CLA-2 CO:R:C:S W556592 LS
Mr. Thomas J. O'Donnell
Sonnenberg, Anderson, O'Donnell & Rodriguez
200 South Wacker Drive 33rd Floor
Chicago, Illinois 60606
RE: Applicability of subheading 9802.00.60, HTSUS, to steel bends and tees; cutting, swaging, sizing, squaring, dustblasting, mechanical polishing, and welding; C.S.D. 84-49; 053159; 555377
Dear Mr. O'Donnell:
This is in response to your letter of March 19, 1992, on behalf of G/H Products Corp., requesting a ruling concerning the applicability of subheading 9802.00.60, Harmonized Tariff Schedule of the nited States {HTSUS), to stainless steel bends and tees imported from Denmark. Samples of both the weld and clamp type bends and a sample of a tee were submitted.
FACTS:
The following facts are based upon your letters dated March 19, 1992 and July 27, 1992, and several telephone conversations between Timothy Stewart of your office and a member of my staff.
G/H Products plans to export U.S. manufactured stainless steel straight tubing to its parent company in Denmark where the following operations will be performed:
The tubing is cut to specific lengths.
The tubing is either swaged into a "bend" or elbow shape, or fabricated into a "tee" by cutting and welding on an additional piece of tubing to create a "T" shape.
The bends and tees undergo a "sizing" operation whereby a steel ball is put through the inside of the tubing to restore the inside diameter size and the round shape of the tubing.
The ends of the bends and tees are cut square and deburred.
The inner and outer diameters of the bends and tees are measured to insure conformity to specification. The bends or tees vary in size from a 1/2 inch to 4 inch outside diameter.
Both the weld type and clamp type bends and tees are returned to the U.S. where they undergo the following operations:
With respect to the clamp type bends and tees, a ferrule is welded onto one, two, or three ends, depending on the configuration of the article.
A re-sizing operation is performed on all the weld type bends and tees. With respect to the clamp type bends and tees, re-sizing will be performed on the ends without a ferrule or, in the case of those with ferrules on one or both ends, resizing will be done as required on the ends which do not meet the tolerance for roundness. The resizing consists of the following two steps: (1) checking to determine if the end is out of tolerance; and (2) if so, sizing the ends in an arbor to insure the inside and outside diameters and roundness. The latter operation thus changes the shape back to a perfectly round form..
Dustblasting or polishing is performed on the weld and clamp type bends and tees, depending on which of these surface textures is required for the end use. G/H Products provides five different surface combinations for the bends and tees. For example, some bends and tees have the same surface texture on the inside and outside diameters, whereas others may be polished on the inside and dustblasted on the outside, or vice versa.
Dustblasting, which you state is synonymous with sandblasting, involves the following steps:
The bends and tees are degreased in a solvent to remove machining oil prior to blasting. This prevents the glass beads used in blasting from sticking to the metal and insures a uniform surface, texture, and color.
3. The inner and/or outer surfaces of the
bends and tees are dust blasted with glass I
beads (silica sand) to a uniform dull silver I
finish. The dustblasting is performed on each bend or tee individually in a specially designed cabinet. You state that, typically, the amount of metal removed by dustblasting is about 0.001 inch.
3. A visual inspection is performed to check for scratches and uniformity of color.
punching, forming, plating, and the like, but does not include painting or the mere assembly of finished parts by bolting, welding, etc.
We find that the combined operations performed in Denmark of cutting the tubing, swaging it into a "bend" shape or fabricating it into a tee, sizing, squaring, and deburring constitute sufficient "further processing" so as to satisfy the foreign processing requirement of subheading 9802.00.60, HTSUS. See,
, T.D. 66-181(1), 101 Treas. Dec. 51 (1966) (cutting to length operations constitute a "further processing'' under item 806.30, TSUS). Swaging the tubing into an elbow shape or cutting and welding an additional piece of tubing to create a "T" shaped tubing clearly changes the shape of the metal.
For the reasons discussed below, the various combinations of processes performed upon the weld type and clamp type bends and tees when they are returned to the U.S. will satisfy the domestic "further processing" requirement of subheading 9802.00.60, HTSUS. You have stated that the weld type bends and tees will either be dustblasted and resized or mechanically polished and resized. In most instances, the clamp type bends and tees will undergo a combination of three processes, i.e., dustblasting or polishing, sizing, and attachment of a ferrule or ferrules. However, under circumstances where a ferrule is attached to both ends and the ends are found to be in tolerance, resizing will not be required.
In Headquarters Ruling Letter (HRL) 053159 dated, September 12, 1977, we held that the process of hand polishing wheel rims abroad, which merely produced a gloss or luster, did not constitute "further processing" for purposes of item 806.30,
TSUS, because it was simply a cleaning operation. However, if the wheel rims had been polished abroad by grinding or the use of abrasive wheels, the "further processing" requirement would have been met. In addition, we held that sandblasting which alters a metal's surface qualifies as "further processing" under this tariff provision. However, sandblasting which is performed merely for the purpose of removing rust, dirt, or grease from metal as a preliminary step to painting, is considered a cleaning operation and would not qualify under item 806.30 as "further processing." This same ruling states that "further processing" is found wi.n it "can be shown that the (sand]blasting or other operation is designed to remove significant amounts of surface metal, or otherwise impart a new and different property to the metal itself."
