CLA-2 CO:R:C:M 089538 DWS
Mr. Ike Yang
Sammi AL Tech, Inc.
13942 Orange Avenue
Paramount, CA 90723
RE: Classification and Country of Origin of cold-rolled
stainless steel coil
Dear Mr. Yang:
This is in response to your letter of April 29, 1991,
concerning the classification and country of origin of certain
cold-rolled stainless steel coil under the Harmonized Tariff
Schedule of the United States Annotated (HTSUSA).
FACTS:
Type 304 hot-rolled stainless steel coils, manufactured in
Canada, are sent to Korea where they are processed into cold-
rolled steel coils. The cold-rolled steel coils will then be
imported into the United States. Cold-rolled steel is different
from hot-rolled steel in that its production is carried out below
recrystallization temperatures, whereas hot-rolling is produced
in temperatures above recrystallization. The cold reduction
process significantly reduces the thickness of the hot-rolled
product and results in a cold-rolled steel possessing greater
tensile strength. In fact, the importer claims that there is a
50 to 60 percent reduction in thickness due to the cold reduction
process. At the end of this process, a No. 2B unpolished finish
will be applied, which is a bright cold-rolled finish produced by
cold-rolling, annealing, and descaling followed by a final, light
cold-rolled pass.
The importer claims that the cost of the hot-rolled
stainless steel coil manufactured in Canada will be more than 60
percent of the value of the processed cold-rolled stainless steel
coil. The cold-rolled stainless steel coils which will be
imported into the United States measure from 0.4 mm to 3.5 mm in
thickness and 48 inches in width.
ISSUE:
What is the classification and country of origin of the
cold-rolled stainless steel coil?
LAW AND ANALYSIS:
COUNTRY OF ORIGIN
"Country of origin" is defined in 19 CFR 134.1(b) as "the
country of manufacture, production, or growth of any article of
foreign origin entering the United States. Further work or
material added to an article in another country must effect a
substantial transformation in order to render such other country
the 'country of origin' within the meaning of this part."
"The essence . . . is that a product cannot be said to
originate in the country of exportation if it is not manufactured
there. The question, therefore, is whether operations performed
on products in the country of exportation are of such a
substantial nature to justify the conclusion that the resulting
product is a manufacture of that country. 'Manufacture' implies a
change, but every change is not manufacture . . . There must be
transformation; a new and different article must emerge, 'having
a distinctive name, character or use'." Ferrostaal Metals Corp.
v. United States, 11 CIT 470, 473 (1987).
In HQ 080277, dated September 21, 1987, it was determined
that cold reduction in one country, of hot-rolled steel coil from
a different country, engenders a substantial transformation, and
the steel becomes a product of the country in which the cold-
rolling is accomplished.
It is our opinion that the cold-rolled stainless steel coil
in question meets the substantial transformation test, in that it
has a name, character, and use different from that possessed by
the hot-rolled stainless steel coil as it originally entered
Korea. In this case, the transformation to cold-rolled steel has
not been of a minor nature. As stated by the importer, the
thickness of the hot-rolled steel coil is reduced from 50 to 60
percent during the cold reduction process.
Therefore, because the product in question underwent a
substantial transformation in Korea, that country is the country
of origin for tariff classification purposes.
CLASSIFICATION
Classification of merchandise under the HTSUSA is in
accordance with the General Rules of Interpretation (GRI's),
taken in order. GRI 1 provides that classification is determined
according to the terms of the headings and any relative section
or chapter notes.
The cold-rolled stainless steel coil is described in
subheadings 7219.32.00 to 7219.35.00, HTSUSA. Pursuant to GRI 1,
it will be classifiable under one of these provisions depending
on thickness.
To understand the language of heading 7219, HTSUSA, the
Explanatory Notes may be utilized. The Explanatory Notes,
although not dispositive, are to be used to determine the proper
interpretation of the HTSUSA. 54 Fed. Reg. 35127, 35128
(August 23, 1989). Explanatory Note IV(C) to chapter 72 provides
that further finishing to the product (i.e. annealing) does not
affect the heading to which the steel is classified. At the end
of the cold reduction process, an unpolished finish is applied to
the steel through cold-rolling, annealing, and descaling, which
does not, according to the Explanatory Notes, affect the
classification of the cold-rolled steel.
HOLDING:
The country of origin for the cold-rolled stainless steel
coil is Korea. It is classifiable under subheadings 7219.32.00
to 7219.35.00, HTSUSA, which provide for flat-rolled products of
stainless steel, of a width of 600 mm or more: not further
worked than cold-rolled:
7219.32.00- of a thickness of 3 mm or more but less than
4.75 mm;
7219.33.00- of a thickness exceeding 1 mm but less than
3 mm;
7219.34.00- of a thickness of 0.5 mm or more but not
exceeding 1 mm;
7219.35.00- of a thickness of less than 0.5 mm.
The general, column one rate of duty is 10.1 percent ad
valorem.
Regarding the applicability of Voluntary Restraint
Arrangement (VRA) certification requirements, as this program is
administered by the U.S. Department of Commerce, we recommend
that you contact the Office of Agreements and Compliance,
International Trade Administration, U.S. Department of Commerce,
Washington, D.C., 20230 (telephone: 202-377-3793), for the VRA
requirements applicable to the imported product.
Sincerely,
John Durant, Director
Commercial Rulings Division