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HQ 557525




March 12, 1994

CLA-2 CO:R:C:S 557525 WAS

CATEGORY: CLASSIFICATION

TARIFF NO: 9802.00.50, 9802.00.60, 9802.00.80

Mr. Rudy Magdangal
Engelhard Corporation
700 Blair Road
Carteret, N.J. 07008

RE: Reconsideration of NYRL 888508; eligibility of metal wire cloth from the United Kingdom for a partial duty exemption

Dear Mr. Magdangal:

This is in response to your letter dated August 3, 1993, requesting clarification of New York Ruling Letter (NYRL) 888508 dated July 26, 1993, concerning the eligibility of wire cloth made of a platinum and rhodium alloy for a partial duty exemption under subheading 9802.00.60, Harmonized Tariff Schedule of the United States (HTSUS). Pursuant to section 625, Tariff Act of 1930 (19 U.S.C. 1625), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act, Pub. L. No. 103-182, 107 Stat. 2057, 2186 (1993) (hereinafter section 625), notice of the proposed revocation of NYRL 888508 was published February 9, 1994, in the Customs Bulletin, Volume 28, Number 6.

FACTS:

The subject article is wire cloth made of platinum and rhodium alloy wire produced in the U.S. which is sent to the United Kingdom for a weaving operation. Upon return, to the U.S., the wire cloth will be cut, welded, and made into an activated catalyst which will be treated with a platinum-containing salt and made into multi-layer units.

In NYRL 888508, Customs held that the applicable tariff classification of the wire cloth was under subheading 7115.90.50, HTSUS, and eligible for the partial duty exemption under subheading 9802.00.60, HTSUS. However, you have since been advised by Customs in New York that subheading 9802.00.60, HTSUS, is inapplicable to articles of precious metal. You ask if the returned cloth would be entitled to a partial duty exemption under either subheading 9802.00.50 or 9802.00.80, HTSUS.

ISSUE:

Whether the wire cloth described above qualifies for the partial duty exemption available under subheading 9802.00.50, 9802.00.60, or 9802.00.80, HTSUS, when returned to the U.S.

LAW AND ANALYSIS:

Subheading 9802.00.50, HTSUS, provides a partial duty exemption for articles returned to the U.S. after having been exported to be advanced in value or improved in condition by means of repairs or alterations. Such articles are dutiable only upon the value of the foreign repairs or alterations, provided the documentary requirements of section 10.8, Customs Regulations (19 CFR 10.8), are satisfied. However, entitlement to this tariff treatment is precluded in circumstances where the operations performed abroad destroy the identity of the articles or create new or commercially different articles. See A.F. Burstrom v. United States, 44 CCPA 27, C.A.D. 631 (1956); Guardian Industries Corp. v. United States, 3 CIT 9 (1982). Tariff treatment under subheading 9802.00.50, HTSUS, is also precluded where the exported articles are incomplete for their intended use prior to the foreign processing. Guardian; Dolliff & Company, Inc. v. United States, 81 Cust. Ct. 1, C.D. 82, 599 F.2d 1015, 119 (1979).

In applying the above criteria to this case, we conclude that the exported component - wire - is not a "completed article" since it is clearly unsuitable for, and, in fact, incapable of its intended use in the United States as various types of multi-layer units. In fact, upon return to the U.S., the wire cloth will be cut, welded, and made into an activated catalyst. Accordingly, the wire cloth is not eligible for the partial duty exemption under subheading 9802.00.50, HTSUS, when returned to the U.S.

Regarding subheading 9802.00.60, HTSUS, this tariff provision 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.

Pursuant to U.S. note 3(d) of subchapter II, Chapter 98, the term "metal" covers:

(1) the base metals enumerated in additional U.S. note 1 to section XV; (2) arsenic, barium boron, calcium, mercury, selenium, silicon, strontium, tellurium, thorium, uranium and the rare-earth elements; and (3) alloys of any of the foregoing.

Based on the foregoing definition of metals, it is clear that precious metal or metal clad with precious metals was not intended to be included in this subheading. Therefore, the metal wire cloth in this case which is classified under a provision (subheading 7115.90.50, HTSUS) which provides for "other articles of precious metal or of metal clad with precious" is not eligible for the partial duty exemption under subheading 9802.00.60, HTSUS.

Finally, we will address the applicability of subheading 9802.00.80, HTSUS. Subheading 9802.00.80, HTSUS, provides a partial duty exemption for:

[a]rticles assembled abroad in whole or in part of fabricated components, the product of the United States, which (a) were exported in condition ready for assembly without further fabrication, (b) have not lost their physical identity in such articles by change in form, shape or otherwise, and (c) have not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process such as cleaning, lubricating and painting.

All three requirements of subheading 9802.00.80, HTSUS, must be satisfied before a component may receive a duty allowance. An article entered under subheading 9802.00.80, HTSUS, is subject to duty upon the full value of the imported assembled article less the cost or value of the U.S. components, upon compliance with the documentary requirements of section 10.24, Customs Regulations (19 CFR 10.24).

Section 10.16(a), Customs Regulations (19 CFR 10.16(a)) provides, in part, that:

The assembly operations performed abroad may consist of any method used to join or fit together solid components, such as welding, soldering, riveting, force fitting, gluing, laminating, sewing, or the use of fasteners, and may be preceded, accompanied, or followed by operations incidental to the assembly as illustrated in paragraph (b) of this section.

Pursuant to section 10.16(a), Customs Regulations (19 CFR 10.16(a)), Example three provides that:

The manufacture abroad of cloth on a loom using thread or yarn exported from the United States on spools, cops, or pirns is not considered an assembly but a weaving operation, and the thread or yarn does not qualify for the exemption.

Consistent with the above-cited example in the regulations, we are of the opinion that the process of weaving U.S.-origin metal wire into cloth in the United Kingdom is not considered a proper assembly operation under subheading 9802.00.80, HTSUS. Therefore, the U.S.-origin metal wire which is used in the production of metal cloth in the United Kingdom does not qualify for the partial duty exemption under subheading 9802.00.80, HTSUS.

HOLDING:

Based on our review of the facts involved in NYRL 888508, we are of the opinion that as the metal wire exported to the United Kingdom consists of precious metal, it is precluded from eligibility for the partial duty exemption available under subheading 9802.00.60, HTSUS. In addition, the wire cloth is not eligible for the partial duty exemption available under subheading 9802.00.50, HTSUS, when returned to the U.S., since the article is not exported in condition complete for its intended purpose. Finally, the operation of weaving U.S.-origin metal wire into cloth in the United Kingdom is not considered a proper assembly operation, and therefore, no allowance in duty may be made for the cost or value of the U.S.-origin components under subheading 9802.00.80, HTSUS. Therefore, the returned wire cloth will be dutiable on its full value.

NYRL 888508 is modified accordingly.

In accordance with section 625, this ruling will become effective 60 days after its publication in the Customs Bulletin. Publication of rulings or decisions pursuant to section 623 does not constitute a change of practice or position in accordance with section 177.10(c)(1), Customs Regulations (19 CFR

Sincerely,

John Durant, Director
Commercial Rulings Division

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