Since you state that dustblasting and sandblasting are synonymous terms used by different industries, we rely upon
HRL 053159 in finding that the dustblasting of the bends and tees constitutes "further processing," for purposes of subheading 9802.00.60, HTSUS. The differences in surface texture between the unfinished and dustblasted bends and tees are readily
Mechanical polishing, which creates an alternative finish to dustblasting, involves the following steps:
The bends and tees are polished using silicon carbide grit paper on a belt. The exterior surface is polished while the article is maneuvered with both hands against a backstand polisher. Polishing is first done with a rough grit belt.
A fine finishing grit belt is then used to arrive at the specified finish grit on the inner or outer surfaces. In order to polish the inner surface, a silicon carbide cloth tipped flexible mandrel is inserted into the bends and tees. You state that, typically, the amount of metal removed by polishing is approximately 0.003 - 0.005 inch.
A visual inspection is performed to check for scratches and uniformity of color.
The G/H Products logo and American Iron & Steel Institute's (AISI) stainless steel type is electro-chemically etched on the outer surface of the bend or tee. The polished bends and tees are also etched with the ''3-A" designation of the International Association of Milk, Food and Environmental Sanitarians (IAMFES).
The bends and tees are layered over paper and placed in crates to prevent any scratching when shipped.
The bends and tees are designed for use in equipment in the food, dairy, beverage, pharmaceutical, and chemical industries. In all these industries, uniformity in the surface texture of the metal tubing is of major importance because a smooth surface reduces the tendency of liquids to become embedded in the tubing. This is essential from a sanitary standpoint as it permits the installed piping system, which includes the bends and tees, to be "cleaned in place." The piping is cleaned in place by running liquid detergents and/or heated water through the system to remove residues which would contaminate liquids (such as beverages, pharmaceuticals, and chemicals) which are subsequently conveyed through the system. Thus, without the dustblasting, the bends and tees are considered unfinished for their intended purpose in industries where a "cleaning in place" capability is required. You state that the dustblasting not only reduces surface pits, scratches, and crevices, but also imparts the necessary texture and uniformity to the metal's surface. In order to comply with the "3-A" IAMFES standard, the bends and tees used on dairy industry equipment must undergo the requisite mechanical polishing operation which prevents bacteria from
becoming embedded in the tubing. Polishing not only completely removes pits, crevices, and folds, but also imparts a shiny, smoother finish and texture to the tubing.
You contend that the bends and tees are eligible for the partial duty exemption under subheading 9802.00.60, HTSUS, since both the foreign and domestic operations constitute "further processing" within the meaning of that provision. You specifically address the dustblasting and polishing operations and assert that each satisfies the domestic "further processing" requirement because of the finishes and textures they impart to the metal.
ISSUE:
Whether the bends and tees will be eligible for the partial duty exemption under subheading 9802.00.60, HTSUS, when imported into the U.S. from Denmark.
LAW AND ANALYSIS:
Subheading 9802.00.60, HTSUS, 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 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.
This tariff provision imposes a dual "further processing" requirement on eligible articles of metal--one foreign, and when returned, one domestic. Metal articles satisfying these statutory requirements may be classified under subheading 9802.00.60, HTSUS, with duty payable only on the value of such processing performed outside the U.S., provided there is compliance with the documentary requirements of section 10.9, Customs Regulations (19 CFR 10.9).
In C.S.O. 84-49, 18 Cust. Bull. 957 (1983), we held that:
[f]or purposes of item 806.30, TSUS [the predecessor tariff provision to subheading 9802.00.60, HTSUS], 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,
apparent to both sight and touch. The dustblasting not only smoothes the surface of the metal by eliminating minor imperfections, but also removes some of the shine of the unfinished bends and tees and creates a dull grey, uniform finish with a different texture. Thus, we find that the dustblasting imparts new and different characteristics which become an integral part of the metal. Similarly, the mechanical, two-step polishing of the bends and tees constitutes more than a cleaning operation, because it actually alters the surface finish and texture of the metal which is vital to the use of the bends and tees in the dairy industry. Cf. HRL 555432 dated July 26, 1990 (smoothing out the weld surface on the inside of flange and pipe, primarily by grinding, was incidental to the assembly of the flange and pipe and did not constitute a "further processing"); HRL 556080 dated August 27, 1991 (polishing of disc blanks which was performed as a preliminary step to a magnetic coating operation was considered "further processing" when it was accompanied by the electroplating or anodizing coating process).
The attachment of one or more ferrules by welding does not, by itself, constitute "further processing," within the meaning of subheading 9802.00.60, HTSUS. See HRL 555377 dated October 16,1989 (brazing, a welding operation, and other assembly operations, such as soldering or bolting, do not constitute "further processing"). However, when this welding operation is combined with the dustblasting or polishing operations, the bends and tees which are subjected to these processes will be eligible for the partial duty exemption under subheading 9802.00.60, HTSUS.
HOLDING:
Based upon the information submitted, we find that the processes performed in Denmark to form the bends and tees, and the operations which take place upon the return of the bends and tees to the U.S., constitute "further processing" within the meaning of subheading 9802.00.60, HTSUS. Therefore, the bends and tees will be entitled to the partial duty exemption under this tariff provision upon compliance with the documentary requirement of 19 CFR 10.9.
Sincerely,
John Durant, Director Commercial Rulings Division