

conclude that the imported stainless steel products are

semifinished products and classified as other semifinished

products of stainless steel in subheading 7218.90.00, HTSUSA.

Counsel and the importer claim that the hot-rolling performed

on the slab is a primary hot-rolling because it is used to

break down the slab to an intermediate product called \"sheet

bar,\" which is a thinner, semifinished material that must be

processed by a secondary hot-rolling to make flat-rolled

products (plates or sheets). The imported products are said

to have a rough appearance which, according to counsel for the

importer, is used to describe \"the appearance of the imported

sheet bars as those which have been \'hot-rolled\' only, and

which have not been subject to the well-recognized finishing

operations.\" However, we note that, in the terms of the EN to

heading 7207, \"rough appearance\" is more specific and means

the following: the products are not rolled \"exactly to size\"

or, in other words, are not rolled to cross-sectional or other

dimensional tolerances required for flat-rolled products; the

surfaces may be convex or concave; and the surfaces may have

obvious roller marks or imperfections which require secondary

hot-working to produce flat-rolled products.

Counsel and importer state that the imported hot-rolled

products do not meet the industry standards for the close

tolerances (gauge) required for flat-rolled products (plate or

sheet). It is further stated that the imported hot-rolled

products are not rolled, pursuant to requirements established

by the importer or a specific end-user, to tolerances which

are comparable in accuracy to the industry standards for

flat-rolled products. There is no evidence in the file that

controverts these statements.

Semifinished products, such as sheet bar, are intended

for further hot-working. However, it is the condition of the

product at the time of importation that determines whether or

not it is that kind of steel product that is \"intended for

further hot-working\" and, therefore, classifiable as

semifinished steel products. Classification of semifinished

products is not an actual use determination. Therefore,

although the actual hot-rolling of a steel product after

importation may have some evidentiary value, it is neither

conclusive evidence that a steel product is a semifinished

product, nor is it conclusive evidence that a steel product is

not a flat-rolled product.

Our decision to classify the imported products as

semifinished stainless steel products is based on the

statements by counsel and the importer that the products were

not hot-rolled to either internal or industry specifications

which meet or satisfy the criteria for flat-rolled products

known as \"hot-rolled plate.\" That is, the products are not

rolled with controls for gauge, edge, or surface condition

required for plate. The imported product requires further

hot-working in order to impart these features. It is on the

basis of these statements of fact presented by counsel and the

importer that we classify these hot-rolled products as

semifinished stainless steel. Any change in the facts as

presented (e.g., the existence of production standards for

dimensional tolerances equivalent to tolerances for flat-

rolled products) may result in a different conclusion.

We note that the fact that the imported product was not

surface finished (i.e., still had scale left after the primary

hot-rolling and subsequent cooling) and was not edge trimmed

(or similar edge control) is not the basis for our decision.

Plates may have a hot-rolled finish, which is described in

ASTM designation A 480/A480M, section 10.1.1, as \"\[s\]cale not

removed, an intermediate finish.\" We also note that edge

trimming may be performed at any time to impart the edge

finished on a flat-rolled product, such as plate.

Regarding the applicability of voluntary restraint

agreement (VRA) certification requirements, as this program is

administered by the U.S. Department of Commerce, we recommend

that you contact the Office of Agreements Compliance,

International Trade Administration, U.S. Department of

Commerce, Washington, D.C., 20230, telephone (202) 377-3793,

for the VRA requirements applicable to the imported product.

HOLDING:

The stainless steel products have been reduced from

continuous cast slabs by a primary hot-rolling only and are

classified as semifinished stainless steel products in

subheading 7218.90.00, HTSUSA.

Sincerely,

Harvey B. Fox

Director, Office of

Regulations and Rulings