Trade Court Sustains CBP's Preferred Classification of Heat-Treated Forged Steel Rods
Heat-treated forged steel rods imported by ME Global are properly classified in the Harmonized Tariff Schedule as "other bars" not further worked than forged, rather than in the importer's preferred classification as "grinding balls and similar articles for mills," the Court of International Trade ruled in a May 2 decision.
Judge Richard Eaton upheld the government's proposed classification of the steel rods, used to crush ore in mining and mineral extraction operations, under HTS subheading 7228.40.00 for "other bars and rods, not further worked than forged." The importer had argued for classification under HTS subheading 7326.11.00 as "other articles of iron or steel: forged or stamped, but not further worked: ... grinding balls and similar articles for mills."
Both subheadings are duty-free, but subheading 7228.40.00 is subject to both Section 232 and Section 301 tariffs, while subheading 7326.11.00 is only subject to Section 301 tariffs.
ME Global had argued that, according to two Explanatory Notes, goods classified under heading 7228 will be moved out of this heading if subjected to "working" that causes them to assume the character of articles falling under another heading. Heat treatments and other processing that the steel rods underwent, while not considered working, caused the rods to be processed out of the heading since they assumed the character of subheading 7326.11.00, the importer said. ME Global also said that the rods' use should determine their classification since the text of the subheading inherently suggests the goods are for a particular use.
Eaton ruled the language of the subheading is irrelevant since the first comparison is between tariff provisions at the heading level, and heading 7228, which covers "other bars and rods," more specifically describes the heat-treated forged steel rods than heading 7326, which is a basket provision for "other articles of iron or steel." Neither heading 7228 nor 7326 suggests a type of use, so use is "not an essential or even a material consideration," Eaton added.
The court is not allowed to consider subheadings in evaluating whether the goods assumed the character of articles under subheading 7326.11.00, Eaton said. The importer cannot create a rule that "a term of a subheading should be used to interpret the scope of a term of a heading, or the scope of a heading as determined according to its terms, when read in accordance with the relevant section and chapter notes," the judge said.
Eaton ruled that the rods are properly classified under heading 7228 and subheading 7228.40.00. The judge said that a steel rod can contain notches still considered to have a solid cross-section along its whole length for the purposes of being classified under heading 7228. Eaton ruled that the metallurgical testing also shows that the rods are properly classified as being of "other alloy steel."
(ME Global v. United States, Slip Op. 23-68, CIT # 19-00179, dated 05/02/23; Judge: Richard Eaton; Attorneys: John Peterson of Neville Peterson for plaintiff ME Global; Alexander Vanderweide for defendant U.S. government)