KARACHI: A recent ruling by Pakistan Customs has reignited debate over the classification of hot-rolled (HR) trimmings, a by-product of steel manufacturing, with industry stakeholders divided over whether the material should be categorized as scrap or as usable industrial input.
The dispute, raised by the Pakistan Association of Large Steel Producers (PALSP) and the Pakistan Ship Breakers’ Association (PSBA), centers on the classification of HR strips in irregularly wound coils. The associations argue that these strips, derived from prime-quality coils, maintain uniform thickness and should be classified under HS Code 72.11 rather than PCT Heading 7204.4100, which covers scrap.
Following industry concerns, the Classification Committee convened multiple hearings, including a meeting on November 20, 2024, attended by representatives from leading steel mills and recycling firms. While PALSP and PSBA maintained that HR trimmings are viable for wire manufacturing, other industry representatives contended that the material is irregular in shape and thickness, making it unsuitable for direct industrial use.
After reviewing physical inspections, documentary evidence, and international precedents—including a U.S. Customs ruling from 2002—the committee determined that the imported HR trimmings do not meet the criteria for classification under HS Code 72.11 or 72.13. Instead, the ruling concluded that the material falls under PCT Code 7204.4990, categorizing it as scrap.
The decision has implications for steel importers and manufacturers, as classification under scrap headings affects tariff rates and regulatory compliance. While some industry players welcomed the clarity, others expressed concerns that the ruling could impact cost structures and supply chains.
The ruling, issued by Additional Collector Amjad Aman, is subject to appeal under Pakistan’s Customs Act, 1969. Industry stakeholders are expected to continue lobbying for revisions, citing economic and operational concerns.