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HQ 555530


February 7, 1990

CLA-2 CO:R:C:V 555530 KAC

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.60

Mr. David Y. Berry
Viking Industrial Corporation
620 Clark Avenue
Pittsburg, California 94565

RE: Applicability of partial duty exemption under HTSUS subheading 9802.00.60 to black plate steel coils processed in Guatemala or Costa Rica

Dear Mr. Berry:

This is in response to your letter of November 21, 1989, requesting a ruling on the applicability of subheading 9802.00.60, Harmonized Tariff Schedule of the United States (HTSUS) (formerly item 806.30, Tariff Schedules of the United States) (TSUS)), to black plate steel coils imported from Guatemala or Costa Rica following processing.

FACTS:

Viking will ship U.S.-manufactured black plate steel coils to Guatemala or Costa Rica. The coils range in thickness from 0.008 to 0.0160 inch, and in width from 28 to 48 inches. In Guatemala or Costa Rica, the coils will be uncoiled, galvanized, recoiled, and returned to the U.S. The galvanizing process entails chemical cleaning, hot-dipped zinc coating (galvanizing), cooling, and chromating. The zinc coating will be a G-60 designation as per the American Society for Testing Materials (ASTM) A525-83 specification (0.06 ounce per square foot, mean both sides, adding 0.00102 inch to total sheet thickness in the galvanizing process). The additional thickness of the zinc coating is the only dimensional change of the coils. There is no other metallurgical change to the material.

Upon return to the U.S., the coils will be slit into narrower coils or cut into sheets. The coils will be used for numerous applications, including punched, stamped, roll-formed, and corrugated parts used in heating, cooling, plumbing, construction, appliance, automotive, and agricultural industries.

ISSUE:

Whether the black plate steel coils will be eligible for the partial duty exemption available under HTSUS subheading 9802.00.60 when returned to the U.S.

LAW & ANALYSIS:

HTSUS subheading 9802.00.60 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 subject 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 this tariff provision with duty 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.D. 84-49, 18 Cust.Bull. 957 (1983) we stated that:

[f]or purposes of item 806.30, TSUS, 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, punching, forming, plating, and the like, but does not include painting or the mere assembly of finished parts by bolting, welding, etc.

In the instant case, the steel coil is an eligible article of metal for purposes of HTSUS subheading 9802.00.60. The galvanizing operation performed in Guatemala or Costa Rica is considered a "further processing" operation, as it changes the metal and imparts new and different characteristics which becomes an integral part of the metal. See, Headquarters Ruling Letter 553860 dated October 22, 1985, which held that electroplating with nickel, brass, or chrome is an operation sufficient to comply with the "further processing" requirement of TSUS item 806.30. Moreover, the cutting and slitting of the returned steel in the U.S. are considered sufficient processes which comply with the "further processing" requirement for the domestic segment of HTSUS subheading 9802.00.60. See, Headquarters Ruling Letters 553950 dated December 13, 1985, and 063601 dated April 18, 1980 (cutting and slitting for final fabrication constitutes further processing).
HOLDING:

On the basis of the information submitted, it is our opinion that the processes performed abroad and the U.S. processes constitute "further processing" as that term is used in HTSUS subheading 9802.00.60, and, therefore, the imported galvanized steel coils will be entitled to classification under this tariff provision, upon compliance with 19 CFR 10.9.

Sincerely,

John Durant, Director
Commercial Rulings Division

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