HQ 0084656 - Coastwise Transportation of Merchandise Manufactured or Processed into a New and Different Product; Section 4.80b(a), Customs Regulations - United States International Trade Commision Rulings

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HQ 084656

August 18, 1989

CLA-2 CO:R:C:G 084656

CATEGORY: CLASSIFICATION

Chief, Carrier Rulings Branch

RE: Coastwise Transportation of Merchandise Manufactured or Processed into a New and Different Product; Section 4.80b(a), Customs Regulations

Dear Sir:

By memorandum, dated May 24, 1989 (110217 GV), you ask whether drawn galvanized wire processed from carbon steel wire rod is a new and different product for purposes of section 4.80b(a), Customs Regulations. Our response follows.

AISI grade 1008 carbon steel wire rod in round cross sectional dimension ranges in diameter from 0.216 to 0.748 inches. The wire rod is wound onto coils which are dipped into hydrochloric acid to remove mill scale, then coated with lime or borax to inhibit rust formation. The wire rod is then uncoiled and cold drawn as many as eleven times through a series of conical shaped dies into what is described as 16 gauge wire. Thereafter, the drawn wire is stress relieved (annealed) in a bath of molten lead maintained at 1300 degrees F, cooled, cleaned again in hydrochloric acid, and flux treated. The wire is then hot dipped galvanized by passing it through a molten zinc bath heated to 860 degrees F.

The drawing significantly increases both yield strength and tensile strength, and reflects a reduction in cross- sectional area of up to 92 percent. The annealing reduces yield strength up to 62 percent and tensile strength up to 50 percent while increasing ductility by up to 300 percent. The cleaning, drawing, annealing, and galvanizing operations are said to add approximately 124 percent to the value of the wire rod.

In order for the wire rod to be considered a new and different product for purposes of section 4.80b(a), Customs Regulations, the record must establish that the described processing substantially transforms the galvanized wire in such a way that it results in a product other than or materially different from the wire rod. A new and different product 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. In this case, the drawing phase of the operation results in a significant reduction in the product's cross sectional area. Moreover, the drawn process wire here cannot be galvanized without first being annealed to remove the stresses of cold working. This increases ductility which is essential, in this case, to permit galvanizing. The substantiality of the entire processing operation is reflected in the 124 percent value added. Finally, the processing dedicates the galvanized wire to uses (i.e., nails, coat hangers, barbed wire, condenser wire), for which the wire rod is unsuited.

The facts here support a finding that drawn, galvanized wire, processed as indicated from carbon steel wire rod, is considered substantially transformed, and is a new and different product for purposes of section 4.80b(a), Customs Regulations.

Sincerely,

John Elkins

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