HQ 0081491 - Recessed Cold Headed Screw Wire Processed from Hot Rolled Wire Rod - United States International Trade Commision Rulings

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HQ 081491

NOV 8, 1989

CLA-2:CO:R:C:G 081491 JAS

CATEGORY: CLASSIFICATION

TARIFF NO.: None

James G. Meagley, Esq.
Phillips, Lytle, Hitchcock, Blaine & Huber 3400 Marine Midland Center
Buffalo, New York 14203

RE: Recessed Cold Headed Screw Wire Processed from Hot Rolled Wire Rod

Dear Mr. Meagley:

In your letter of December 18, 1987, as supplemented, on behalf of Robertson-Whitehouse, Milton, Ontario, Canada, you inquire as to the country of origin of certain drawn and annealed wire processed in Canada from hot rolled wire rod from third countries.

There is no issue of tariff classification or eligibility of the merchandise for a reduced rate of duty under the United States-Canada Free-Trade Agreement. Our ruling follows.

FACTS:

The wire at issue here is made from medium-low carbon hot rolled steel wire rod, cold heading quality, conforming to ASTM specification A-510-77. The round wire rod is 0.218 inch in diameter and contains the chemical elements required by AISI specification 1018.

The wire rod arrives in Canada in 2,000 lb. coils. In Canada, the rod is natural aged in the yard, then either chemically or mechanically descaled to remove mill scale and rust. It is then uncoiled and drawn between 4 and 6 times through progressively smaller tungsten carbide dies into process wire. It is then spheroidize annealed by heating to a temperature of 1350 degrees F for 13 hours in a protective atmosphere of nitrogen and propylene. The annealed wire is
then said to meet ASTM specification A-548-82 and A-549-82 which provide for a quality of wire required for recessed screws. The annealed wire is then lubricated and drawn a second time to make the surface more machinable for the subsequent cold-heading process used to make a variety of recessed screws and rivets. Finally, the wire is coiled, tagged, and stored. This is its condition as imported.

The drawing phase of the processing in Canada is said to significantly increase the tensile strength of the wire, but the psi. increase in this case is not stated. The Canadian processing adds approximately 32 percent to the value of the hot rolled wire rod and results in a finished wire ranging from 0.103 to 0.164 inches in diameter, with the smallest wires occasionally being 0.064 inch in diameter. You state this represents an equivalent reduction in cross-sectional area of between 69 percent and 93 percent.

ISSUE:

Does the processing in Canada substantially transform the hot rolled wire rod into a product of Canada for tariff purposes?

LAW AND ANALYSIS:

In order for the hot rolled wire rod entering Canada to have been considered substantially transformed there, the record must establish that the processing in Canada resulted in a product other than or materially different from the merchandise that entered Canada. A new and different article must emerge from the processing, one having a new name, character or use. Anheuser-Busch Brewing Association v. United States, 207 U.S. 556 (1908), and related cases.

Spheroidize annealing is a time-consuming, controlled operation which relieves the stresses of the first draw and increases ductility to permit further drawing to final dimensional tolerances. The annealing in this case also insures optimum machinability as the wire will be further cold worked by upsetting the ends, a necessary step in making recessed, cold headed screws. The annealing in this case dedicates a process wire capable of a variety of uses to a finished wire having a specific use in the making of recessed, cold headed screws.

HOLDING:

The cold heading quality wire in issue, which has
been drawn, spheroidize annealed and further drawn, as described in the facts, from 0.218 inch hot rolled wire rod, is substantially transformed in Canada and is a product of that country for tariff purposes.

Sincerely,

John Durant, Director
Commercial Rulings Division

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