CLA-2 CO:R:C:S 557713 MLR
Togiola T.A. Tulafono, Esq.
Iupeli Siliva Building - Suite #5
Fagatogo, American Samoa 96799-0380
RE: Electrolytic Tin Plated or Chromium Coated Steel in coil
form cut and coated in American Samoa; General Note
3(a)(iv), HTSUS; insular possession; tin free steel plates;
can ends; substantial transformation
Dear Mr. Tulafono:
This is in reference to your letter of November 24, 1993,
requesting a ruling on behalf of Star Kist Samoa, Inc. ("Star
Kist"), concerning the eligibility of steel plates and can ends
from American Samoa for duty-free treatment under General Note
3(a)(iv), Harmonized Tariff Schedule of the United States
(HTSUS). Photographs were submitted with your request.
FACTS:
Star Kist operates a tuna cannery in American Samoa. As an
adjunct to the tuna cannery operation, Star Kist has built a
plant where steel plates and can ends are manufactured for direct
exportation into the U.S. Your letter describes the processing
of four types of articles: (1) 300 x 315 55 pound electrolytic
tin plated steel (ETP) plate; (2) 307 x 500 75 pound body plate
ETP; (3) 307 x 109 60 pounds tin free steel (TFS) 2 piece body
plate; and (4) 307 75 pound TFS lids.
Each article basically involves purchasing either
electrolytic tin plated steel (for articles (1) and (2) above) or
electrolytic chromium coated steel (for articles (3) and (4)
above) from Japan and the U.S., both in coil form. The coils
measure 32 13/16", 36 1/16", 32 1/2", or 35" wide, for articles
(1)-(4), respectively. A Littel shearing line cuts the coils
into plates. The photographs indicate that the coil is sheared
into a jagged-type edge. The plates are then stacked on wooden
pallets and transferred to coating equipment where an enamel
coating film is applied {one side for articles (1) and (2), and
both sides for articles (3) and (4)}. After the coating
application, the plates are baked in an oven, then wrapped and
strapped for shipment to the U.S. These plates {articles (1)-
(3)} will be used to produce 300 x 315, 307 x 500, or 307 x 109
sanitary containers, respectively.
In the case of the 35" wide coil which is used to produce
article (4) above, after the plates are coated, they are taken to
a 307 End Level 2 press where they are made into 307 lids. These
lids then go through a preferred liner machine where a water base
compound lining is applied to ensure that a perfect seal is going
to be obtained when the cans are sealed. Once the compound is
applied, the lids are put in paper bag sleeves and stacked on
wooden pallets. These pallets are stretched wrapped for
shipment. These lids are used to cover 307 sanitary containers.
ISSUE:
Whether the steel plates and can ends will be entitled to
duty-free treatment under General Headnote 3(a)(iv), HTSUS, when
imported into the U.S.
LAW AND ANALYSIS:
General Note 3(a)(iv), HTSUS, provides that goods imported
from a U.S. insular possession may enter the customs territory of
the U.S. free of duty if the goods:
(1) are the growth or product of the possession;
(2) do not contain foreign materials which represent more
than 70 percent of the goods' total value (or more than
50 percent with respect to textile and apparel articles
subject to textile agreements, and other goods
described in section 213(b) of the Caribbean Basin
Economic Recovery Act) (CBERA); and
(3) come directly to the customs territory of the U.S. from
the possession.
The American Samoa is a U.S. insular possession.
Foreign materials imported into an insular possession become
a "product of" the possession if they are substantially
transformed there into a new and different article of commerce.
A substantial transformation occurs when an article emerges from
a process with a new name, character, or use different from that
possessed by the article prior to processing. See Texas
Instruments, Inc. v. United States, 69 CCPA 152, 681 F.2d 778
(1982).
Star Kist claims that the electrolytic tin plated or
chromium coated steel in coil form is substantially transformed
in American Samoa, and that at least 30 percent of the value of
the steel plates and can ends is added in the transformation
process in American Samoa.
In Headquarters Ruling Letter (HRL) 950419 dated December
27, 1991, silicon electrical steel in coils was imported into the
U.S. where the coil was unwound onto a core cutting machine and
cut into precise 45 degree angles. The steel shapes were then
stacked to ensure uniformity and guide holes were punched into
the corners with pins inserted therein to ease transportation.
It was held that the steel coils were substantially transformed
by the specific cutting, stacking, and punching operations, and
dedicated the silicon electrical steel to a use or uses for which
it was unsuited at the time of importation into the U.S.
In HRL 081333 dated April 20, 1990, Customs determined that
lacquering tin plate or tin-free steel did not constitute a
substantial transformation because they remained blank plates and
sheets, their use for making a variety of food product containers
remained the same, and although the lacquer enhanced the
corrosion-resistant character of the tin mill products, this did
not change the character of the product which was imparted by the
base metal, the electrolytic coating, the thickness of the
sheets, and the length and width of the sheets.
In this case, while the coating of the plates does not
constitute a substantial transformation pursuant to HRL 081333,
the coating and baking operations along with the shearing of the
coils into plates with jagged edges constitutes a substantial
transformation based upon HRL 950419. Consequently, we find that
the steel plates and can ends are "products of" American Samoa
and will be eligible for duty-free treatment under General Note
3(a)(iv), provided the 70 percent foreign value limitation is not
exceeded. In order to determine whether the foreign value
limitation is satisfied, only the electrolytic tin plated or
chromium coated steel imported from Japan will be considered as
"foreign." The U.S. steel will not be considered as "foreign"
pursuant to General Note 3(a)(iv)(A).
HOLDING:
On the basis of the information submitted, the electrolytic
tin plated or chromium coated steel in coil form is substantially
transformed into articles which are the manufacture or product of
American Samoa for purposes of General Headnote 3(a)(iv), HTSUS.
Accordingly, the steel plates and can ends will be entitled to
duty-free entry, provided they are imported directly from
American Samoa to the U.S., and the 70 percent foreign value
limitation is satisfied.
Sincerely,
John Durant, Director