DEFECTIVE TUBE ENDS, REJECTED COUPLINGS, COUPLING BLANKSCLAIM FOR ENTRY AS METAL SCRAP DENIED Certain metal goods, consisting of tube ends, couplings, and coupling blanks, although secondhand, defective, or damaged, were not "fit only to be remanufactured" within the meaning of Public Law 81-869, as amended, so as to be entitled to free entry as metal scrap. The record discloses that the processes undertaken to restore the defective articles to usefulness, and the actual use of the finished product, did not change the fundamental character of the said articles. Held, they were not remanufactured. United States Customs Court, Second Division Protests 65/2649 and 65/2645 against the decision of the collector of [Judgment for defendant.] (Decided November 25, 1968) Allerton deC. Tompkins for the plaintiffs. Edwin L. Weisl, Jr., Assistant Attorney General (Bernard J. Babb, trial attorney), for the defendant. Before RAO and FORD, Judges RAO, Chief Judge: The issue presented for our determination here is whether an importation of certain metal goods from Mexico was properly classified by customs officials within the provisions of paragraph 397 of the Tariff Act of 1930, as modified by the Sixth Protocol of Supplementary Concessions to the General Agreement on Tariffs and Trade, T.D. 54108, as articles or wares, not specially provided for whether partly or wholly manufactured, wholly or in chief value of iron, steel, brass, nickel, pewter, zinc, or aluminum, other, and, accordingly, assessed with duty at the rate of 19 per centum ad valorem. Plaintiffs claim that the imported merchandise is entitled to free entry as metal scrap under the provisions of section 1 of Public Law 81-869, 64 Stat. 1093, as amended by Public Law 85-453, 72 Stat. 184. In the alternative, plaintiffs claim that the merchandise is dutiable under paragraph 312 of the Tariff Act of 1930, as modified by the Torquay Protocol to the General Agreement on Tariffs and Trade, 86 Treas. Dec. 121, T.D. 52739. Further alternative claims were made that the merchandise should be classified under paragraph 301 and under paragraph 1555 of the same statute. However, plaintiffs have not offered any evidence at the trial nor addressed any arguments thereto in their brief, and, therefore, these claims will be considered abandoned. The pertinent parts of the competing provisions are as follows: Paragraph 397 of the Tariff Act of 1930, as modified by T.D. 54108– Articles or wares not specially provided for, whether partly or wholly manufactured: Composed wholly or in chief value of iron, steel, Other, composed wholly or in chief zinc, or aluminum (except ***)- 19% ad val. Public Law 81-869, 64 Stat. 1093, as amended by Public Law 85453, 72 Stat. 184 Sec. 1 (a) No duties or import taxes shall be levied, collected, or payable under the Tariff Act of 1930, as amended, or under section 3425 of the Internal Revenue Code with respect to metal scrap, or relaying and rerolling rails. (b) The word "scrap", as used in this Act, shall mean all ferrous and non-ferrous materials and articles, of which ferrous or non-ferrous metal is the component material of chief value, which are second-hand or waste or refuse, or are obsolete, defective or damaged, and which are fit only to be remanufactured, but does not include such non-ferrous materials and articles in pig, ingot, or billet form which have passed through a smelting process and which can be commercially used without remanufacture. Sec. 2. Articles of which metal is the component material of chief value, other than ores or concentrates or crude metal, imported to be used in the remanufacture by melting, shall be accorded entry free of duty and import tax, upon submission of proof, under such regulations and within such time as the Secretary of the Treasury may prescribe, that they have been used in remanufacture by melting. Provided, however, That nothing contained in the provisions of this section shall be construed to limit or restrict the exemption granted by section 1 of this Act. Paragraph 312 of the Tariff Act of 1930, as modified by T.D. 52739Beams, girders, joists, angles, channels, car-truck channels, tees, columns and posts, or parts or sections of columns and posts, and deck and bulb beams, together with all other structural shapes of iron or steel: Not assembled, *** Machined, drilled, punched, assembled, fitted, fab- 712% ad val. The record herein consists of the oral testimony of four witnesses and 11 exhibits and the official papers, which were received without being marked. The following plaintiffs' exhibits were received in evidence: Exhibit 1 is a representative sample of the pipe ends or tube ends imported by Valley Steel Products Company from Mexico. Exhibit 2 is a representative sample of a coupling blank with slivers in it. Exhibit 3 is a representative sample of a coupling blank with slivers and eccentricity. Exhibit 4 is a representative sample of a coupling blank with an end recessed and with eccentricity. Exhibit 5 is a representative sample of a rejected threaded coupling. Exhibit 6 is a representative sample of a coupling blank which was partially manufactured. Collective exhibit 7 consists of photographs of Mr. A. J. Strubel with several piles of couplings and coupling blanks purchased from mills in Mexico and elsewhere. Collective exhibit 8 consists of two photographs of Mr. A. J. Strubel standing beside a heating furnace where some of the Mexican stock was processed. Collective illustrative exhibit 9. A photograph of Mr. A. J. Strubel standing beside a press which was used in the processing of some of the Mexican stock. Defendant's exhibits, A-1 and A-2, are letters addressed to the collector together with the official papers signed by the treasurer of Valley Steel Products Company indicating an intention that the Mexican importation will be melted and used for remanufacture. Mr. A. J. Strubel was the primary witness to appear on behalf of the plaintiff. He testified that he was the vice president and general manager of Valley