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HQ 556181


January 7, 1992

CLA-2 CO:R:C:S 556181 DSN

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.60

Mr. Charles Owen Verrill, Jr.
Ms. Eileen P. Bradner
Wiley, Rein & Fielding
1776 K Street, N.W.
Washington, D.C. 20006

RE: Applicability of partial duty exemption to galvanized round wire from Canada; further processing; 555915; 555620; 554965; 543665; C.S.D. 84-89

Dear Mr. Verrill:

This is in response to your letter of August 7, 1991, on behalf of Georgetown Wire Company, Inc., requesting a ruling on the applicability of subheading 9802.00.60, Harmonized Tariff Schedule of the United States (HTSUS), to certain wire building material products imported from Canada. Samples and a video were submitted for examination.

FACTS:

Your client intends to purchase round galvanized wire from Canadian producers. This galvanized wire is produced from carbon steel wire rod of U.S.-origin. In Canada, the U.S. wire rod is chemically cleaned, descaled, coated, drawn through dies, annealed, and galvanized to produce round wire which is suitable for manufacture into welded wire mesh or woven wire netting to be used in the construction industry.

The galvanized wire is imported into the U.S. in coils. Welded wire mesh consists of welded wire, carrier sheet of absorbent paper and backing sheet of waterproof or water- resistant paper. In the U.S., the galvanized wire coils are placed on stands behind a fabricating machine. The carrier paper, which is received on rolls, is printed and the printed paper is then slotted and cut into sheets. The sheets are placed on the fabricating machine and wires, referred to as "linewires," are fed lengthwise into the machine. The carrier paper is then pulled in over the linewires. As the paper is being pulled forward, more wire, referred to as "crosswire," is fed in across the top of the carrier paper at right angles to the linewires. The crosswire is positioned so that the linewires cross at the point where the carrier sheets are slotted. Welding heads make contact at this point and the wires are welded, sandwiching the carrier sheet between the crosswire and linewires. When the welding heads are released, another crosswire is fed in and the welding process is repeated. When the product reaches a certain length, it is sheared off and removed from the machine.

The sheets are placed on a laminator and glue is applied to the carrier paper sandwiched in the welded wire fabric. A waterproof paper sheet is then glued onto the fabricated sheet. The sheets are then palletized and prepared for shipment.

You state that woven wire netting is manufactured in two distinct types referred to as self-furred woven wire (SF) and self-furred paper-backed woven wire (SFB). SF wire is in coils and placed on stands. The wire is fed off the stands into the machine. Wires are first formed and then fed into the twister gears. The twister gears rotate, which twists the wires together. As a result of this process, the individual wires become an assembled wire fabric which is then lifted from the twister gears and fed into the furring stage. The netting is bent (furred) so that it can stand away from the wall on a construction site. The finished product is then rolled, banded, and palletized for shipment.

SFB wire is galvanized wire with waterproof paper attached. The processing is the same as for the SF, except that the SFB requires the addition of waterproof building paper to the product. A carrier sheet is printed and perforated. Linewires are fed which sandwiches the carrier paper between them and the woven wire mesh. The linewires are attached to the woven mesh by twisting them through the perforations in the carrier sheet. Glue is applied to the waterproof paper which is attached to the carrier sheet. The finished product is rolled up, banded and palletized.

ISSUE:

Whether the galvanized round wire will be entitled to the partial duty exemption under subheading 9802.00.60, HTSUS, when imported to the U.S. from Canada.

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 this tariff provision with duty 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).

In C.S.D. 84-89, 18 Cust. Bull. 957 (1983) we stated that:

[f]or purposes of item 806.30, TSUS, 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 precursor provision to subheading 9802.00.60, HTSUS, was item 806.30, Tariff Schedules of the United States (TSUS)).

In this case, the galvanized round wire from Canada is an eligible article of metal for purposes of subheading 9802.00.60, HTSUS. The drawing and galvanizing processes performed in Canada are considered "further processing" operations, as they impart new and different characteristics which become an integral part of the wire. See, Headquarters Ruling Letter (HRL) 555915 of June 17, 1991, which held that galvanizing steel structural components is an operation sufficient to comply with the "further processing" requirement of subheading 9802.00.60, HTSUS.

We are of the opinion that the domestic operations to be performed on the returned wire also constitute "further processing" within the meaning of the statute. The cutting, bending, shaping, and twisting operations are necessary further fabrication processes that finish the wire products by imparting new and different characteristics to the metal. See Headquarters Ruling Letters (HRL's) 555620 of August 3, 1990; 554965 of September 6, 1989; 543665 of January 9, 1986. However, please note that the welding operation, if performed alone, would not qualify as "further processing" as it is an assembly operation. See C.S.D. 84-89.

HOLDING:

On the basis of the information submitted, it is our opinion that the processes performed abroad and upon return to the U.S. constitute "further processing" as that term is used in subheading 9802.00.60, HTSUS. Therefore, the imported wire will be entitled to entry under this tariff provision with duty only on the cost or value of such processing performed outside the U.S., upon compliance with the documentary requirements of 19 CFR 10.9.

Sincerely,

John Durant, Director
Commercial Rulings Division

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