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HQ 555291


April 10, 1989

CLA-2-CO:R:C 555291 RA

CATEGORY: CLASSIFICATION

TARIFF NOS.: 9802.00.50 and 9802.00.60, HTSUS

Mr. Charles A. Snodderly
Import Contract Administrator
SKW Metals and Alloys, Inc.
P.O. Box 368
Niagara Falls, New York 14302

RE: Applicability of subheading 9802.00.50 or 9802.00.60, HTSUS, to aluminum alloy products

Dear Mr. Snodderly:

This is in response to your letter of December 22, 1988, addressed to the Regional Commissioner of Customs, New York Region, which has been referred to us for reply on the question of a partial duty allowance for certain aluminum alloy products made in England from aluminum ingots of U.S. origin.

FACTS:

You indicate that aluminum ingots from domestic supplies are exported to England where they will be melted and blended with metals of foreign origin to form various finished grain refining alloy products for use as additives in alloy manufacture. Upon return to the U.S., aluminum producers will further blend the imported alloy products with raw aluminum to produce metal stock for use in the manufacture of finished aluminum products, such as automobile or airplane parts.

ISSUE:

Will the provision for products exported for alterations in subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS), or the provision for metal articles processed abroad and further processed on return in subheading 9802.00.60, HTSUS, apply to the aluminum alloy products made abroad?

LAW AND ANALYSIS:

Subheading 9802.00.50, HTSUS, provides for the assessment of duty on the value of repairs or alterations performed on articles sent abroad for that purpose. However, the application of this tariff provision is precluded in circumstances where the operations performed abroad destroy the identity of the articles or create new or commercially different articles. Guardian Industries Corporation v. U.S., 3 CIT 9 (1982). Subheading 9802.00.50, HTSUS, treatment also is precluded where the exported articles are incomplete for their intended use and the foreign processing operation is a necessary step in the preparation or manufacture of finished articles. Dolliff & Company, Inc. v. U.S., 66 CCPA 77, C.A.D. 1225 (1979). As the aluminum ingots in the instant case are sent abroad to be finished into new and different alloy products, the foreign operations clearly exceed the meaning of the term "alterations."

Subheading 9802.00.60, HTSUS, is applicable only to articles of metal (except precious metal) which are manufactured in the U.S. or subjected to a process of manufacture in the U.S., exported for further processing, and returned after such processing for further processing in the U.S. Articles which satisfy these requirements are dutiable only upon the value of the processing performed outside the U.S., assuming compliance with section 10.9, Customs Regulations (19 CFR 10.9; copy enclosed). Thus, this tariff provision is applicable in this case only if the returned alloy products are not finished for the purposes of their intended use and are further processed in the U.S. to advance them towards their end use in making finished aluminum products. When they are melted and blended with other metal, the additives have been further processed in the U.S. as required by subheading 9802.00.60, HTSUS. In C.I.E. 1240/55, dated December 9, 1955, we held that purified metals returned to be alloyed and the resultant alloys used in the manufacture of automobile and similar parts would be considered as further processed in the U.S.

HOLDING:

Aluminum alloy products made by melting domestic-made ingots and blending with foreign-made metals have been subjected to operations abroad which exceed the scope of the term "alterations," thereby precluding application of subheading 9802.00.50, HTSUS, to the returned alloy products. However, the use of the alloy products when returned as additives to other metal by melting and blending to make alloys used in the manufacture of metal parts would be considered as further
processing in the U.S., as required by subheading 9802.00.60, HTSUS. Therefore, the returned alloy products will be entitled to the partial duty exemption provided for in this tariff provision, upon compliance with 19 CFR 10.9. Duty will be assessed on the value of the foreign processing, which will not include the value of the exported aluminium ingots of U.S. origin.

Sincerely,

John Durant, Director

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