United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 1991 HQ Rulings > HQ 0555426 - HQ 0555590 > HQ 0555583

Previous Ruling Next Ruling


HQ 555583


May 22, 1990

CLA-2 CO:R:C:V 555583 DSN

CATEGORY: CLASSIFICATION

TARIFF NO.: 7317.00.55

Mr. Paul Kenney
President
W.J. Young Fastener & Machinery Co., Inc. 181 Elliot Street
Beverly, MA 01915

RE: CBERA treatment of certain nails

Dear Mr. Kenney:

This is in response to your letters of January 31, 1990, and March 27, 1990, on behalf of Caribbean Metal Products Inc., in which you request a ruling that certain nails produced in the Netherlands Antilles are entitled to duty-free treatment under the Caribbean Basin Economic Recovery Act (CBERA) (19 U.S.C. 2701-2706).

FACTS:

According to your submissions, wire rod manufactured in Trinidad and Tobago from pig iron and scrap is imported into the Netherlands Antilles in 2500 pound coils with a diameter of .210 inch. In the Netherlands Antilles, the wire rod is fed into a wire drawing machine utilizing a cold system of air, water and lubricants, which de-scales the rod and passes it through four reducing dies. Each of these dies reduces the diameter of the rod by a pre-determined amount. This process converts the rod into nail wire with a finished diameter of .105 inch, or smaller, depending on the hole size used on the wire drawing machine.

The finished wire is then fed into a high speed open die nail press which first cuts the point on the wire and then forms the head of the nail.

The next stage involves the tumbling of the nails in a closed barrel and cleaning them with sawdust and water. After this process, the nails are passed through sets of parallel rolls and the heads are sorted.

The non-hardened plain nails are then packed into corrugated boxes. The nails requiring threading are put through a rotary die threading machine, which consists of one rotary and one shoe die. This operation deforms the shank and implants the annular thread configuration.

The nails that require hardening are inserted into a furnace and heated after which they are quenched in an oil tank. Both the nails that need re-threading and hardening are re- tumbled for cleaning purposes before being packaged.

The cost figures submitted have been broken down in the following manner:

Wire Rod .19 cents/lb.

Direct Labor .14 cents/lb. wire drawing nail making tumbling and polishing threading heat treating packaging

Manufacturing .18 cents/lb. depreciation machine repairs and maintenance purchase, rework, heat treated dies rent water, light and power shipping supplies vacation pay

Shipping .04 cents/lb.

Selling price .64 cents/lb.

Gross profit .09 cents/lb.

ISSUE:

Whether the described nails produced in the Netherlands Antilles are entitled to duty-free treatment under the CBERA when imported into the U.S.

LAW AND ANALYSIS:

Under the CBERA, eligible articles the growth, product or manufacture of a designated beneficiary country (BC) may receive duty-free treatment if such articles are imported directly to the U.S. from a BC, and if the sum of 1) the cost or value of the materials produced in a BC or BC's, plus 2) the direct cost of processing operations performed in a BC or BC's, is not less than 35% of the appraised value of the article at the time it is entered into the U.S. See 19 U.S.C. 2703(a). The cost or value of materials imported into a BC from a non-BC may be counted toward the 35% requirement only if these materials are first substantially transformed into a new or different intermediate article of commerce which is then used in the production of a new or different article which is imported into the U.S. See section 10.196(a), Customs Regulations (19 CFR 10.196(a)).

The Netherlands Antilles is a BC. See General Note 3(c)(v)(A), Harmonized Tariff Schedule of the United States Annotated (HTSUSA). Based on your description, it appears that the nails would be classified under subheading 7317.00.55, HTSUSA, which provides for nails, tacks, drawing pins, corrugated nails, staples (other than those of heading 8305) and similar articles, of iron or steel, whether or not with heads of other material, but exluding such articles with heads of copper, other, which is a CBERA eligible provision. Therefore, if the nails are imported directly to the U.S. from the Netherlands Antilles, and they satisfy the "product of" and 35% value-content requirements, the nails will receive duty-free treatment under the CBERA.

The processing performed in Trinidad and Tobago (also a BC) clearly results in the substantial transformation of pig iron and scrap into a new and different article of commerce -- wire rod. Moreover, the subsequent processing performed in the Netherlands Antilles substantially transforms the wire rod into another new and different article of commerce -- nails. Therefore, the nails are considered to be a "product of" a BC, and the cost or value of the wire rod may be counted toward the 35% value-content requirement. Based on your cost figures, the sum of the cost or value of the wire rod and the direct processing costs incurred in the Netherland Antilles will exceed 35% of the estimated appraised value of the imported nails.

For your information, we are enclosing a copy of the Customs Regulations relating to the CBERA (sections 10.191-10.198, Customs Regulations (19 CFR 10.191-10.198)).

HOLDING:

Assuming that the nails manufactured in the Netherlands Antilles will be imported directly to the U.S., they will be entitled to duty-free treatment under the CBERA.

Sincerely,

John Durant, Director
Commercial Rulings Division

Previous Ruling Next Ruling

See also: