CBP Finds Steel Descaling Not 'Further Working' for Classification Purposes
Descaling steel using a rough grit in one pass does not constitute “further working” of steel that removes it from classification as a semi-finished steel product, said CBP in ruling HQ H250634 (here). The ruling was issued in response to a request for internal advice from CBP at the Port of Mobile, Alabama on how it should classify stainless steel slabs and dust byproducts from Outokumpu Stainless USA’s manufacturing operation at a foreign-trade-zone facility in Calvert, Alabama.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
Outokumpu’s facility takes in recycled and scrap stainless steel, and turns them into stainless steel slabs. As part of the production process, the recycled and scrap steel are melted in a furnace, generating dust emissions that the mill captures through a de-dusting system and forms into briquettes for recycling. After the stainless steel solidifies and is molded and drawn to shape, the surface of the slabs is descaled to remove oxidization and prepare the slab for further processing outside the FTZ. The descaling process uses either 80, 100 or 180 grit to remove 0.5mm to 6mm off the surface of the slabs.
At issue was whether the descaling process removes the slabs from classification under heading 7218 as “stainless steel in ingots or other primary forms; semi-finished products of stainless steel.” Pursuant to Note 1(ij) to Chapter 72, base metals can only be classified as “semi-finished” if they have not been “further worked. Additional U.S. Note 2 to chapter 72 defines “further working” as “polishing and burnishing; artificial oxidation; chemical surface treatments such as phosphatizing, oxalating and borating; coating with metal; coating with nonmetallic substances (e.g., enameling, varnishing, lacquering, painting, coating with plastics materials); or cladding.”
CBP headquarters ruled that the descaling does not render the slabs “further worked,” and the slabs remain classifiable under heading 7218. Although the agency has issued similar rulings that found the descaling process “further worked” steel and changed its classification, those rulings concerned steel that had undergone two passes under grinding wheels, with the second pass polishing the steel using a grit of 220 to 600. In Outokumpu’s case, on the other hand, the slabs are only subjected to one pass at a rougher grit, so they don’t undergo the “polishing” process cited by Additional U.S. Note 2 as an example of “further working.” CBP also cited the Explanatory Notes to chapter 72, which say oxidation scale removal does not change an article’s classification.
As for the dust byproduct, CBP ruled that it is classifiable under heading 2619 as “slag, dross (other than granulated slag), scalings and other waste from the manufacture of iron or steel,” rather than as iron ore under heading 2601. The dust is not a “mineral of mineralogical species” as required by the definition of “ore” in Note 2 to chapter 26. On the other hand, Explanatory Note 26.19 says that heading 2619 includes “dust from blast furnaces and other kinds of waste resulting from the manufacture of iron and steel.” However, CBP noted that the port may request samples of the dust to make sure that it is a waste product from steel production classifiable under heading 2619.