CLA-2 CO:R:C:V 555037DBI
Mr. John Kingery
Ussex, Inc.
P.O. Box 1368
292 Arnold Mill Road
Woodstock, Georgia 30188
RE: Applicability of partial duty exemption of item
806.30, TSUS, to processed steel in the form of
scrap, ingot and slab
Dear Mr. Kingery:
This is in response to your letter dated May 26, 1988, in
which you request a ruling on behalf of Ussex, Inc., concerning
the applicability of item 806.30, Tariff Schedules of the United
States (TSUS), to processed steel in the form of scrap, ingot and
slab to be exported to Yugoslavia to be processed into hot
rolled, cold rolled, galvanized and stainless coil or sheet, bars
and wires.
FACTS:
You advise that your company will be purchasing processed
steel in the form of scrap, ingot and slab from a U.S. supplier.
You will then ship the steel to Yugoslavia where the steel will
be manufactured into hot rolled, cold rolled, galvanized and
stainless coils or sheets, bars and wires. The steel will be
returned to the U.S. where the manufacturers will perform further
processing consisting of rollforming, machine punching, stamping,
drawing, spot or arc welding, peeling, polishing or a combination
of the above.
ISSUE:
Whether the described steel products, when returned to the
U.S., will be eligible for the partial duty exemption of item
806.30, TSUS (9802.00.60 (HTSUS))?
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LAW AND ANALYSIS:
Under item 806.30, TSUS, articles of metal (except precious
metal) manufactured in the U.S. or subjected to a process of
manufacture in the U.S., if exported for further processing, and
if the exported article as processed outside the U.S., or the
article which results from the processing outside the U.S., is
returned to the U.S. for further processing, may be entered with
duty on the cost or value of the processing abroad upon
compliance with section 10.9, Customs Regulations (19 CFR 10.9).
We have previously held in a ruling dated June 22, 1987, (HQ
554626), that in order for base metal scrap to qualify under item
806.30, TSUS, the scrap metal must be obtained from American
metal and not from processing of foreign-made metal. Your letter
does not indicate whether the processed steel you will purchase
was U.S. metal. However, it must be U.S. metal and not foreign
made in order for any of the scrap to qualify for 806.30, TSUS,
treatment.
With respect to the foreign processing, we have previously
held that for the purposes of item 806.30, TSUS, the term
"further processing" has reference to processing that changes the
shape of the metal or imparts new and different characteristics
which become an integral part of the metal itself and which did
not exist in the metal before processing. Thus, further
processing includes machining, grinding, drilling, threading,
punching, forming, plating, and the like, but does not include
painting or the mere assembly of finished parts by bolting,
welding, etc. C.S.D. 84-49, 18 Cust. Bull. 957 (1983).
In the present case, the manufacture of steel into hot
rolled, cold rolled, galvanized and stainless coils or sheets,
bars and wires changes the shape of the metal and imparts a new
and different characteristic which has become an integral part of
the metal itself that did not exist prior to the processing.
Furthermore, we have previously held that processing steel
into hot and cold rolled sheet (HQ 554549, April 20, 1987) and
galvanized steel (HQ 554344, November 19,1986) constitute
sufficient processing of the steel to comply with the "further
processing" requirement of the foreign segment of item 806.30,
TSUS.
In Intelex Systems, Inc. v. United States, 59 CCPA 138,
C.A.D. 1055, 460 F.2d 1083 (1972), the court said that the
expression "returned to the United States for further processing"
means "that the articles processed abroad and returned to the
United States is no more than an advanced material or article
which will be subjected to further manufacturing process in the
U.S. to get a complete article."
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In this case, the steel is advanced by the manufacturing
process performed abroad and is returned to the U.S. for further
processing. The rollforming, stamping, drawing, machine punching
and spot or arc welding would appear to comply with the
requirements of item 806.30, TSUS, since such operations, when
performed alone, are a necessary further fabrication that finish
completed steel articles. However, the peeling and polishing, if
performed alone, are not necessarily a further fabrication that
finishes a completed steel article, and would not satisfy the
requirements of item 806.30, TSUS. Therefore, these processes
must be performed in combination with one of the other described
processes in order to comply with item 806.30, TSUS.
HOLDING:
On the basis of the information submitted, it is our opinion
that the manufacturing performed abroad and the U.S. processing
constitute further processing as that term is used in item
806.30, TSUS, and, therefore, allowances in duty may be made
under item 806.30, TSUS, for the cost or value of the processing
abroad, upon compliance with section 10.9, Customs Regulations
(19 CFR 10.9).
Sincerely,
John Durant, Director
Commercial Rulings Division
1cc: CLA-2 CO:R:C:V:DIZZO:6/20/88
Mr. John Kingery
Ussex, Inc.
P.O. Box 1368
292 Arnold Mill Road
Woodstock, GA 30188