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HQ 555768


November 7, 1990

CLA-2 CO:R:C:V 555768 GRV

CATEGORY: CLASSIFICATION

Jeffrey A. Meeks, Esq.
Adduci, Mastriani, Meeks & Schill
330 Madison Avenue
New York, New York 10017

RE: Request for relief from VRA certification requirements for certain stainless steel plate made in Belgium from U.S. stainless steel scrap

Dear Mr. Meeks:

This is in response to your letter of October 15, 1990, on behalf of Charleroi (U.S.A.), requesting certain equitable relief as a result of Charleroi's putative detrimental reliance on our letter of July 2, 1990 (555604).

FACTS:

By letter of February 27, 1990, Charleroi (U.S.A.) requested that we "confirm" that: (1) a previous Headquarters Ruling Letter (HRL) holding that U.S. steel scrap is an eligible article of metal for purposes of item 806.30, Tariff Schedules of the United States (TSUS) (the precursor provision to subheading 9802.00.60, Harmonized Tariff Schedule of the United States (HTSUS)) would apply to U.S. stainless steel scrap to be exported by Charleroi to a European country (Belgium) for processing into stainless steel plate or bands; (2) the returned steel products would not be subject to applicable voluntary restraint agreement (VRA) requirements; and (3) the returned products would be entitled to the partial duty exemption under TSUS item 806.30.

In our response of July 2, 1990, to Charleroi, we confirmed that the previous HRL concerning the eligibility of U.S. steel scrap for TSUS item 806.30 treatment would be applicable to Charleroi's proposed transaction. However, we further stated that, without more specific information regarding the processing operations to be performed in the U.S., we were unable to provide a definitive ruling that the returned steel products would be entitled to HTSUS subheading 9802.00.60 treatment. In regard to VRA requirements, we stated the following:

Assuming the returned articles of metal qualify for the partial duty exemption under HTSUS subheading 9802.00.60, the enclosed copy of C.S.D. 89-128 addresses your inquiry regarding compliance with any applicable VRA requirements.

C.S.D. 89-128 dated September 6, 1989 (HRL 554965), a ruling addressed to another steel importer, concerned U.S. stainless steel strip and coil processed in Europe into pipe and sheet and returned for further processing. Based on the specific descriptive information provided by the importer concerning the foreign and domestic manufacturing processes to be performed, we held that the returned steel products would be entitled to HTSUS subheading 9802.00.60 treatment. We also stated that:

... although the products may be subject to ... (VRAs) the U.S. has with Spain and other European countries, the articles may be entered under HTSUS subheading 9802.00.60 without an export certificate, provided all requirements for entry under that subheading are met.

You state that based on the "seemingly clear statement" in our July 2, 1990, letter, Charleroi placed orders to purchase 3,000 tons of stainless steel scrap, solicited orders totaling 1119.25 metric tons (MT) of stainless steel plate, and began shipping the steel scrap to Belgium for processing into plate. When the first shipments totaling 122.45 MT of steel plate arrived in the U.S., our district office in Philadelphia advised that a VRA export certificate was required. You contend that Customs "sudden reversal of position regarding VRA license exemption for" came as a "complete surprise" to your client and caused extremely significant damages, exceeding $4 to $5 million.

You assert that, in recognition of the sensitivity of steel imports--particularly in regard to VRA limitations--, Charleroi has consistently attempted to determine the classification and entry requirements for imported steel products. In this connection, you point out that your client requested a ruling from Customs in 1989 regarding the applicability of HTSUS subheading 9802.00.60 and VRA requirements to stainless steel plate produced in Belgium from U.S. slab. You characterize our response (HRL 084776 dated September 21, 1989) as holding that the stainless steel plate is classified under HTSUS subheading 9802.00.60 and that plate processed in this manner and returned to the U.S. under this subheading would not be subject to VRA requirements.

As a result of your client's alleged detrimental reliance on our July 2, 1990, letter, you maintain that Customs is obliged to grant equitable relief in the form of permitting the entry of the stainless steel plate which has been completed or is in the final stages of completion (totaling 1119.225 MT) without the requirement of a VRA license and without charging the product to existing VRA levels for the European Community.

LAW AND ANALYSIS:

Section 177.9(d)(2), Customs Regulations (19 CFR 177.9(d)(2)), provides that there shall be no retroactive application of a revoked or modified ruling with respect to the person to whom the ruling was issued, provided:

(i) The request for a ruling contained no misstatement or omission of material facts;

(ii) The facts subsequently developed are not materially different from the facts on which the ruling was based;

(iii)There has been no change in the applicable law;

(iv) The ruling was originally issued with respect to a prospective transaction; and

(v) All of the parties involved in the transaction acted in good faith in reliance upon the ruling and retroactive modification or revocation would be to their detriment.

