CLA-2-72:RR:NC::118 D85763
Ms. Elizabeth Howard
Willan-Wogen Alloys Ltd.
4 The Sanctuary, Westminster
London, SW1P 3JS, UK
RE: The tariff classification of ferrotitanium from the United Kingdom
Dear Ms. Howard:
In your letter dated December 10, 1998, you requested a tariff classification ruling.
You state that titanium scrap is shipped from the U.S. to the U.K. where it is melted with steel scrap to produce ferrotitanium. The ferrotitanium is then shipped to the United states via Montreal. When the ferrotitanium reaches the U.S., there is no further processing which adds value before being consumed in the U.S. by various steel plants. You have requested guidance as to the applicability of subheading 9802.00.6000, Harmonized Tariff Schedule of the United States (HTS).
Subheading 9802.00.6000, HTS, 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 is 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 metal articles: one foreign, and when returned, one domestic. Articles of metal satisfying these statutory requirements may be classified under subheading 9802.00.60, HTS, with duty only upon the value of such processing performed outside the U.S., upon compliance with the documentation requirements of section 10.9, Customs Regulations (19 C.F.R. §10.9).
The Customs Service has consistently held that subheading 9802.00.60, HTS, is inapplicable to scrap obtained directly from processing foreign-made metal in the U.S. The requirement that scrap be a metal article “manufactured or subjected to a process of manufacture” in the U.S. is satisfied only if the metal article from which the scrap was obtained was initially manufactured or subjected to a process of manufacture in the U.S. Customs does not consider processes such as the dismantling (by whatever means), shredding, crushing, ripping and grinding of obsolete articles and industrial scrap to be manufacturing processes, whether or not accompanied by sorting, grading or other similar activities to promote the salability or utility of the scrap. Manufacturing begins once raw materials are available and does not include reclamation activities undertaken with respect to obsolete and industrial scrap prior to the creation of raw materials for new manufacturing.
In C.S.D. 84-49, 18 Cust. Bull. 957 (1983), it was stated that:
[f]or purposes of item 806.30 [the precursor provision to subheading 9802.00.60, HTS], 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 includes 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.
Ferrotitanium is a standard commercially finished product and therefore, it is not imported for further processing. It is ready for use as a standard addition material in metallurgical applications. As previously stated, in order to be considered “further processing,” some operation must be applied to the metal which changes the shape or form of the metal or imparts new and different characteristics which become an integral part of the metal itself. Processing performed on an already completed article, incident to using it for the purpose intended, is not sufficient to constitute “further processing.” Intelex Systems, Inc. v. United States, 59 CCPA 138, C.A.D. 1055 (1972)
Based upon the information submitted, the applicable subheading for the ferrotitanium, manufactured from exported scrap, will be 7202.91.0000, HTS, which provides for Ferroalloys: Other: Ferrotitanium and ferrosilicon titanium. The rate of duty will be 3.7% ad valorem.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Kathy Campanelli at 212-466-5492.
Sincerely,
Robert B. Swierupski
Director
National Commodity
Specialist Division