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HQ 555914


July 25, 1991

CLA-2 CO:R:C:S 555914 LS

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.60

Ms. Patty Iacono
Gladish & Associates
215 Long Beach Boulevard, #511
Long Beach, California 90802-3100

RE: Applicability of duty exemption under subheading 9802.00.60, HTSUS, to aluminum can ends; stamping; assembling; C.S.D. 84-49; 555037; 555377

Dear Ms. Iacono:

This is in response to your letter of February 20, 1991, on behalf of Nissho Iwai American Corp. ("Nissho"), requesting a ruling concerning the applicability of subheading 9802.00.60, Harmonized Tariff Schedule of the United States (HTSUS), to aluminum beverage can ends imported from Saudi Arabia.

FACTS:

The following facts are based upon your letter dated January 29, 1991, which was forwarded to us through our Customs office in New York, and a telephone conversation between yourself and a member of my staff.

Nissho plans to export U.S.-manufactured aluminum sheet in coil form to a manufacturer in Saudi Arabia. In Saudi Arabia, the sheet will undergo a stamping operation whereby shapes are cut to form can ends. The remaining scrap metal is retained in Saudi Arabia. The can ends, i.e., the bottoms and tops of beverage or aerosol aluminum containers, will then be returned to Nissho in the U.S. where they will be processed into complete cans filled with designated contents. In a letter dated June 5, 1991 and in several telephone calls, we requested further information as to this processing performed in the U.S.

Since we have not received a response to our June 5, 1991, letter within a 30 day period, we cannot definitively determine whether the U.S. operations satisfy the domestic "further processing" requirement of subheading 9802.00.60, HTSUS. Since we found in C.S.D. 84-49, 18 Cust. Bull. 957 (1983), that can ends were joined to can bodies by means of a mere assembly operation such as seaming, we will assume, for purposes of this ruling, that this same operation is performed by Nissho on the can ends when they are returned to the U.S., and that the can ends are not subjected to any other process in the U.S.

You also request that we address the question of the value upon which the duty will be assessed.

ISSUE:

Whether the can ends will be eligible for the partial duty exemption under subheading 9802.00.60, HTSUS, when returned to the U.S.

LAW AND ANALYSIS:

Subheading 9802.00.60, HTSUS, 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 articles of metal--one foreign, and when returned, one domestic. Metal articles satisfying these statutory requirements may be classified under subheading 9802.00.60, HTSUS, with duty payable 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). U.S. Note 3(a) to Subchapter II, Chapter 98, HTSUS, provides that the value of the foreign processing is based upon the cost to the importer of such processing, as set out in the invoice and entry papers.

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

[f]or purposes of item 806.30, TSUS [the predecessor tariff provision to subheading 9802.00.60, HTSUS], 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.

The operation performed in Saudi Arabia, i.e., stamping can ends from aluminum sheet in coil form, constitutes sufficient "further processing" so as to satisfy the foreign processing requirement of subheading 9802.00.60, HTSUS. In Headquarters Ruling Letter (HRL) 555037 dated June 24, 1988, we held that the process of stamping steel coils, sheets, bars and wires constitutes "further processing" within the meaning of item 806.30, TSUS. Stamping can ends out of aluminum sheet clearly impacts upon the aluminum by changing its shape.

In C.S.D. 84-49, we held that aluminum beverage can bodies which are manufactured in Mexico from aluminum produced in the U.S., and then imported into the U.S. for assembly with easy- opening can ends, were not eligible for the partial duty exemption under item 806.30, TSUS. The manufacture of the can bodies in Mexico was found to meet the foreign processing requirement of this tariff provision. However, because the can bodies were flanged at their rims during the manufacturing process in Mexico and, upon return to the U.S., were seamed with the can ends, we found that the mere assembly, by seaming, of the two finished parts did not constitute a "further processing" so as to satisfy the domestic processing requirement of subheading 9802.00.60, HTSUS.

If the can ends are merely assembled with the can bodies by an operation such as seaming, and are not subjected to any other operation which changes the shape of the metal or imparts new and different characteristics which become an integral part of the metal itself, the domestic processing requirement of subheading 9802.00.60, HTSUS, has not been satisfied. See C.S.D. 84-49; HRL 555377 dated October 16, 1989 (brazing, a type of welding oper- ation constituting an assembly, is not considered to be "further processing," within the meaning of subheading 9802.00.60, HTSUS). Therefore, the can ends will not be eligible for the partial duty exemption under subheading 9802.00.60. HTSUS.

We are not aware of any other provision under which the can ends would be entitled to a duty exemption upon their return to the U.S. Assuming the can ends are not eligible for the partial duty exemption under subheading 9802.00.60, HTSUS, they will be subject to duty upon their full appraised value when imported into the U.S. That value is determined pursuant to 19 U.S.C. 1401a and sections 152.100-152.108, Customs Regulations (19 CFR 152.100-152.108).

HOLDING:

The operation performed in Saudi Arabia, i.e., stamping can ends from aluminum sheet in coil form, constitutes sufficient "further processing" so as to satisfy the foreign processing requirement of subheading 9802.00.60, HTSUS. If, however, the can ends, upon importation into the U.S., are merely assembled with the can bodies by an operation such as seaming, and are not subjected to any other operation which changes the shape of the metal or imparts new and different characteristics to the metal, the domestic "further processing" requirement under subheading 9802.00.60, HTSUS, will not be satisfied. Based upon the latter assumption, the can ends will not be eligible for the partial duty exemption under subheading 9802.00.60, HTSUS.

Sincerely,

John Durant, Director
Commercial Rulings Division

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