CLA-2 CO:R:C:S 556345 SER
Ms. Kendra Klippert
Trans American Customhouse Brokers
Suite 312
Peace Bridge Plaza
Buffalo, NY 14213
RE: Applicability of subheading 9802.00.60, HTSUSA, to copper
rods from Canada; C.S.D. 84-49; HRL 555356, 556080, 554965
Dear Ms. Klippert:
This is in reference to your request of October 21, 1991,
and further submission of January 30, 1992, on behalf of Alcatel
Canada Wire (Alcatel), concerning the applicability of subheading
9802.00.60, Harmonized Tariff Schedule of the United States
Annotated (HTSUSA), to copper rod from Canada.
FACTS:
U.S.-origin copper cathodes are exported to Canada where
they are melted in a furnace and passed through casting, rolling,
and pickling stages in a continuous process. The resulting
copper rod is then coiled, strapped onto pallets and shipped to
electrical cable manufacturing plants in the U.S. In the U.S.
the copper rod is drawn to a smaller diameter, stranded, and
covered with insulation and protective armor or jacket. The
final product is a conductor or communications cable, which is
used in industrial and residential construction as well as power
and communications utilities.
ISSUE:
Whether the copper rod will be eligible for the partial
duty exemption available under subheading 9802.00.60, HTSUSA,
when imported into the U.S.
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LAW AND ANALYSIS:
Subheading 9802.00.60, HTSUSA, provides a partial duty
exemption for:
[a]ny article of metal (as defined in U.S. note 3(d) of
this subchapter) manufactured in the United States or
subject to a process 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.
This tariff provision imposes a dual "further processing"
requirement on eligible articles of metal-- one foreign, and when
returned, one domestic. Metal articles satisfying these
statutory requirements may be classified under this tariff
provision with duty only on the value of such processing
performed outside of the U.S., provided there is compliance with
the documentary requirements of section 10.9, Customs Regulations
(19 CFR 10.9).
In C.S.D. 84-49, 18 Cust.Bull. 957 (1983) we stated that:
[f]or purposes of item 806.30, TSUS [precursor to
9802.00.60 HTSUSA], 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.
In this case, the copper rod is an eligible article of
metal for purposes of subheading 9802.00.60, HTSUSA. In
addition, the processing of the copper cathodes in Canada clearly
constitutes "further processing" under this tariff provision. In
Headquarters Ruling Letter (HRL) 555356 dated December 26, 1989,
Customs held that melting and rolling of aluminum constituted
"further processing" for purposes of this program. In that
ruling, as in this case, the processing operations clearly
impart new and different characteristics which become an integral
part of the metal itself and which did not exist in the metal
before processing.
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It next must be determined whether the domestic "further
processing" requirement has been met. In this case, the
domestic operations are to be conducted by firms who purchase the
copper rod from Alcatel. These firms will then conduct
operations on the copper rod in the form of drawing, stranding,
and covering with insulation and a protective jacket. The end
result is a finished conductor or communications cable which is
used in industrial and residential construction as well as power
and communications utilities.
There is no requirement under subheading 9802.00.60, HTSUSA,
that the identity of the person who performs the "further
processing" in the U.S. be known at the time the material is
exported from the U.S, or at the time the returned material
enters the U.S. There is also no requirement that the same
person who exported the material, or the same person who imports
the material must perform the "further processing" in the U.S.
However, the importer should satisfy the district or area
director of the actual performance of "further processing" in the
U.S. See, 19 CFR 10.9, and Headquarters Ruling Letter (HRL)
556080 dated August 27, 1991.
In addition, the domestic "further processing" should be
conducted within a reasonable time following importation. See,
19 CFR 10.9, and HRL 556080 dated August 27, 1991. In HRL 554965
dated September 6, 1989, Customs found that under the
circumstances of that case, four months was a reasonable period
of time to warehouse stainless steel sheets in the U.S. before
being further processed.
Based on your description of the operations to be performed
in the U.S. on the copper rod to create the conductor or
communications cable, it is our opinion that the domestic
"further processing" requirement would be satisfied. The drawing
operation conducted on the imported copper rod in the
manufacture of the finished conductor or communication cable
would clearly would impart new and different characteristics
which become an integral part of the metal itself. However, as
previously stated, the district or area director must be
satisfied of the actual performance of "further processing" in
the U.S.
HOLDING:
On the basis of the information submitted, it is our opinion
that the processes performed abroad on the exported copper
cathodes constitute "further processing" as that term is used in
subheading 9802.00.60, HTSUSA. In addition, the drawing
operation to be performed in the U.S. on the imported copper
rods also would constitute "further processing". However, since
your company is not performing the operations in the U.S., the
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district or area director must be satisfied of the actual
performance of "further processing" in the U.S. Contingent on
the satisfaction of the district or area director in this regard,
the imported copper rods will be entitled to entry under
subheading 9802.00.60, HTSUSA, with duty only on the cost or
value of such processing performed outside the U.S., upon
compliance with the documentary requirements of 19 CFR 10.9.
Sincerely,
John Durant, Director
Commercial Rulings Division