CLA-2 CO:R:C:S 557656 WAS
District Director
U.S. Customs Service
555 Battery Street, Room 211
P.O. Box 2450
San Francisco, CA 94111
RE: Internal Advice Request 77/93; applicability of subheading
9802.00.60, HTSUS, to copper mill products from Japan
Dear Sir:
This is in reference to your letter dated September 22,
1993, forwarding a request for internal advice regarding whether
copper products which are made abroad from U.S.-origin copper are
eligible for the partial duty exemption available under
subheading 9802.00.60, Harmonized Tariff Schedule of the United
States (HTSUS), when returned to the U.S. No sample of the
merchandise was submitted for review.
FACTS:
Electrolytic copper cathode (a primary form of copper) of
U.S. origin is exported to Japan and processed there into various
copper mill products by Hitachi Cable, Tsuchiura Works. The
finished mill products, which include articles such as rods,
strips, and seamless tubes, are then imported into the U.S. by
Hitachi Cable America, Inc. (HCA). Upon entering into the U.S.,
the imported products are sold to Copper Brass Sales, Inc., U.S.
(CBS). Neither HCA nor CBS performs any manufacturing processes
on the imported rods, strips, or tubes. CBS resells these
products to various end users.
The importer has provided us with a brief outline of Hitachi
products (i.e., rod, tube, bus bar, and strip) which are supplied
to its customers, a description of the types of further
processing operations performed in the U.S. by these customers,
and the final products which result from the domestic processing
operations. (copy enclosed). For instance, with regard to the
imported rod, the importer states that it will be subject to
drawing operations in the U.S. in the production of magnetron
anodes. With regard to the imported bus bar, the importer states
that it will undergo machining operations in the production of
pulse magnetrons for radar in the U.S. With regard to the tube,
the importer states that it will undergo stamping operations in
the production of sputtering back plates in the U.S. and cutting,
bending, and brazing operations in the production of klystrons
(radar equipment). Finally, with regard to the strip, the
importer states that it will be subject to forging in the
production of broadcasting tubes, deep drawing in the production
of traveling-wave tubes, rolling in the production of vacuum
capacitors, heat treatment in the production of vacuum gaskets,
and brazing in the production of stabilizers for superconductors
in the U.S.
ISSUE:
Whether the rods, strips, and tubes qualify for the partial
duty exemption available under subheading 9802.00.60, HTSUS, when
returned to the U.S.
LAW AND ANALYSIS:
HTSUS subheading 9802.00.60 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 subjected 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 U.S. 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 the U.S., provided the documentary requirements
of section 10.9, Customs Regulations (19 CFR 10.9), are
satisfied.
To receive subheading 9802.00.60, HTSUS, treatment, the
product upon exportation from the U.S. must be an "article of
metal" as defined in U.S. note 3(d), subchapter II, Chapter 98,
HTSUS. U.S. note 3(d), states:
For purposes of subheading 9802.00.60, the term "metal"
covers (1) the base metals enumerated in additional U.S.
note 1 to section XV (2) arsenic, barium, boron, calcium,
mercury, selenium, silicon, strontium, telurium, thorium,
uranium and therare-earth elements; and (3) alloys of any of
the foregoing.
In C.S.D. 84-49, 18 Cust. Bull. 957 (1983) we stated that:
[f]or purposes of item 806.30, TSUS [the predecessor tariff
provision to HTSUS subheading 9802.00.60], 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 including 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.
As the base metals enumerated in additional U.S. note 1,
Section XV, HTSUS, include "copper," the copper cathode is an
eligible article of metal for purposes of subheading 9802.00.60,
HTSUS. Moreover, as the copper originates from U.S. copper
refinery mills, it satisfies the initial requirement under this
tariff provision that the metal must be manufactured in the U.S.
or subjected to a process of manufacture in the U.S.
In addition, the processing of the copper in Japan
constitutes sufficient "further processing" so as to satisfy the
initial foreign processing requirement of subheading 9802.00.60,
HTSUS. The information you have submitted shows that the copper
cathodes undergo the following processes to produce the copper
tubes, rods and strips in Japan: hot extrusion, hot rolling,
tube reducing, cold drawing, scalping, cold rolling, level
winding, stretch leveling, annealing, slitting and bright
annealing. In Headquarters Ruling Letter (HRL) 556345 dated
February 10, 1992, Customs held that melting and rolling of
copper cathodes 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 prior to the processing.
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
rods, tubes and strips. These firms will then conduct operations
on the copper rods, tubes and strips to produce various articles.
There is no requirement under subheading 9802.00.60, HTSUS,
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. In addition, there is 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 must satisfy the district or area
director of the actual performance of further processing in the
U.S.
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.
The drawing operation conducted on the imported rod in the
manufacture of the magnetron anodes clearly imparts new and
different characteristics which become an integral part of the
metal itself and which did not exist prior to the processing.
