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HQ 556307


November 21, 1991

CLA-2 CO:R:C:S 556307 DSN

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.60

Mr. George Marks
President
Marks Hardware, Inc.
5300 New Horizons Blvd.
Amityville, New York 11701

RE: Applicability of partial duty exemption to door knob shells from Mexico; further processing; 555037; 556080; 555997; 071396

Dear Mr. Marks:

This is in response to your letter of July 23, 1991, to our New York office, requesting a ruling on the applicability of subheading 9802.00.60, Harmonized Tariff Schedule of the United States (HTSUS), to certain door knob shells imported from Mexico.

FACTS:

According to your submission, and a telephone conversation between Mr. San Antonio, purchasing manager of your company, and a member of my staff, brass door knob shells of U.S. origin are exported to Mexico for processing. In Mexico, the shells are placed on a buffing wheel in order to polish the brass. A clear lacquer coating is then applied to the shell to protect its appearance and improve corrosion resistance. Upon importation into the U.S., a piece of metal, referred to as a "bushing," is inserted inside the neck of the shell. In order to secure the "bushing" to the shell, a stamp press is applied to the neck of the shell, creating four small indentations which press upon the "bushing," holding it in place.

ISSUE:

Whether the door knobs shells will be entitled to the partial duty exemption under subheading 9802.00.60, HTSUS 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 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 HTSUS subheading 9802.00.60 was item 806.30, Tariff Schedules of the United States (TSUS).)

In this case, the brass door knobs are eligible articles of metal for purposes of subheading 9802.00.60, HTSUS. However, it is our opinion that the polishing and lacquering operations performed in Mexico are insufficient to comply with the foreign "further processing" requirement. We have previously held that merely polishing a metal article does not constitute "further processing" for purposes of subheading 9802.00.60, HTSUS. See, Headquarter Ruling Letters (HRL's) 556080 of August 27, 1991, and 555037 of June 24, 1988. However, polishing accompanied by another process that imparts new and different characteristics which become an integral part of the metal itself will be acceptable "further processing" under subheading 9802.00.60, HTSUS. In HRL 556080 supra, the polishing operation performed removed approximately 1.5% of the metal from an aluminum disc blank before it was magnetically coated by a process of anodizing or electroplating. We held that the polishing operation coupled with the magnetic coating process constituted "further processing" for purposes of subheading 9802.00.60, HTSUS.

However, we believe that the lacquering process in the present case is distinguishable from the anodizing or electroplating process in HRL 556080. While the latter process changes the metal by imparting magnetic properties which become an integral part of the metal itself, the lacquering process imparts new characteristics (appearance protection and corrosion resistance) which do not become an integral part of the metal itself. Consistent with the above rationale, we held in HRL 071396 of July 19, 1983, that the application of a plastic coating to a metal article did not constitute "further processing." See also HRL 555997 of August 14, 1991 (cleaning and applying a thin infrared coating to germanium optical lenses do not constitute "further processing.")

As the polishing and lacquering operations performed in Mexico do not comply with the foreign "further processing" requirement under subheading 9802.00.60, HTSUS, the door knob shells will not be entitled to the partial duty exemption under this tariff provision when returned to the U.S.

HOLDING:

On the basis of the information provided, it is our opinion that the processes performed abroad do not constitute "further processing" as that term is used in subheading 9802.00.60, HTSUS, and, therefore, the imported door knob shells will not be entitled to entry under this tariff provision.

Sincerely,

John Durant, Director
Commercial Rulings Division

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