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HQ 559435




July 12, 1996

CLA-2 RR:TC:SM 559435 AT

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.60,

Stephen L. Snitchler, President
Trans-Pacific Machinery, Inc.
295 Madison Avenue
New York, New York 10017

RE: Applicability of partial duty exemption under HTSUS subheading 9802.00.60 to aluminum tubes manufactured in China of U.S. origin aluminum and returned to the U.S. for further processing; "further processing".

Dear Mr. Snitchler:

This is in response to your letter dated August 21, 1995, requesting a ruling concerning the applicability of the partial duty exemption under subheading 9802.00.60, HTSUS, to aluminum tubes imported into the U.S. A sample aluminum tube as well as photographs depicting the unassembled and assembled irrigation system were submitted for our review. We regret the delay in responding.

FACTS:

According to your submission, Trans-Pacific Machinery, Inc. (Trans-Pacific) intends to import into the U.S. aluminum tubes manufactured in China to be further processed in the U.S. You state that Trans-Pacific will buy U.S.-origin P1020 aluminum, and ship it to China where it will be extruded into aluminum tubes. The tubes will be exported back into the U.S. in thirty foot lengths, and then assembled into irrigation systems. The U.S. assembly operation consists of: 1. "Swage" (expand) the tube from 3" to 3.125" on one end. The swaging is accomplished by forcing a ferrous cone into the female end of the pipe and then extracting the cone;

2. Polish the male end and bolt on a steel band with a latch which latches to the next female end (the female end has a rubber pressure-energized seal and a 3/4" NPT thread facing up);

3. Press in the steel coupler with steel cement on the female end, or alternatively, weld on an aluminum coupler; and

4. Screw in the iron pipe to the top of the coupler and screw in the sprinkler head.

You contend that the aluminum tubes manufactured in China from U.S.-origin aluminum which are returned to the U.S. to be used in the assembly of irrigation systems are eligible for the partial duty exemption under subheading 9802.00.60, HTSUS.

ISSUE:

Whether the aluminum tubes manufactured in China from U.S. origin aluminum which are returned to the U.S. to be used in the assembly of irrigation systems, in the manner described above, qualify for a partial duty exemption available under subheading 9802.00.60, HTSUS.

LAW AND ANALYSIS:

Subheading 9802.00.60, HTSUS, provides a partial duty exemption for:

[any} 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 the documentary requirements of section 10.9, Customs Regulations (19 CFR 10.9), are satisfied.

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; (3) and alloys of any of the foregoing.

As the aluminum tubes are extruded from aluminum, a base metal enumerated in additional U.S. Note 1, Section XV, HTSUS, the aluminum tubes are eligible articles of metal for purposes of subheading 9802.00.60, HTSUS. Moreover, as the aluminum is of U.S. origin, it satisfies the initial requirement under this tariff provision that the metal be manufactured in the U.S. or subjected to a process of manufacture in the U.S.

The extruding operation performed in China to manufacture the aluminum tubes clearly constitutes sufficient "further processing" so as to satisfy the foreign "further processing" requirement of subheading 9802.00.60, HTSUS. See, HQ 557992 dated January 23, 1996 (holding that Trex material, an alloy of zirconium, subjected to cold pilgering, annealing, etching, straightening, blasting, polishing and cutting to length to manufacture zirconium tubes in Germany constituted a "further processing" operation). See, HQ 556123 dated July 30, 1991 (holding that steel plates subjected to cutting, and forming operations are considered "further processing" under subheading 9802.00.60, HTSUS). In this case, as in the cited rulings, the processing operations performed to the aluminum impart new and different characteristics to the aluminum (it has changed in shape and form) which did not exist in the aluminum prior to the processing.

It next must be determined whether the domestic operations performed on the aluminum tubes in the U.S. satisfy the domestic "further processing" requirement of subheading 9802.00.60, HTSUS. You assert that the operations performed in the U.S. by Trans-Pacific during the assembly of the irrigation systems constitute sufficient "further processing" so as to satisfy the domestic "further processing" requirement of subheading 9802.00.60, HTSUS.

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 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 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. (Emphasis added).

Consistent with C.S.D. 84-89, in this case, we find that the processes performed on the aluminum tubes during the assembly operation, especially the swaging operation, constitute a process of manufacture in satisfaction of the "further processing" requirement under subheading 9802.00.60. As a result of the swaging operation, the diameter of the tube increases from 2.950 inches to 3.075 inches and the swaged aluminum tubes now can be coupled together and used to make irrigation systems. Also, the domestic processing performed on the tubes constitutes more than a mere assembly of finished parts--aluminum tubes--since the diameter of the tubes must be increased prior to the assembly operation by swaging the tubes (accomplished by forcing a ferrous cone into the female end of the pipe and then extracting the cone) so they can be coupled together.

Based on the considerations above, we find that the U.S. processing performed on the imported aluminum tubes by Trans-Pacific during the operations involved in assembly of the irrigation systems, in the manner described above, constitutes "further processing" of the imported aluminum tubes. Accordingly, the imported aluminum tubes are eligible for the partial duty exemption under subheading 9802.00.60 when imported into the U.S., assuming compliance with the documentation requirements of 19 CFR 10.9. HOLDING:

Based on our review of the information submitted, we find that the processes performed in China to the U.S. origin aluminum satisfy the foreign "further processing" requirement and the U.S. processing performed on the imported aluminum tubes during the assembly operation of the irrigation systems, as described above, satisfies the domestic "further processing" requirement for purposes of subheading 9802.00.60, HTSUS. Accordingly, the imported aluminum tubes are eligible for the partial duty exemption under subheading 9802.00.60 when imported into the U.S., upon compliance with the documentation requirements of 19 CFR 10.9.

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.

Sincerely,

John Durant, Director

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