Applicability of partial duty exemption under HTSUS subhead- ing 9802.00.60 to golf club heads from Mexico.C.S.D. 84-49; machining;plating;555562;Intelex;reaming;minor operation; 555127;555165;086289

HQ 555751 January 31, 1991 CLA-2 CO:R:C:S 555751 GRV CATEGORY: CLASSIFICATION TARIFF NO.: 9802.00.60 Mr. Richard G. Seley Rudolph Miles & Sons, Inc. Customhouse Brokers 4950 Gateway East P.O. Box 144 El Paso, Texas 79942 RE: Applicability of partial duty exemption under HTSUS subhead- ing 9802.00.60 to golf club heads from Mexico.C.S.D. 84-49; machining;plating;555562;Intelex;reaming;minor operation; 555127;555165;086289 Dear Mr. Seley: This is in response to your letter of September 25, 1990, on behalf of Ben Hogan Co., requesting a ruling on the applicability of subheading 9802.00.60, Harmonized Tariff Schedule of the United States (HTSUS), to golf club heads to be imported from Mexico. Samples of golf club heads representing their condition as exported, returned and finished in the U.S. were submitted for examination. FACTS: U.S.-origin iron forgings will be shipped to Mexico to be processed into golf club heads. In Mexico, the iron forgings will be subjected to multiple machining and plating operations, the hosels (posts) of the club heads will be bored, and the processed golf club heads will be buffed, sonic cleaned, painted and packaged. Upon return to the U.S., the hosels of the golf club heads will be reamed so that the shaft of the golf club can be properly assembled to it. Regarding the reaming operation, you state that the metal removed--varying from .008 to .020 inch--increases the hosel bore diameter to insure the correct fit of the shaft to the club head. You claim that the performance of this operation just prior to the shaft assembly insures a clean surface for optimum adhesion of the shaft to the iron head, which is essential to assure club integrity. ISSUE: Whether the reaming operation performed on the golf club heads when they are returned to the U.S. constitutes a sufficient process of manufacture to qualify as "further processing" within the meaning of HTSUS subheading 9802.00.60. 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 process- ing 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. metal articles: one foreign, and when returned, one domestic. However, not all "processing" to which articles of metal can be subjected are significant enough to qualify as "further processing," within the purview of HTSUS subheading 9802.00.60. Intelex Systems, Inc. v. United States, C.A.D. 1055, 59 CCPA 138, 460 F.2d 1083 (1972), aff'g, C.D. 4093, 65 Cust.Ct. 306, 318 F.Supp. 515 (1970). Metal articles satisfying these statutory requirements may be classified under HTSUS subheading 9802.00.60 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. In C.S.D. 84-49, 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 character- istics 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. In Headquarters Ruling Letter (HRL) 555127 dated October 17, 1988, we considered whether certain golf club heads returned to the U.S. to have a portion of the hosel cut off were eligible for HTSUS subheading 9802.00.60 tariff treatment. Finding that the domestic cutting operation was a necessary further fabrication of the golf clubs, resulting in a change in the shape of the hosel component, we concluded that the returned golf club heads were entitled to classification under HTSUS subheading 9802.00.60. In this case, we do not dispute your assertion that the performance of the reaming operation just prior to the shaft assembly is essential to assure club integrity. However, the fact that an operation may be a necessary step in the production of the final article is not dispositive of whether the operation qualifies as "further processing" for purposes of HTSUS subheading 9802.00.60. See, HRL 555165 dated June 26, 1989 (the returned metal article must be subjected to a "process of manufacture," and merely because it is returned in an incomplete state does not mean that any kind of processing in the U.S. that advances it toward completion will serve to satisfy the domestic "further processing" requirement). We are not persuaded that the domestic reaming operation performed here constitutes "further processing" within the meaning of HTSUS subheading 9802.00.60. In our opinion, the reaming operation is minor--removing a maximum of only .020 inch from the hosel bore, which does not change the shape of the metal or impart new and different characteristics to the golf club head which did not exist in the metal before the domestic operation. See, HRL 086289 dated March 13, 1990 (minimal domestic operations of grinding rough edges smooth and deburring steel arms for power transmission towers did not constitute "further processing" under HTSUS subheading 9802.00.60). Further, we note that the two samples submitted, representing the golf club heads as returned and processed in the U.S., are visually indistinguishable from each other, and do not evidence any change in shape of the golf club heads. HOLDING: On the basis of the information and samples submitted, we conclude that the reaming operation performed on the golf club heads when they are returned to the U.S. does not constitute "further processing" within the meaning of HTSUS subheading 9802.00.60. Therefore, the golf club heads will be fully dutiable when imported into the U.S. Sincerely, John Durant, Director Commercial Rulings Division