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Improper Classification Aids Imports in Avoiding Section 232 Tariffs, Petition Alleges

Thursday, April 04, 2019
Sandler, Travis & Rosenberg Trade Report

A recent petition seeking the reclassification of an imported product could signal a new strategy that domestic companies could use to seek higher tariffs on goods from foreign competitors.

U.S. Customs and Border Protection is seeking comments by May 3 on a petition filed on behalf of a U.S. steel product manufacturer requesting the reclassification of steel special profiles from the United Kingdom and Germany. These goods are imported for use in manufacturing forklift masts or carriages and in ruling NY N293371 are referred to as incomplete steel mast rails and finger bars.

In that ruling CBP described the profiles as either (1) cut to a fixed length in accordance with customer instructions or (2) in lengths designed to fit within the transporting cargo container, adding that in their condition as imported they are not ready for direct use in forklifts. CBP applied General Rule of Interpretation 2(a) to classify the goods as blanks for parts of forklifts under HTSUS 8431.20.00.

However, the petitioner contends that the profiles must undergo extensive manufacturing after importation to make them suitable for use in the mast or carriage of a forklift and therefore do not have the essential character of forklift truck parts. In addition, the petitioner maintains that use of GRI 2(a) is inappropriate because the goods meet the definition of an angle shape or section in Note 1(n) to HTSUS Chapter 72. As a result, the petitioner states, the profiles should be classified under HTSUS 7216.50.00 as hot-rolled non-alloy steel profile shapes.

The petitioner also argues that due to their current classification the profiles are avoiding the application of the Section 232 additional 25 percent duty on steel products. While both the HTSUS subheadings under consideration are currently duty-free, steel products of the UK and Germany under HTSUS 7216.50.00 are currently subject to the Section 232 tariff while products of those countries classified under HTSUS 8431.20.00 are not.

Click here for the latest information on the Section 232 additional tariffs on steel and aluminum products.

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