Thursday, November 06, 2014

Where Was I? Ruling of "A" Week 14: Circuit Scrap

Ever wonder what happens to scrap printed circuit assemblies? They get mined for valuable metals, primarily for copper.

I know that because I read HQ  H218910 (Dec. 17, 2013).

The issue in the ruling is the classification of the scrap PCA's. They might reasonably be classified as waste and scrap of plastic (which is the substrate) or of metal. They might also be classified as various electronic components such as resistors or as electronic assemblies such as control boards.

Waste and scrap is not defined in the tariff schedule, but there are cases that address the concept. The Courts have collectively arrived at a definition of waste as material with no original value or no value for the ordinary or main purpose of manufacture. That means that lower grade or inferior products that are otherwise functional and saleable are not waste, they are just inferior. Think factory seconds or day old bread.

In the metals context, Note 8(a) to Section XV defines "waste and scrap" as “[m]etal waste and scrap from the manufacture or mechanical working of metals, and metal goods definitely not usable as such because of breakage, cutting-up, wear or other reasons.” Similarly, Chapter 71, Additional Note 1(c) says that metal waste and scrap is fit only for the recovery of raw materials. According to the Explanatory Notes, that includes waste and scrap of electronic circuit boards containing precious metal. So you can see where this is going.

The problem in defining these goods as waste metal is that the boards are plastic along with multiple metals. Extremely learned (but no relation) counsel for the importer provided Customs documentation showing that copper is the predominant metal by weight and is the target of the recovery operation. Copper waste and scrap is classifiable in HTSUS item 7404.00.60, which is where Customs put this merchandise.

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