HQ 0088224 - Tubing, Seamless, Upset End, Grade L80 Processed in the United States from Green Tubing of Japanese Origin; Oil Country Tubular Goods; Country of Origin; Substantial Transformation - United States International Trade Commision Rulings

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HQ 088224

JAN 31 1991

CLA-2:CO:R:C:G 088224 JAS

CATEGORY: CLASSIFICATION

TARIFF NO.: None

Ms. Jane Rankin
Seam-Mac Tube, Inc.
P.O. Box 14134
Monroe, Louisiana 71207

RE: Tubing, Seamless, Upset End, Grade L80 Processed in the United States from Green Tubing of Japanese Origin; Oil Country Tubular Goods; Country of Origin; Substantial Transformation

Dear Ms. Rankin:

In your letter of October 1, 1990, you inquire as to the country of origin for purposes of the United States-Japan steel arrangement of certain tubing of Japanese origin processed in the United States, exported to Canada and returned. You submitted additional information by facsimile transmittal, dated January 29, 1991. There is no issue of tariff classification. Our ruling follows.

FACTS:

The merchandise initially entering the United States is described as hot finished tubing, 1.315 inch outside diameter, plain end, produced from AISI grade 4130 modified steel. After importation these tubes, referred to in the trade as green tubes, are subjected to an upset forging process after which they are heat treated by quenching and tempering.

Upset forging involves heat treating each end of a tube at about 2250 degrees F for 3 minutes, after which the ends are forged in a vertical upsetter. This process thickens the ends of the tube and adds additional strength at the tube joints, thus preparing the ends for threading.

Quenching is a process that involves heating the tube to the austenitizing range of about 1625 degrees F for a period of time that varies with the type of steel. The tube is then water quenched after which it is heated in a tempering furnace at
about 1370 degrees F for a predetermined period of time. The quenching and tempering is designed to control the hardness and reduce the brittleness of the steel and to bring it to tensile and yield strengths required by the American Petroleum Institute. The described upset forging and heat treatment transforms the green tubes into grade L80 seamless upset and tubing conforming to API specification 5CT, oil well casing and tubing, commonly referred to in the trade as oil country tubular goods. The amount of value added by the upset forging and heat treatment is not indicated.

The resulting tubing is exported to Canada where it is to be threaded to enable a user to connect lengths of pipe together. Prior to threading, however, certain pipe lengths must be returned to the U.S. for additional fabrication. These pipe lengths are the subject of this ruling request. If these pipe lengths are not considered to be substantially transformed in the United States and are still products of Japan, they would be subject to the United States-Japan steel arrangement.

ISSUE:

Whether the described upset forging and heat treatment substantially transforms green tubes of Japanese origin into products of the United States.

LAW AND ANALYSIS:

In order for the green tubes of Japanese origin to be considered substantially transformed by the processing in the United States, so as to be regarded as products thereof for purposes of the United States-Japan steel arrangement, the evidence must show that the processing results in a product other than or materially different from the green tubes. That is, a new and different article of commerce 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). A mere change in a product's name, without more, is a relatively unimportant consideration in most cases. Value added by the processing likewise is not viewed as determinative, except to the extent it may reflect the significance of the processing. As to character and use, however, there must be evidence to show that the processing in the United States transforms the green tubes in such a way that they are no longer the essence of the upset end heat treated tubing.

Though not required of all steel tubing, upsetting is a specific end requirement for tubing that will be suspended into very deep wells. It does not, however, alter tensile strength which is a specification designed into the tubing. Upsetting does not affect either the character of the tubing or the use to which it will be put. The described heat treatment, on the other
hand, is an essential processing operation that distinguishes multifunction green tubes from oil country tubular goods by imparting the critical high yield strength and tensile strength required by A.P.I. specifications for oil well tubing.

We conclude that the described heat treatment in the United States is sufficient to substantially transform the green tubes of Japanese origin into A.P.I. oil well tubing which is a product of the United States.

HOLDING:

Upon its return from Canada the grade L80 seamless upset end tubing will be considered a product of the United States for purposes of the United States-Japan steel arrangement.

Sincerely,

John Durant, Director
Commercial Rulings Division

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