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HQ 555701


August 29, 1990

CLA-2 CO:R:C:V 555701 GRV

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.60

Kenneth G. Weigel, Esq.
Webster & Sheffield
2000 Pennsylvania, N.W., Suite 7400
Washington, D.C. 20006

RE: Applicability of partial duty exemption under HTSUS subhead- ing 9802.00.60 to steel plates. Rolling steel slabs into plates and variously cutting, heat treating and/or welding the returned plates into use-specific sizes and test materials constitute "further processing."084776;037347; C.S.D. 89-27(10);C.S.D.84-49;C.S.D.90-32(6);T.D. 66-181(1); 555103;085222

Dear Mr. Weigel:

This is in response to your letters of July 26, and August 9, 1990, requesting a ruling on the applicability of subheading 9802.00.60, Harmonized Tariff Schedule of the United States (HTSUS), to 4 grades of steel plates to be imported from Japan following processing.

FACTS:

U.S.-manufactured steel slabs will be exported to Japan for processing into 4 grades of steel plates. In Japan, the steel slabs will be hot-rolled by the continuous, on-line cooling (CLC) process into steel plates. When returned to the U.S., the steel plates will be subjected to one of two processes. Some plates will be cut (the thinner plates will be cold sheared and the thicker plates will be thermal cut using oxyfuel torches) into various, use-specific sizes, and the remainder will be sectioned (cut) and subjected to some machining (e.g., turning, threading, milling, etc.) and welding operations to form test materials for various mechanical and ballistic tests. A small number of plates will undergo heat treatments.

You submit that the steel plates to be imported are eligible for the partial duty exemption under HTSUS subheading 9802.00.60, based on applicable tariff provisions and certain of our holdings in previous rulings. You state that the steel plates are "articles of metal," as defined in U.S. Note 3(d) of subchapter II, chapter 98. (You also have indicated that the steel plates will be classified in chapter 72 (under either heading 7208 or 7211) when imported). You assert that the CLC processes performed in Japan on the slabs to manufacture the plates constitute further processing, citing Headquarters Ruling Letters (HRLs) 084776 (September 21, 1989) (holding that the processing of steel slabs into steel plates constitutes "further processing" within the ambit of the statute) and 037347 (July 14, 1975) (holding that the flattening and cutting to either specific or standard warehouse lengths constitutes further processing for purposes of this tariff provision). Lastly, you assert that the further cutting and welding or heat treatment operations performed on the plates when they are returned to the U.S. constitute "further processing," citing C.S.D. 84-49, 18 Cust.Bull. 957 (1983) (stating that wine cans undergoing a cutting operation were entitled to tariff treatment under the provision under consideration), HRL 554889 (October 24, 1988) (abstracted as C.S.D. 89-27(10), and holding that the cutting, bending, rolling, punching and/or shaping of stainless steel sheet constitutes further processing). You also reference HRL 555356 (abstracted as C.S.D. 90-32(6)) and T.D. 66-191(1), 101 Treas.Dec. 518 (1966) (both dealing with cutting operations).

ISSUE:

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

LAW AND 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 subjected 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, U.S. 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 the documentary requirements of section 10.9, Customs Regulations (19 CFR 10.9), are met.

In C.S.D. 84-49, 18 Cust.Bull. 957 (1983) we stated that:

[f]or purposes of item 806.30, TSUS [the predecessor tariff provision to HTSUS subheading 9802.00.60], the term 'further processing' has reference to processing that changes the shape of the metal or imparts new and different characteris- tics 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.

We have also stated that rolling operations which change the shape of the metal constitute "further processing" for purposes of HTSUS subheading 9802.00.60. C.S.D. 90-32(6), 24 Cust.Bull. ___ (1989) (dealing with printing press plates) and HRL 084776 (September 21, 1989) (processing of steel slabs into steel plates constitutes "further processing" within the ambit of the statute). Further, we have held that heat treatments which impart new and different characteristics which become an integral part of the metal itself and which did not exist in the metal before processing constitute "further processing" for purposes of this tariff provision. HRL 555103 (February 2, 1989) (dealing with stainless steel bars and wire rod). However, we have consistently held that mere assembly operations, such as the welding together of finished parts, do not constitute "further processing" for purposes of the statute. HRL 085222 (November 17, 1989) (dealing with bumper hitch plates).

In this case, the steel slabs are eligible articles of metal for purposes of HTSUS subheading 9802.00.60. Also, the foreign hot-rolling of the exported steel slabs into steel plates and, taken as a whole, the domestic manufacturing operations performed on the steel plates are sufficient to meet the dual further processing requirements the statute imposes on U.S. articles of metal. Accordingly, the steel plates will be eligible for the partial duty exemption under this tariff provision when returned to the U.S.
HOLDING:

On the basis of the information submitted, the steel plates to be imported constitute articles of metal for purposes of HTSUS subheading 9802.00.60, and are subjected to sufficient "further processing" operations both abroad and on return to the U.S. to be eligible for the partial duty exemption available under this statute, upon compliance with the documentary requirements of 19 CFR 10.9.

Sincerely,


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