CLA-2-72:OT:RR:NC:N1:117
Malinda Lee Hickey
BWI Corporation
501 McCormick Drive
Glen Burnie, MD 21061
RE: The tariff classification, country of origin of ferrotitanium imported from the United Kingdom and the applicability of subheading 9802.00.60, HTSUS
Dear Ms. Hickey:
In your letter dated December 12, 2019, on behalf of your client, Westbrook Light Alloys Ltd., you requested a tariff classification ruling.
The product to be imported is ferrotitanium. According to your submission, “U.S.” titanium scrap, usually in the form of turnings, is sent to the United Kingdom (UK), where it is de-greased, combined with iron, melted in a furnace and formed into ferrotitanium ingots. These ingots are subsequently cooled, crushed to a customer specified size fracture, bagged/drummed and re-exported to the U.S. You indicate that this merchandise will be used as an additive in steel making. Despite the exact percentage of iron not being included in the stated chemical composition, we presume that the subject product does, in fact, meet the Chapter 72, Note 1(c) definition of a ferroalloy.
In addition to classification, you have also inquired as to the country of origin of the ferrotitanium. Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements of 19 U.S.C. §1304. Pursuant to 19 CFR 134.1(b), “country of origin” means 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. A substantial transformation results when a new and different article emerges from the processing having a distinctive name, character, or use.
It is the opinion of this office that a substantial transformation has taken place in the UK. Two distinct base metals (titanium and iron) are combined and converted through a series of steps into a ferroalloy. Ferrotitanium is a separate and distinct article of commerce which possesses a new name, character and use from the starting materials.
The applicable subheading for the ferrotitanium will be 7202.91.0000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Ferroalloys: Other: Ferrotitanium and ferrosilicon titanium. The rate of duty will be 3.7 percent ad valorem.
You have also requested guidance as to the applicability of subheading 9802.00.6000, HTSUS, which provides a partial duty exemption for “Any article of metal (as defined in U.S. note 3(e) 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, HTSUS, 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). CBP has consistently held that subheading 9802.00.60, HTSUS, 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. When asked about the origin of the U.S. scrap, your client stated that “The scrap is generated by machining, boring, grinding of turbines blades, airframes and other titanium components,” but could not say with certainty whether the processing involved titanium of domestic or foreign origin. As such, we find that the ferrotitanium does not qualify for preferential duty treatment under subheading 9802.00.60, HTSUS.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at https://hts.usitc.gov/current.
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 April Cutuli at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division