Importer Appeals CIT Opinion on Classification of Steel Conduit Tubing
The Court of International Trade improperly upheld CBP's incorrect classification of conduit tubing imported from Mexico as steel tubing instead of insulated fittings, Shamrock Building Materials said in its June 5 opening brief at the U.S. Court of Appeals for the Federal Circuit (Shamrock Building Materials v. U.S., Fed. Cir. # 23-1648)
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CBP originally classified the goods under Harmonized Tariff Schedule heading 7306, which covers "Other tubes, pipes, and hollow profiles ... of iron or steel," which carries a duty-free general rate but a 25% duty under Section 232. Shamrock argued the tubing should have been classified under heading 8547 as “electrical conduit tubing ... of base metal lined with insulating material," which would have subjected the imports to a 4.6% duty rate but exempted them from Section 232 duties under the trade deal with Mexico.
Shamrock’s conduits can’t “insulate the base metal, to any significant degree, from the electrical current or heat in the wire it surrounds," the lower court ruled in March. The imports are not "electrical conduit ... of base metal lined with an insulating material" and couldn't be classified under HTS heading 8547, Judge Timothy Stanceau ruled (see 2303140035).
Shamrock argued that the trade court ignored the plain language of heading 8547 and substituted its own interpretation of the term “insulated electrical conduit tubing,” which only appears only in the "non-statutory" Explanatory Note to heading 7306. The conduit is classifiable under the plain language of heading 8547 because it is “lined with insulating material," as the heading explicitly states, Shamrock said. The tubing's epoxy resin, melamine and silicone are "universally recognized in scientific, technical and lexicographic authorities as insulating materials" as the government has already conceded, Shamrock said.
Despite admitting that the conduit is lined with a coating that functions with a “measurable electrically insulating property,” CIT found the conduit was not classifiable under that heading and found the heading, Shamrock said. CIT’s finding that the heading term was ambiguous was based on the unsupported premise disconnected from the “intended purpose and use” of electrical conduit. Heading 8547 "expressly includes electrical conduit 'lined with insulating material' " and does not place any other qualifiers on the term "insulating,” Shamrock said.
CIT also misunderstood how electrical conduit is described within the industry, Shamrock said. The lower court interpreted heading 8547 language to require that the insulating layer "must function in a way that relates to the ‘electrical conduit’ function,” without support, the importer argued. CIT cited no evidence to support that electrical conduits must perform the interior insulating function that the court assumed it would.
Finally, Shamrock argued that the CIT failed to explain how previous CBP rulings regarding heading 8547 were unpersuasive. Customs rulings are entitled to deference and the CAFC has done so in the past, Shamrock argued. Customs has consistently interpreted heading 8547 to not require any “significant” degree of electrical insulation for classification.