See HRL 556345 dated February 10, 1992 (drawing operation
conducted on the imported copper rod in the manufacture of the
finished conductor or communication cable results in "further
processing" in the U.S.). The machining operations conducted on
the imported bus bar also clearly impart new and different
characteristics which become an integral part of the metal itself
and which did not exist prior to the processing. See HRL 555620
dated August 3, 1990 (grinding or machining of a bevel onto the
edge and cutting holes in torispherical tank heads are considered
sufficient processes to comply with the domestic "further
processing" requirement). With regard to the tube, the stamping,
cutting and bending operations are considered "further
processing" within the meaning of subheading 9802.00.60, HTSUS.
See HRL 556123 dated July 30, 1991 (steel plates subjected to
cutting, and forming operations are considered "further
processing" under subheading 9802.00.60, HTSUS); HRL 555914 dated
July 25, 1991 (stamping can ends from aluminum sheet in coil form
constitutes sufficient "further processing" so as to satisfy the
foreign processing requirement of subheading 9802.00.60, HTSUS).
In addition, forging the copper rod falls within what has
been considered acceptable "further processing" operations under
subheading 9802.00.60, HTSUS. See HRL 555536 dated October 29,
1990 (heating and forging cut bars into the shapes of surgical
instruments constitutes a "further processing" operation pursuant
to subheading 9802.00.60, HTSUS). Furthermore, the heat
treatment operations conducted on the copper strip to produce the
vacuum gasket are sufficient to comply with the domestic "further
processing" requirement under subheading 9802.00.60, HTSUS. See
HRL 555536 dated October 29, 1990 (heat treatment of surgical
instruments which hardened the instruments and changed the
mechanical and chemical attributes of the metal was a "further
processing" within the meaning of subheading 9802.00.60, HTSUS;
see also HRL 555103 dated February 2, 1989 (holding that a
stainless steel article subjected to a heat treatment process
known as "Solution (water) Quench, Annealed" which was designed
to relieve rolling stress constituted a "further processing"
operation). In addition, rolling the copper strip to produce the
vacuum capacitors changes the shape of the metal and constitutes
a "further processing" operation for purposes of subheading
9802.00.60, HTSUS. See HRL 556080 dated August 27, 1991
(converting primary forms of metal into semi-finished or finished
articles of metal by hot- or cold-rolling operations changes the
shape of the metal and constitutes "further processing"). In
sum, the above-described operations are all considered sufficient
processes to comply with the domestic "further processing"
requirement of subheading 9802.00.60, HTSUS.
However, brazing the copper strip in the production of
stabilizers for superconductors does not constitute a domestic
"further processing" operation for purposes of subheading
9802.00.60, HTSUS. Brazing is generally described as a welding
operation used in the joining of pipes to fittings, carbide tips
to tools, radiators, heat exchangers, electrical parts, and the
repair of castings. See Manufacturing Processes (8th ed.), by
Amstead, Ostwald and Begeman (John Wiley & Sons; 1987), at 159.
We have consistently held that assembly operations, such as
welding, soldering, bolting, or force fitting do not satisfy the
requirements of the statute. See HRL 025776 dated February 14,
1973; HRL 555377 dated October 16, 1989. Therefore, we are of
the opinion that the brazing operation performed in the U.S. to
the imported strips in the production of stabilizers for
superconductors does not constitute a process of manufacture
within the meaning of subheading 9802.00.60, HTSUS. Therefore,
the copper strips which undergo a brazing operation do not
satisfy the domestic "further processing" requirement of
subheading 9802.00.60, HTSUS, and are not entitled to partial
duty exemption provided under this tariff provision.
HOLDING:
On the basis of the information submitted, it is our opinion
that the processes performed abroad to the copper cathodes
satisfy the foreign "further processing" requirement. In
addition, the domestic processes described above, except for the
brazing operation, satisfy the domestic "further processing"
requirement for purposes of subheading 9802.00.60, HTSUS.
Therefore, the imported copper rods, tubes and strips subjected
to the operations described above (except strips used to produce
stabilizers for superconductors) are entitled to classification
under this tariff provision with duty only upon the cost or value
of such processing performed outside the U.S., upon compliance
with the documentary requirements of 19 CFR 10.9. Entitlement to
the partial duty exemption under subheading 9802.00.60, HTSUS, is
contingent upon the importer being able to satisfy your office of
the actual performance of further processing in the U.S. within a
reasonable period of time.
The Office of Regulations and Rulings will take steps to
make this decision available to Customs personnel via the Customs
Rulings Module in ACS and the public via the Diskette
Subscription Service, Lexis, Freedom of Information Act and other
public access channels within 60 days from the date of this
decision.
Sincerely,
John Durant, Director
Commercial Rulings Division
Enclosure