Steel Products Company, the importer herein, which firm is in the business of purchasing secondary materials for remanufacture and is the largest company in the world in the field, maintaining 10 plants in the United States. He explained that secondary materials generally include any product from a mill which is not primary, and include such articles as pipes, plates, couplings, and thread protectors. He stated that after processing the imported secondary material, the resulting products are thread protectors, water well casings, O.D. pipe, square and rectangular tubing, and drive shoes. Strubel further testified that some of the machinery which is used in the company's operations includes a draw bench, which is a machine that reduces the size or shape of pipe and presses for shaping material, heating furnaces used to reshape metal, a hot rolling mill to flatten the gauge of plates and tapping and boring machines and threading machines and various shears and decoilers for cutting metal. The witness also testified that he is familiar with the merchandise at bar and that prior to its purchase by the company he had made trips to Mexico, where he inspected the mill of the exporter and observed its entire manufacturing operation. He there saw a pile of tubing in various lengths, some partially threaded and some completely threaded and some with slivers and seams, and arranged for the purchase of the entire accumulation of tubing ends and reject couplings and coupling blanks during 1957 and 1958. He stated that in his opinion there is no difference between the merchandise which he then saw and that described on the invoices herein. The witness identified plaintiffs' exhibits 1 through 6 as tube ends, coupling blanks, and couplings purchased from the Mexican mill as scrap and selected by him from the Flora, Illinois, yard of Valley Steel Products Company on April 25, 1966, as representative of the nature of the articles coming from the Mexican shipment, although he was unable to identify them as coming out of the shipments before the court. Upon identifying these exhibits he stated that they were defective due to either having eccentricities, slivers, or improper threading. He explained that an eccentric tubing end was one that had irregular wall widths and, therefore, could not be threaded and that slivers are deposits of carbon or foreign matter which may run through the whole piece of steel and which give a seamed impression and prevent adequate threading. He further stated that the tube ends, couplings, and coupling blanks were imported from mills in Mexico and elsewhere in sizes ranging from 2 inches through 16 inches, and he identified plaintiffs' exhibit 7 as three photographs showing him standing next to the piles of couplings and coupling blanks at the company's Flora, Illinois, yard. He stated that all of this material is seamless steel and that oil well couplings are tubings which join pieces of pipe or casing, and that they must be strong, watertight and airtight to prevent earth from entering the production string and that the imported merchandise was not suitable for use as such as it was secondary material. Strubel testified that after importation the merchandise was brought to the yard, inspected, and segregated into various categories and that some pieces, such as that represented by exhibit 1, were sold as scrap; that pieces like exhibit 2 were reduced in diameter and made into pipe thread protectors or couplings; that pieces like exhibit 3 and exhibit 4 could be made into such things as thread protectors, water well couplings and drive shoes. Exhibit 5 was identified by him as a rejected coupling because of defective threads, and exhibit 6, as a coupling blank obtained from Mexico which was improperly recessed. He testified that a pipe protector is a piece of steel put on the threads to protect them during shipment and that water couplings are used on casings and drilling of water wheels and that a drive shoe is a device threaded halfway down with a sharp bevel which is used in driving water well casing into the ground. He explained that in the case of thread protectors, if the threads are not too tight the couplings would be cut in half to make two couplings out of one. He stated that in order to make water well couplings the couplings would be bored on a boring machine and then rethreaded on the threading machine and that in some cases the size of the couplings would be reduced by heating them and pressing them into a smaller, more usable blank; that the blanks, after they are removed from the furnace in a cherry red condition, are placed under the opening of the press and the outside diameter is reduced by the pressure. Strubel further testified that the production costs incurred by the work on the imported merchandise was substantial and that the processing changed the imported material into new commercial products; that some of the merchandise was sold and remelted, but he does not know what amount of the total importation these sales represented since no such records were kept. On cross-examination Strubel testified that he arranged to purchase such merchandise in 1957, about 3 years before the instant entries, and that included in these shipments were coupling blanks, threaded couplings, dropped end tubing, and coupling stock and that he did not know how many of each category was included. He stated that his company paid $70 per metric ton for the imported merchandise and that he knows that the stock is oil well casings because of its dimensions and wall thickness, which dimensions range from 2 inches to 16 inches in diameter, and that some of the merchandise was sold to scrap dealers, but that he did not know how much was sold. He stated that in some cases couplings had to be rethreaded to be used as thread protectors; that those requiring rethreading were placed in the threading machines and the threads were rechased, but that rethreading was not always necessary. He stated that he did not know what percentage of the |