NY 865158
AUG 14 1991
CLA-2-84:S:N:N1:104 865158
Mr. Brian Johnson
Border Brokerage Company
P.O. Box B
Blaine, Washington 98230
RE: The tariff classification of a mandrel from the United
States and Canada.
Dear Mr. Johnson:
In your letter dated July 9, 1991, you requested a tariff
classification ruling on behalf of Earle M. Jorgensen Co.,
Seattle, Washington.
The alloy steel mandrel is used in a pipe rolling mill to
form pipe to a continuous inside diameter. After a billet of
steel has been formed, a hole is drilled through the center of
the billet. The mandrel is set in the hole and the billet is
then continuously rolled across the rolls of the mill until the
pipe is formed. The mandrel is used to form both the inside and
outside diameters of the pipe.
In your letter, you also request a determination as to
whether processing done in Canada is considered an alteration or
manufacturing process. A determination is also requested as to
which value duty will be assessed against (1) the value of the
processing done in Canada only or (2) the value of the processing
done in Canada plus the value of mandrel as exported to Canada.
Specification sheets and cost breakdown figures were submitted
with your letter.
Blueprints for mandrels are submitted to Earle M. Jorgensen
Co. ("Jorgensen") by its various customers. Jorgensen performs
the basic manufacturing of the mandrel. The mandrel is then sent
to Canada where Ebco Industries ("Ebco") performs a chrome
plating operation on the article. The chrome plating allows
graphite to be applied to the surface of the mandrel.
The graphite is necessary so that the mandrel can be extracted
from the billet after forming is completed. After the chrome
plating and graphite coating operations have been performed, Ebco
returns the mandrel to Jorgensen for further machining (e.g.
grinding of the mandrel's ends).
An alteration is performed on an article which is already
complete and does not include intermediate processing operations
which are performed in the preparation or manufacture of finished
articles. Alterations are not performed on an exported article
that is incomplete for its intended use and which requires a
manufacturing process to make it complete. It is clear from the
details noted above that the operations performed in Canada
constitute a part of the manufacturing process begun in the
United States. In the described circumstances, the plating and
coating processes are considered more than a mere alteration for
tariff purposes. The Canadian processes are but intermediate
steps in the total manufacturing process begun and ended in the
United States.
Further processing refers to processing that changes the
shape of the metal or imparts new and different characteristics
which did not exist before this processing. These new and
different characteristics become an integral part of the metal
itself. In addition to machining, grinding, drilling,
threading, punching, and forming, further processing also refers
to plating. It would not include the mere assembly of finished
parts (e.g. bolting).
On the basis of the information submitted, the mandrel to be
imported is subjected to further processing both in Canada and on
return to the United States. It is understood that the article
is not capable of being used either in its original condition as
exported to Canada nor as reimported into the United States.
The applicable subheading for the mandrel will be
8455.90.0000, Harmonized Tariff Schedule of the United States
(HTS), which provides for other parts of rolling mills. The rate
of duty will be 4.9% ad valorem.
Goods classifiable under subheading 8455.90.0000, HTS, which
have originated in the territory of Canada will be entitled to a
1.9% ad valorem rate of duty under the United States-Canada Free
Trade Agreement (FTA) upon compliance with all applicable
regulations.
In addition, the mandrel will be eligible for the partial
duty exemption available in subheading 9802.00.6000, HTS, upon
compliance with all applicable regulations. Subheading
9802.00.6000, HTS, provides for any article of metal [as defined
in U.S. note 3(d) to subchapter II] 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. Duty is
assessed only upon the value of such processing performed outside
the United States.
This ruling is being issued under the provisions of Section
177 of the Customs Regulations (19 C.F.R. 177).
A copy of this ruling letter should be attached to the entry
documents filed at the time this merchandise is imported. If the
documents have been filed without a copy, this ruling should be
brought to the attention of the Customs officer handling the
transaction.
Sincerely,
Jean F. Maguire
Area Director
New York Seaport