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HQ 228509

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April 9, 2002

CON-9-04-RR:CR:DR 228509 DR

CATEGORY: DRAWBACK

Mr. Bernard M. Vas, Vice President
Nippon Express USA, Inc.
San Francisco Air Cargo
P.O. Box 2487
South San Francisco, CA 94083-2487

RE: Ruling request on behalf of Tomen Canada, Inc. concerning applicability of T.I.B. entry for Stainless Steel Coils to be processed

Dear Mr. Vas:

This is in response to your letter, on behalf of Tomen Canada, Inc. of June 17, 1999, concerning the importation of stainless steel sheets in coils from Japan into the United States for "processing," and subsequent exportation to Canada.

FACTS:

Tomen Canada, Inc. ("Tomen"), imports cold-rolled stainless steel sheets from Japan in coils (.020" x 23.2", and .020" x 23.4") to be slit into 1.200" and 2.310" wide strips. These strips, which have been altered only in size, are then exported to Canada to be processed and assembled into automotive window trim or channel. The International Trade Administration (ITA) has determined that stainless steel sheets in coils from Japan are being sold in the United States at less than fair value and are subject to antidumping duties. See 64 FR 108 (January 4, 1999); 64 FR 30574 (Jun. 8, 1999).

ISSUES:

1. Whether the stainless steel sheets in coils are classifiable under subheading 7219.34.0035, Harmonized Tariff Schedule United States (HTSUS) 2. Whether slitting the steel is an allowable process under subheading 9813.00.05, HTSUS. 3. Whether slitting leaves the steel in the same condition as imported. 1.
LAW AND ANALYSIS:

1. CLASSIFICATION

The General Rules of Interpretation (GRI's) to the HTSUS govern the classification of goods in the tariff schedule. GRI 1 states, in pertinent part, that "for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes..."

Furthermore, the Harmonized Commodity Description and Coding System Explanatory Notes ("ENs") constitute the Customs Cooperation Council's official interpretation of the Harmonized System. While not legally binding, and therefore not dispositive, the ENs provide a commentary on the scope of each heading of the Harmonized System, and are generally indicative of the proper interpretation of these headings. See T.D. 89-90, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).

Chapter 72, Note 1(k), HTSUS, defines a "flat-rolled product" as a rolled product of solid rectangular cross section, in coils of successively superimposed layers. Chapter 72, Note 1(e), HTSUS, defines "stainless steel" as a chemical composition with percentages of alloying elements by weight of carbon content "0.12" and chromium content "18.00." The product is therefore classifiable under the subheading 7220.20.10, HTSUS, as flat-rolled products of stainless steel, not further worked than cold-rolled (cold-reduced), of a width of 300 mm or more but less than 600 mm. The Note 1(k) definition referenced above also includes products in straight lengths, which, if of a thickness less than 4.75 mm, are of a width measuring at least 10 times the thickness. Whether recoiled prior to exportation or exported in straight lengths, the steel strip (slit from the imported stainless steel coil), as described, remains within the Note 1(k) definition. However, the exported steel strips would be classifiable under subheading 7220.20.70, HTSUS, as flat-rolled products of stainless steel, not further worked than cold-rolled (cold-reduced), of a width of less than 300 mm, of a thickness exceeding 0.25 mm but not exceeding 1.25 mm.

2. THE PROCESS OF SLITTING METAL SHEETS UNDER SUBHEADING 9813.00.05, HTSUS

Subheading 9813.00.05, HTSUS, provides for the temporary duty-free entry of "[a]rticles to be repaired, altered, or processed (including processes which result in articles manufactured or produced in the United States." Pursuant to U.S. Note 1(a) of Subchapter XIII of Chapter 98, HTSUS, which contains subheading 9813.00.05:

The articles described in the provisions of this subchapter, when not imported for sale or for sale on approval, may be admitted into the United States without the payment of duty, under bond for their exportation within one year from the date of importation, which period, in the discretion of the Secretary of the Treasury, may be extended, upon application, for one or more further periods which, when added to the initial 1 year, shall not exceed a total of 3 years.