Section 177.1(d)(1), Customs Regulations (19 CFR 177.1(d)(1)), defines "ruling" as "... a written statement issued by the Headquarters Office ... that interprets and applies the provisions of the Customs and related laws to a specific set of facts." According to 19 CFR 177.1(d)(2), an "information letter" is "a written statement issued by the Customs Service that does no more than call attention to a well-established interpretation or principle of Customs law, without applying it to a specific set of facts." Among the circumstances set forth in this regulation under which it is appropriate to issue an "information letter" is when "the request is incomplete or otherwise fails to meet the requirements set forth in this part."

There appears to be no question in this case that our July 2, 1990, letter constitutes an "information letter" rather than a "ruling" since it explicitly states that "we are unable to give you a definitive ruling that the" plate would be entitled to HTSUS subheading 9802.00.60 treatment "without more specific information regarding the processing operations to be performed in the U.S." For this reason, as well as those discussed below, it is our opinion that the provisions of 19 CFR 177.9(d)(2), restricting the retroactive application of a modified or revoked ruling, are inapplicable to the circumstances of this case.

Headquarters telex dated October 8, 1986, to Customs field offices and all interested parties indicates that steel products subject to a restraint agreement and entered under HTSUS subheading 9802.00.60 are exempt from VRA requirements only if (1) the U.S. product exported from the U.S. is in the form of an arrangement product, and (2) all the conditions and documentation requirements of HTSUS subheading 9802.00.60 are satisfied. Because stainless steel scrap is not an arrangement product, the first criterion set forth above is not met. Therefore, when U.S. scrap is exported and later returned in the form of an arrangement product, an export certificate is required even though the product may satisfy all the requirements for entry under HTSUS subheading 9802.00.60.

C.S.D. 89-128, which was referenced in our July 2, 1990, letter, involved U.S. stainless steel strip and coil (arrangement products) which were processed in Europe into pipe and sheet and returned to the U.S. for further processing. As we determined in that ruling that the returned metal products satisfied the conditions for entry under HTSUS subheading 9802.00.60, we advised that no export certificate was required. Thus, both prerequisites for an exemption from VRA certification were satisfied in C.S.D. 89-128.

In light of the above discussion, it is important to reiterate that our July 2, 1990, letter to Charleroi specifically declined to rule on the applicability of HTSUS subheading 9802.00.60 to the stainless steel plate in the absence of certain material information. This necessary additional information was not subsequently provided and, as a result, this office has yet to rule that the steel plate is entitled to classification under this tariff provision. Thus, even though an export certificate was required because the first criterion for an exemption was not satisfied, Charleroi's failure to favorably and definitively resolve the second criterion militates against a finding that your client "justifiably relied" on our July 2, 1990, information letter.

The importance of a definitive ruling on the eligibility of a product for HTSUS subheading 9802.00.80 treatment, in terms of the product's VRA status, was emphasized in our ruling letter to Charleroi dated September 21, 1989 (HRL 084776). That case concerned the classification and VRA status of U.S. stainless steel slab (an arrangement product) processed abroad into steel plate and returned. We stated in HRL 084776 that "[t]he applicability of this subheading [9802.00.60] may affect both the VRA status and the dutiable value of the stainless steel plates." Contrary to your characterization of the holding in HRL 084776, we concluded as follows:

We do not have sufficient information to rule that the plates are subject to 'further processing' in the United States within the meaning of subheading 9802.00.60, HTSUS. Therefore, the stainless steel plates are subject to the VRA export certification requirements and are subject to duty on their full value. (Emphasis added).

In response to that ruling, Charleroi provided additional information concerning the domestic further processing of the returned plate made from U.S. slab. However, because Charleroi again failed to specify precisely the further processing, our subsequent letter to Charleroi (HRL 555572 dated April 27, 1990) conditionally held that the steel plate would be eligible for HTSUS subheading 9802.00.60 treatment "if the further processing in this country consists of more than mere assembly and includes a change in shape or other characteristics of the metal ...." No mention was made in HRL 555572 regarding the VRA status of the steel plate.

The documentation filed by your client with Customs in Philadelphia in connection with the entry of stainless plate made from U.S. scrap includes a bill of lading which reflects that 982.09 MT of U.S. scrap was exported from the U.S. to Belgium on May 22, 1990. The fact that the subject information letter to Charleroi was issued more than a month later (July 2, 1990), clearly contradicts your assertion that, "based on" our letter, Charleroi placed orders to purchase 3,000 tons of steel scrap. Moreover, assuming its correctness, this information profoundly calls into question your client's "good faith" reliance on our July 2, 1990, letter.

HOLDING:

For the reasons set forth above, it is our opinion that Charleroi did not justifiably rely to its detriment on our information letter of July 2, 1990. Therefore, we find that no recommendation for equitable relief from VRA certification requirements is warranted in this case.

Sincerely,

John Durant, Director

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