CLA-2-74:OT:RR:NC:N5:116
Mr. Richard F. O’Neill
Neville Peterson, LLP
701 Fifth Avenue
Seattle, Washington 98104
RE: The tariff classification and applicability of 9802.00.50 to steel tubing exported from the United States (U.S.), sent to Canada for additional processing, and returned to the U.S.
Dear Mr. O’Neill:
In your letter dated December 17, 2024, you requested a tariff classification ruling on behalf of your client, Endurance Technologies, Inc. In particular, you are seeking a determination as to whether certain steel tubing qualifies for a reduction in duty under subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS).
The products to be imported are specially hardened and boronized seamless and electric resistance welded (“ERW”) nonalloy steel tubing products known as “Enduralloy®”. These products are used as oil country tubular goods (“OCTG”) in the U.S. oil and gas industry. The outside diameter for the ERW tubes and for the seamless tubes ranges from 60.3 mm to 88.9 mm, with wall thicknesses ranging from 4.826 mm to 6.451 mm. The OCTG are exported from the U.S. into Canada, where they undergo boronization processing and are then imported into the U.S. to be sold to U.S. customers as Enduralloy®, a finished OCTG that has been advanced in value and improved in condition by operations performed in Canada. You state that prior to exportation to Canada, the products are considered finished OCTG, capable of being used in the oil and gas industry.
The applicable subheading for the seamless steel tubing will be 7304.29.5015, HTSUS, which provides for tubes, pipes and hollow profiles, seamless, of iron (other than cast iron) or steel: casing, tubing and drill pipe, of a kind used in drilling for oil or gas: other: tubing: of iron or nonalloy steel: having an outside diameter not exceeding 114.3 mm: having a wall thickness not exceeding 9.5 mm.
The applicable subheading for the ERW steel tubing will be 7306.29.6050, HTSUS, which provides for other tubes, pipes and hollow profiles (for example, open seamed or welded, riveted or similarly closed), of iron or steel: casing and tubing of a kind used in drilling for oil or gas: other: tubing: of iron or nonalloy steel: other.
In your request you indicate that the tubes will be exported from the U.S. into Canada for the boronization processs. You propose that they should be classified within subheading 9802.00.50, HTSUS, upon their return into the U.S. Subheading 9802.00.50, HTSUS, provides a partial or complete duty exemption for articles exported from and returned to the U.S. after having been advanced in value or improved in condition by repairs or alterations, provided that the documentary requirements of Section 181.64, Customs Regulations (19 CFR § 181.64), are satisfied. 19 CFR § 181.64 (a) states that “repairs or alterations” means restoration, addition, renovation, redyeing, cleaning, resterilizing, or other treatment which does not destroy the essential characteristics of, or create a new and commercially different good from, the good exported from the United States. However, entitlement to this tariff treatment is precluded in circumstances where the operations performed abroad destroy the identity of the exported articles or create new or commercially different articles through a process of manufacture. Subheading 9802.00.50, HTSUS, treatment is also precluded where the exported articles are incomplete for their intended use and the foreign processing operation is a necessary step in the preparation or manufacture of finished articles. Furthermore, the merchandise must be in compliance with the pertinent legal notes of the HTSUS. For example, Section XXII, Chapter 98, Subchapter II, U.S. Note 1(b) states that heading 9802 HTSUS shall not apply to any article exported with benefit of drawback (other than NAFTA drawback). In this instance, the tubes are complete for their intended use prior to being exported to Canada to undergo the boronization process. As exported from the U.S., they are finished products in that they are suitable for use as intended in the oil and gas industry. Although the processing performed in Canada slightly alters the appearance of these items, such operations do not destroy their character nor their intended use. They are shipped to Canada solely for boronization before being returned to the U.S. The merchandise, in its condition as exported from the U.S. and as returned from Canada, can be marketed and sold to consumers for the same use. Both before and after undergoing the Canadian boronizing process, the tubing remains finished OCTG steel tubing and, in its post-boronized state as ENDURALLOY®, is used in the same OCTG applications as the finished non-boronized steel tubing that was previously exported to Canada for alterations.The operations performed in Canada do not result in the loss of the good’s identity nor do they create a new article with a different commercial use. Therefore, the operations performed in Canada constitute an acceptable alteration within the meaning of subheading 9802.00.50, HTSUS. These tubes will qualify for the special tariff treatment of that provision, provided that the documentary requirements of 19 CFR § 181.64 are met.
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 at https://hts.usitc.gov/current.
The holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request. This position is clearly set forth in Title 19, Code of Federal Regulations (CFR), Section 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, whether directly, by reference, or by implication, is accurate and complete in every material respect. In the event that the facts are modified in any way, or if the goods do not conform to these facts at time of importation, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and submit a request for a new ruling in accordance with 19 CFR 177.2. Additionally, we note that the material facts described in the foregoing ruling may be subject to periodic verification by CBP.
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 Angelia Amerson at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division