In Headquarters Ruling 224283 (March 17, 1993), it was held that the trimming of steel coils to reduce their width constitutes a processing within the meaning of subheading 9813.00.05, HTSUS. In this case, it appears that the processing of the steel involves only slitting, which does not alter the characteristics of the imported steel or otherwise rise to the level of a manufacture. Therefore, slitting here would constitute a process within the meaning of 9813.00.05, HTSUS.

3. WHETHER THE SLITTING LEAVES THE STEEL IN THE SAME CONDITION AS IMPORTED

After undergoing the slitting operation, the steel strips would be exported to Canada to be processed and assembled. According to your letter dated September 8, 2000, the steel is not further processed until Tomen has exported the steel, and that further processing entails roll forming, gluing the strip with PVC, and bending it into shape. The slitting, based upon your description, would leave the steel in the same condition for purposes of 19 U.S.C. 3333(a)(2) and U.S. Note 1(c), Subchapter XIII, Chapter 98, HTSUS. However, you attention is invited to 19 U.S.C. 3333(e), which appears to override the exemptions of subparagraph §3333(a)(2) for antidumping and countervailing duty purposes. We have asked the Department of Commerce for its position on that statute. When we receive that statement of position, we will so inform you.

As for your question regarding cancellation of the TIB, the requirements for satisfying the exemption set forth in subheading 9813.00.05, HTSUS, are set forth in U.S. Notes 2(b) and 3. The importer's records must be adequate to reconcile the imported steel sheets with the exported strips. "Destruction" has been defined by the courts to mean that the articles are no longer articles of commerce. American Gas Accumulator v. U.S., T.D. 43642, 56 Treas. Dec. 368 (October 29, 1929).

The bond requirements are set forth in 19 C.F.R. 10.31. The port director has the authority to determine whether a transaction is to be secured by a continuous bond. See 19 C.F.R. 113.13(d). 3. When the bond is for a temporary importation, the bond limit of liability amount shall be fixed in an amount the district director may den necessary to protect the revenue, bit not less than an amount equal to double the duties which it is estimated would accrue had all the articles covered by the entry been entered under an ordinary consumption entry. Taxes and special duties (for example, internal revenue taxes, antidumping and countervailing duties, etc.) shall be taken into account in all computations.

HOLDINGS:

The following determinations are strictly limited to the facts presented and, notwithstanding our conclusions, note that 19 U.S.C. 3333(e) states that "nothing in [section 3333] or its amendments made by it shall be considered to authorize the refund, waiver, or reduction of countervailing or antidumping duties imposed on an imported good." See also 19 C.F.R. §181.42(a). This appears to override the exemption provided by 19 U.S.C. 3333(a)(1) - (8) with respect to dumping or unlawful subsidies, which are within the purview of the Department of Commerce.

ISSUE 1:

The cold rolled stainless steel sheets in coils are classifiable under the subheading 7220.20.10, HTSUS, as flat-rolled products of stainless steel, not further worked than cold-rolled (cold-reduced), of a width of 300 mm or more but less than 600 mm. After having been slit, the steel strip is classifiable in subheading 7220.20.70, HTSUS, as flat-rolled products of stainless steel, not further worked than cold-rolled (cold-reduced), of a width of less than 300 mm, of a thickness exceeding 0.25 mm but not exceeding 1.25 mm.

ISSUE 2:

The slitting of the imported steel into strips is a permissible operation under subheading 9813.00.05, HTSUS.

ISSUE 3:

The slitting of the steel, absent other processes, leaves the steel in the same condition.

John Durant
Director
Commercial Rulings Division

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See also:

• Tariff No.: 7219.34.00 - Stainless steel, width 600mm+, cold-rolled flat-rolled products, w/thickness of 0.5 mm or more but n/o 1 mm
• Tariff No.: 7220.20.10 - Stainless steel, width 300+ but less th/600mm, cold-rolled flat-rolled products
• Tariff No.: 7220.20.70 - Stainless steel, width less th/300mm, cold-rolled flat-rolled products, w/ thickness of 0.25 mm but n/o 1.25 mm
• Tariff No.: 9813.00.05 - Articles to be repaired, altered or processed (including processes which result in articles manufactured or produced in the United States)