CLA-2 CO:R:C:M 950419 MBR
Ms. Marlene Bacon
Ferranti-Packard Transformers Ltd.
P.O. Box 548, Saint Catherines
Ontario, Canada L2R 6W9
RE: Silicon Electrical Steel; Transformer Parts; Substantial
Transformation; Cutting; Stacking; Punching Guide Holes; VRA
Dear Ms. Bacon:
Your letters of June 4, 1991, and August 16, 1991, on behalf
of Ferranti-Packard Transformers Ltd., regarding the substantial
transformation of steel coils, have been forwarded to our office
for reply.
FACTS:
The inquirer imports silicon electrical steel in coils into
the United States. In the U.S. the coil is unwound onto a core
cutting machine. The core cutting machine cuts the steel into
highly precise, specifically ordered shapes (at a 45 degree angle).
The steel shapes are stacked according to size and configuration,
and guide holes are punched into the corners. The pieces are
stacked to ensure uniformity and pins are inserted into the guide
holes for transportation. The cut and stacked steel is then
exported to Canada where the manufacture of transformer cores takes
place.
ISSUE:
Are steel coils substantially transformed by specific cutting
and stacking operations?
LAW AND ANALYSIS:
There is no issue of tariff classification presented.
Moreover, if no substantial transformation is found to have
occurred by the processing in the United States, and the
merchandise is exported, the tonnage is recredited. See HQ 085044,
dated July 26, 1989, and HQ 081743, dated April 18, 1988.
-2-
For substantial transformation to take place in the United
States, the record must establish that the processing operations
result in a product other than, or materially different from, the
merchandise of foreign origin. This means that a new and different
article must emerge from the processing, i.e., one having a new
name, character or use. Anheuser-Busch Brewing Association v.
United States, 207 U.S. 556 (1908).
In HQ 077880, dated December 23, 1986, and HQ 081550, dated
October 18, 1989, we held:
Although cutting to length and winding into a
specifically layered coil may not constitute high-cost
processing operations, the resulting article is recognizable
as an unfinished core for a transformer. The relevant
specifications, i.e., the inside circumference, the cross
sectional area, the location of the joints, and the number of
sheets, are specific characteristics of the toroids and limit
the use of the toroids as parts of electrical transformers.
The toroids have a character and identity that is fixed with
certainty. We distinguish these cut and assembled lengths of
silicon electrical steel from the material lengths, in coil,
of silicon electrical steel. In the latter case, there is no
recognizable article and [it] is precluded from classification
as a part, even though the material may be dedicated for
making the individual articles. Avins Industrial Products Co.
v. United States, 515 F.2d 782 (CCPA 1975).
Therefore, similarly, the record here supports a finding that
a substantial transformation in name, character, and use occurs in
the silicon electrical steel by certain processing operations
incident to the fabrication of transformers (cutting, stacking, and
punching guide holes). These operations dedicate the silicon
electrical steel to a use or uses for which it was unsuited at the
time of importation.
HOLDING:
The above described processing operations result in a product
which would be considered substantially transformed for tariff
purposes.
Sincerely,
John Durant, Director
Commercial Rulings Division