CLA-2 CO:R:C:V 555105 GRV
Mr. Howard Shube
Shube's Manufacturing, Inc.
2010 Ridgecrest Dr. SE
Albuquerque, New Mexico 87108
RE: Applicability of partial duty exemption under TSUS item
806.30, and country of origin marking requirements to
certain U.S.-made pewter castings processed in Mexico
Dear Mr. Shube:
This is in response to your letter of August 9, 1988, re-
questing a ruling on the applicability of item 806.30, Tariff
Schedules of the United States (TSUS), and country of origin
marking requirements to certain U.S.-made pewter castings pro-
cessed in Mexico. Two sets of three samples were submitted for
examination as well as technical descriptions of the various
steps employed in the manufacture of pewter figurines.
FACTS:
You state that the first few steps are performed in the U.S.
where the pewter figurines are initially cast in molds. The cast
figurines are then exported to Mexico, where intermediate pro-
cessing steps are performed.
These steps entail (1) subjecting portions of each figurine
to various metal cutting and grinding operations to remove
"flash" mold lines and other surface imperfections; (2) chemi-
cally-inducing an oxidizing/blacking process to each figurine by
dipping it into an antiquing solution, so that surface details
will be accentuated; and (3) removal of the oxidized/blacked
layer by means of abrasive tumbling and buffing with an abrasive
fiber wheel.
The semi-finished figurines are then imported into the U.S.
where the final processing steps are performed. These steps en-
tail (1) subjecting all figurines to further surface perfecting
operations described as "satin buffing," wherein a small layer of
the surface metal is removed with a buffing wheel utilizing a
fine-grain abrasive surface to give a uniform "satin finish;" (2)
subjecting approximately 65% of the pieces to a faceting opera-
tion described as "diamond cutting," wherein some metal is cut
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away by a high-speed diamond flywheel to impart a jewel-like
sparkle; and (3) application of a clear acrylic lacquer to all
figurines. Selected figurines are also subjected to final as-
sembly operations (attachment of other pewter parts and/or small
pieces of crystal). Of the three enumerated steps, only the sec-
ond, identified as "optional," involves a metal cutting opera-
tion.
ISSUES:
I. Whether the pewter figurines will be eligible for the
partial duty exemption under TSUS item 806.30 (subheading
9802.00.60, Harmonized Tariff Schedule of the United States
(HTSUS)) when returned to the U.S.
II. Whether the pewter figurines will be considered products of
the U.S. for country of origin marking purposes.
LAW & ANALYSIS:
I. Applicability of TSUS item 806.30
TSUS item 806.30 (19 U.S.C. 1202) provides a partial duty
exemption to:
[a]ny article of metal (except precious metal) manu-
factured in the United States or subjected to a pro-
cess of manufacture in the United States, if exported
for further processing, and if the exported article as
processed outside the United States, or the article
which results from the processing outside the United
States, is returned to the United States for further
processing. (Emphasis supplied).
TSUS item 806.30 imposes a dual "further processing" requirement
on metal articles: one must be accomplished in the foreign
country where the metal is exported to and one must be accom-
plished in the U.S. when the metal is returned. Metal articles
satisfying these statutory requirements may be classified under
TSUS item 806.30 with duty only on the value of such processing
done outside the U.S., upon compliance with section 10.9, Customs
Regulations (19 CFR 10.9).
In C.S.D. 84-49, 18 Cust. Bull. 957 (1983) we held that:
[f]or 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
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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.
The described manufacturing operation that occurs in Mexico
comprises various grinding and metal cutting steps, i.e., "flash
removal," and other steps that occasion a further loss of metal
on the figurines by means of a chemically-induced oxidation pro-
cess that is not analogous to painting. Taken as a whole, these
various described manufacturing steps impact the metal itself and
constitute "further processing" within the ambit of the statute.
The samples submitted evidence these manufacturing steps.
Of the manufacturing operations that occur in the U.S., only
the faceting-operation step, described as "diamond cutting" and
identified as optional, truly impacts on the metal itself and
imparts a new and different characteristic, i.e., a "jewel-like
sparkle," to the metal. The "satin buffing" step, at best, only
marginally affects the metal and, therefore, we believe that this
step, by itself, is insufficient to constitute "further process-
ing". Thus, only that portion of the pewter figurines (identi-
fied as approximately 65% of the pieces) that undergo the facet-
ing process described as "diamond cutting" are deemed to have
been "further processed" within the meaning of the statute and
will, upon their importation into the U.S. and compliance with
all the requirements set forth in 19 CFR 10.9, be entitled to the
partial duty exemption under TSUS item 806.30. The pewter fig-
urines that merely undergo the "satin buffing" step will be sub-
ject to full tariff treatment, for the reasons stated.
II. Country of Origin Marking Requirements
Headnote 2 to Part 1 of Schedule 8, TSUS, provides, in part,
that:
[a]ny product of the United States which is returned
after having been advanced in value or improved in
condition abroad by any process of manufacture or other
means...shall be treated for the purposes of this Act
as a foreign article.... (Emphasis supplied).
In applying this provision, Customs has determined that,
except in the case of textiles and textile articles covered by
section 12.130, Customs Regulations (19 CFR 12.130), treatment
"as a foreign article" shall not supersede the rules otherwise
applicable in determining the country of origin of imported
articles. Since the processing performed in Mexico does not
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subtantially transform the castings into new and different
articles of commerce having a new name, character, and use, they
remain products of the U.S. for country of origin marking pur-
poses. Accordingly, the finished figurines should carry no
marking indicating a foreign country of origin.
HOLDING:
On the basis of the described manufacturing processes, and
after viewing the samples submitted, only those pewter figurines
that are subjected to the faceting operation will be entitled,
upon return to the U.S. and compliance with the certification of
registration requirements, to the partial duty exemption provided
by TSUS item 806.30. The remaining figurines are not subjected
to sufficient further processing upon their return to the U.S.
and will be assessed duty upon their full appraised value. The
foreign processing will not render the finished pewter figurines
articles of foreign origin for country of origin marking purposes
and they should not be so marked.
Sincerely,
John Durant, Director
Commercial Rulings Division
CO:R:CV:V:VILDERS"GRV:8/30/88:10/6/88