HQ 223437: Internal Advice request concerning the same kind and qualityof steel products under T.D. 81-74 for same conditionsubstitution drawback purposes.

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                            HQ 223437

                         March 11, 1992


DRA-2-02-CO:R:C:E 223437  TLS

CATEGORY: Entry/Drawback

Regional Director
U.S. Customs Service
10 Causeway Street  Suite 801
Boston, Massachusetts  02222-1056

RE: Internal Advice request concerning the same kind and quality
of steel products under T.D. 81-74 for same condition
substitution drawback purposes.


Dear Sir:

     The above-referenced internal advice request has been
forwarded to this office for our consideration.  We have
considered the points raised by the importer and your office. 
Our decision follows.

FACTS:

     This internal advice request involves the interpretation of
same kind and quality steel products eligible for drawback under
T.D. 81-74.  The requester manufactures various steel parts for
three different domestic automobile companies.  These companies
use the parts to manufacture vehicles in Canada.  The two basic
categories of steel involved in this case are cold rolled steel
and galvanized steel.

     The manufacturer contends that all parts manufactured with
cold rolled steel are interchangeable for drawback purposes. 
There are two types of cold rolled steel, drawing quality and
commercial quality.  The drawing quality steel in this case has
different quality numbers assigned to it by ASTM (American
Society for Testing and Materials) and SAE (Society for
Automotive Engineers) than does the commercial quality steel
(ASTM and SAE are two of the organizations that set quality
standards for automotive parts made of steel).

     While the drawing quality falls under ASTM number A620 and
SAE numbers 1006-1008, the commercial quality is assigned ASTM
number A366 and SAE numbers 1008-1012.  We note that there is
some overlap between the two types with SAE number 1008.  The
manufacturer further argues that a 1954 Customs information
letter has recognized that SAE numbers 1006-1012 are
interchangeable.

     The manufacturer also contends that the variations in
thickness with galvanized steel parts are permissible within the
SAE 1006-1012 classification range.  It argues that the thickness
is identical regardless of the coating process used in
manufacturing.  As with cold rolled steel, the three different
types of galvanized steel products at issue here fall under
different ASTM numbers.  The three types are also processed
differently.  Zincrometal involves a zinc coating that is painted
on, hot dipped galvanized is dipped into molten zinc, and
electrolytic galvanized involves a process that applies the zinc
coating chemically.  The manufacturer states that customer
preference does not distinguish the different processes through
which galvanized steel is manufactured.  It is stated that
customer preference goes only to thickness.

ISSUE:

     Whether steel parts of different ASTM and SAE specification
numbers are of the same kind and quality for the purposes of same
condition drawback under T.D. 81-74.

LAW AND ANALYSIS:

     T.D. 81-74 provides the basic format for drawback contract
involving steel products.  The parallel columns on the contract
define the following as being of same kind and quality:

     Steel of one general class, e.g., an ingot, falling
     within one SAE, AISI (American Iron and Steel
     Institute), or ASTM specification, and if the
     specification contains one or more grades falling
     within one grade of the specification.

The manufacturer cites to a Customs letter dated September 24,
1954, which states the following:

     "two steels in the form of either sheet or strip which
     fall within the composition requirements for SAE 1009
     are merchandise of the same kind and quality, provided
     they are interchangeable for manufacturing purposes. 
     These facts necessarily mean that steel sheet and
     strips coming within the composition requirements of
     SAE 1006, 1008, 1010, and 1012 are considered
     merchandise of the same kind and quality, if the
     condition relative to interchangeability is met.

The letter refers to situations where the different steel parts
are used interchangeably in the manufacturing context.  We note
that the 1954 document is an information letter and not a formal
Customs or Treasury ruling letter.  At any rate, it is not
relevant to this case because the subject contract is being
considered in accordance with T.D. 81-74.

     The manufacturer is currently operating under a general
contract published as T.D. 81-74.  As noted above, this contract
clearly uses ASTM and SAE standards as requirements for same kind
and quality specification.  We believe the requirements set in
81-74 are clear and need no further interpretation.  If a steel
strip falls under SAE 1006 it cannot be said to be of same kind
and quality with a steel strip falling under SAE 1008 under T.D.
81-74.  If two different types of steel strips fall under
different grades within SAE 1006, for instance, then they can be
(but not necessarily will be) considered of same kind and quality
because they are still covered by the plain language of T.D. 81-
74.

     Manufacturers who intend to use the general contracts
pursuant to subpart D, Part 191, Customs Regulations, must adhere
to the terms of the contract as published.  Manufacturers who
determine that they cannot adhere to the terms of a general
contract have the option to seek approval of a specific drawback
contract under subparts B and C, Part 191, Customs Regulations. 
In this situation, the manufacturer selected neither option. 
Instead, after notifying the Regional Commissioner that it would
submit claims in accordance with the terms of T.D. 81-74, the
manufacturer has unilaterally attempted to change the terms of
T.D. 81-74.

     The manufacturer may be able to comply with the specific
drawback contract provisions in subparts B and C, Part 191,
Customs Regulations.  See 19 CFR 191.23(c).  Note that in this
context, 19 CFR 191.61 requires a claimant to apply for any
necessary drawback contract needed within three years after the
date exportation of the articles.

HOLDING:

     Steel parts subject to drawback under T.D. 81-74 are
considered of the same kind and quality only when they fall under
the same SAE or ASTM classification number.  The Customs Service
will consider whether steel outside of the criteria set in T.D.
81-74 as being of the same kind and quality only if submitted as
a specific contract under subparts B and C, Part 191, Customs
Regulations.  In that situation, the question of
interchangeability as set in the 1954 letter will be considered.

                               Sincerely,



                               John Durant, Director