CLA-2 CO:R:C:V 554940 DBI
Mr. Dennis B. Dickey
Department of Engineering
Tol-O-Matic
1028 South 3rd Street
Minneapolis, Minnesota 55415
RE: Applicability of subheading 9802.00.60, HTSUS, to stainless
steel strips exported to Canada for processing
Dear Sir:
This is in response to your letter to the Area Director of
Customs, New York Seaport, dated October 7, 1987, in which you
request a ruling concerning the applicability of item 806.30,
Tariff Schedules of the United States (TSUS), to stainless steel
strips that are exported to Canada to have a strip of rubber
extruded onto the steel and then returned to the U.S. for further
processing. Your letter has been forwarded to this office for a
response.
FACTS:
You advise that your firm purchases stainless steel strips
from a U.S. vendor which has been cut, sized and edged by the
vendor, transforming the strip from industry-standard rawstock
into coilstock. When the coilstock is received, it is either
heat treated or inspected for quality control purposes. The
product is then shipped to Canada.
In a telephone conversation with a member of my staff on
November 1, 1988, you indicated that the processing in Canada
consisted of a chemical treatment of the steel surface called
"electrochemical cleaning" of the metal. The steel surface is
changed 50 millionths of an inch. Following this process, a
dimethyl polysiloxane-related strip of rubber is extruded onto
the stainless steel. After the extrusion process, the combined
materials are inspected and analyzed for conformance to
acceptability standards.
The product is then shipped back to the U.S. where a proper
length of the strip is cut off of the coilstock and assembled to
the final assembly of the "BC Series" band cylinder for use in
air machine tool application. You state that the cut piece
cannot be used for any other purpose and has been intended from
its inception to be only a part of the larger article for which
it was designed.
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ISSUE:
Whether the described stainless steel coilstock, when
returned to the U.S., will be eligible for the partial exemption
from duty provided for in subheading 9802.00.60, Harmonized
Tariff Schedule of the United States, HTSUS (806.30, TSUS).
LAW AND ANALYSIS:
As you are probably aware, the HTSUS replaced the TSUS,
effective January 1, 1989. Item 806.30, TSUS, has been carried
over into the HTSUS without change as subheading 9802.00.60.
Under subheading 9802.00.60, HTSUS, 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 that for purposes of subheading
9802.00.60, HTSUS, 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 this respect, the described processes of cleaning the
metal surface and extruding a dimethyl polysiloxane-related strip
of rubber onto the stainless steel do not change the shape of the
metal nor does it impart a new and different characteristic which
has become an integral part of the metal itself.
HOLDING:
On the basis of the information submitted, it is our
opinion that the foreign cleaning and extrusion processes do not
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constitute further processing as that term is used in subheading
9802.00.60, HTSUS. Therefore, the returned stainless steel
coilstock may not be entered under subheading 9802.00.60, HTSUS.
Sincerely,
John Durant
Director, Commercial
Rulings Division