CLA-2 CO:R:C:M 951473 DWS
Ms. Sandra Liss Friedman
Barnes, Richardson & Colburn
475 Park Avenue South
New York, NY 10016
RE: Cold-Rolled Steel Sheet; Hot-Dip Galvanizing; Annealing;
Passivation; Substantial Transformation; Country of Origin;
Ferrostaal Metals Corp. v. U.S.
Dear Ms. Friedman:
This is in response to your letter of March 30, 1992,
concerning the country of origin of certain cold-rolled steel
sheet under the Harmonized Tariff Schedule of the United States
(HTSUS).
FACTS:
The subject merchandise consists of cold-rolled steel sheet,
manufactured in Italy. After the steel sheet is created, it
undergoes processing in Tunisia. Once in Tunisia, the steel
sheet is annealed, hot-dipped galvanized, and then painted with a
de-oxidizing mixture (passivation), creating rust resistant
properties within the steel sheet.
Before processing in Tunisia, the steel sheet has the common
commercial specification of American Society for Testing
Materials (ASTM) A-366. After processing, the steel sheet has
the common commercial specification of ASTM A-527. The
processing in Tunisia increases the value of the steel sheet by
approximately 30 percent.
ISSUE:
What is the country of origin of the subject cold-rolled
steel sheet?
LAW AND ANALYSIS:
"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.
The court in Ferrostaal Metals Corp. stated that "[w]hether
galvanizing and annealing change the character of the merchandise
depends on the nature of these operations and their effect on the
properties of the materials. . . . The Court finds that the
annealing and galvanizing processes result in a change in
character by significantly altering the mechanical properties and
chemical composition of the steel sheet."
It is claimed that the hot-dip galvanizing process performed
in Tunisia "also changes the character of the product by
imparting a zinc coating that alters the mechanical properties
and chemical composition of the steel sheet and provides
corrosion resistance."
From the information provided us, the processing of the
cold-rolled steel sheet in Tunisia, involving both annealing and
hot-dip galvanizing, is very similar to the processing in
Ferrostaal Metals Corp.. It is our position that, after
processing in Tunisia, a substantial transformation of the
merchandise has taken place. A new and different article having
a distinctive name, character, or use does emerge. This is noted
by the change in the ASTM of the material.
HOLDING:
Following the reasoning in Ferrostaal Metals Corp., it is
our position that a substantial transformation has occurred, and
the country of origin of the cold-rolled steel sheet is Tunisia.
Sincerely,
John Durant, Director
Commercial Rulings Division