CLA-2 CO:R:C:M 950874 DWS
Mr. Alexander G. Arroyos
President
The Dynamic Group
P.O. Box 53538
1201 Hahlo Street
Houston, TX 77052
RE: Substantial Transformation; Country of Origin;
Steel Tin Plate; Continuous Electro-Tinning Process;
Ferrostaal Metals Corp. v. United States
Dear Mr. Arroyos:
This is in response to your letter of December 12, 1991,
concerning the classification and country of origin of steel tin
plate under the Harmonized Tariff Schedule of the United States
(HTSUS).
FACTS:
The subject merchandise consists of steel tin plate. The
stock from which the steel tin plate is manufactured is purchased
from Japan as black plate coil. In Taiwan, the black plate is
coated with tin and then exported to the United States. The
coating of the black plate coil with tin is referred to as the
"continuous electro-tinning process", also known as
"electroplating". The Making, Shaping and Treating of Steel,
10th Edition describes electroplating as "an old art, practiced
not only to protect the base metal from corrosion but also for
decorative purposes and, more recently, to protect the base metal
from wear by friction or abrasion. Metals used for coatings
include . . . tin . . ." You have noted that during this
process, there is no change in the chemical composition of the
base black plate.
ISSUE:
What is the proper classification and country of origin of
the subject steel tin plate under the HTSUS?
LAW AND ANALYSIS:
COUNTRY OF ORIGIN
"Country of origin" is defined in 19 CFR 134.1(b) as "the
country of manufacture, production, or growth of any article of
foreign origin entering the United States. Further work or
material added to an article in another country must effect a
substantial transformation in order to render such other country
the 'country of origin' within the meaning of this part."
"The essence . . . is that a product cannot be said to
originate in the country of exportation if it is not manufactured
there. The question, therefore, is whether operations performed
on products in the country of exportation are of such a
substantial nature to justify the conclusion that the resulting
product is a manufacture of that country. 'Manufacture' implies a
change, but every change is not manufacture . . . There must be
transformation; a new and different article must emerge, 'having
a distinctive name, character or use'." Ferrostaal Metals Corp.
v. United States, 11 CIT 470, 473 (1987).
Ferrostaal Metals Corp. dealt with steel sheet which had
been annealed and galvanized in New Zealand by a process known as
"continuous hot-dip galvanizing" using full hard cold-rolled
steel sheet from Japan. This galvanizing process created a mixed
zinc-steel surface with an identifiable atomic pattern. This
process is distinguishable from the "continuous electro-tinning
process" which, as noted, does not change the chemical
composition of the baseplate. The Court ruled that both the
annealing and the "continuous hot-dip galvanizing" process
constituted a substantial transformation of the merchandise.
The Court in Ferrostaal Metals Corp., states that it "does
not agree with the argument that zinc coating is insignificant
because a substantial transformation cannot occur in steel sheet
once it is shaped. The alloy-bonded zinc coating affects the
character of the sheet by changing its chemical composition and
by providing corrosion resistance." (emphasis supplied). The
Court, in using the conjunctive, seems to at least require a
change in chemical composition before a substantial
transformation can occur in cases involving a coating or plating
process.
The "continuous electro-tinning process" does not change
the chemical composition of the baseplate. Its main use is for
the prevention of corrosion. A new and different article having
a distinctive name, character, or use does not emerge.
Therefore, following the reasoning in Ferrostaal Metals
Corp., it is our position that a substantial transformation has
not occurred, and the country of origin of the steel tin plate is
Japan.
CLASSIFICATION
Classification of merchandise under the HTSUS is in
accordance with the General Rules of Interpretation (GRI's),
taken in order. GRI 1 provides that classification is determined
according to the terms of the headings and any relative section
or chapter notes.
The steel tin plate is specifically described in subheadings
7210.11.00 and 7210.12.00, HTSUS. Pursuant to GRI 1, it will be
classifiable under one of these provisions depending on
thickness.
HOLDING:
The country of origin of the steel tin plate is Japan.
The merchandise is classifiable under subheadings 7210.11.00
and 7210.12.00, HTSUS, which provide for: "[f]lat-rolled products
of iron or nonalloy steel, of a width of 600mm or more, clad,
plated or coated: [p]lated or coated with tin:
7210.11.00- [o]f a thickness of 0.5mm or more;
7210.12.00- [o]f a thickness of less than 0.5mm."
The general, column one rate of duty is 3.5 percent ad
valorem in both provisions.
Sincerely,
John Durant, Director
Commercial Rulings Division