Applicability of HTSUSA subheading 9802.00.60 to aluminum die castings from Mexico; C.S.D. 84-49; vibrating, grinding; HRL 555432

HQ 556200 December 24, 1991 CLA-2 CO:R:C:S 556200 SER CATEGORY: Classification TARIFF NO.: 9802.00.60 Mr. Richard G. Seley Rudolph Miles & Sons, Inc. 4950 Gateway East P.O. Box 144 El Paso, TX 79942 RE: Applicability of HTSUSA subheading 9802.00.60 to aluminum die castings from Mexico; C.S.D. 84-49; vibrating, grinding; HRL 555432 Dear Mr. Seley: This is in reference to your letters of July 23, 1990, and August 16, 1991, on behalf of Madison Precision Products, concerning the applicability of subheading 9802.00.60, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), to aluminum die castings from Mexico. FACTS: U.S.-origin rough aluminum die castings will be sent to Mexico where they first will be vibrated with a ceramic medium to remove flash and burrs, after which they will be flushed with water. This is followed by hand filing to remove larger parting lines, flash, and burrs not removed by the vibrating operations. Next, using a high speed air grinder, any remaining aluminum that is covering pre-tapped holes or areas that the ceramic medium or file could not reach is removed. The die castings then undergo a final washing and inspection. These operations to be performed in Mexico are estimated to take about 2.4 minutes to complete and to cost approximately 20 cents per casting. Upon return to the U.S., the bottom, frontal, and interior surface of the castings are faced off. The castings are then bored to allow space for the shaft bearing, holes are tapped, a bearing sleeve is inserted and reamed. The castings then undergo a final operation of washing and inspection. n -2- ISSUE: Whether the aluminum die castings will be eligible for the partial duty exemption available under subheading 9802.00.60, HTSUSA, when imported into the U.S. LAW AND ANALYSIS: Subheading 9802.00.60, HTSUSA, 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 subject 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 of 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. 84-49, 18 Cust.Bull. 957 (1983) we stated that: [f]or purposes of item 806.30, TSUS [precursor to 9802.00.60 HTSUSA], 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. It is our position that the operations in Mexico are insufficient to satisfy the foreign "further processing" requirement. In Intelex Systems, Inc. v. U.S., 59 CCPA 138, C.A.D. 1055, 460 F.2d 1083 (1972), the court discussed the type of processing that would entail "further processing". In the Intelex case, copper wire and insulating paper were processed into lead-covered telephone cable and imported into the U.S. onn-3- cable rolls. The cable was then merely strung on poles after wire stripping and splicing operations. The court considered the words "process" and "processing" in the context of what constitutes "further processing" within the meaning of paragraph 1615(g)(2)(B), Tariff Act of 1930, as amended (a precursor provision of HTSUSA subheading 9802.00.60), and stated that: ...its meaning [processing] must be controlled by the particular context in which it is used here and the legislative intent. (Citation omitted). When we look to the context of [paragraph] 1615(g)(2), we do not think that Congress had in mind that any and all kinds of 'processing' ...would suffice to bring the article within the purview of that paragraph. Instead, we believe that the words 'further processing' relate to the kind of processing to which the article had been subjected before--namely, 'a process of manufacture,' as expressed in [paragraph] 1615(g)(2)(A). We continue of the view that Congress used the expression 'subjected to a process of manufacture' as synonymous with 'processing' (citation omitted), and that the 'further processing' referred to in [paragraph] 1615(g)(2) is a further manufacturing process. The court stated that it did "... not think that processes to which an already completed article were subjected, incident to using it for the purpose intended, were necessarily part and parcel of manufacturing processes performed on that article." (Court's emphasis). Therefore, finding no evidence that the operations performed in the U.S. on the imported telephone cable constituted a process of manufacture in any common or commercial sense, the court determined that the partial duty exemption was inapplicable to the imported cable. In the instant case, the aluminum die castings are essentially completed articles. The operations of vibrating, hand filing, and grinding do not constitute processes of manufacture in a common or commercial sense. In Headquarters Ruling Letter (HRL) 555432 dated July 26, 1990, we held that smoothing out the weld surface on the inside of flange and pipe, primarily by grinding, was a minor finishing operation which is incidental to the assembly of the flange and pipe. As this operation did not impart new and different characteristics which become an integral part of the metal, it did not constitute a "further processing". See, also HRL 086289 dated March 13, 1990 (grinding down bracket edges which does not impart new and different characteristics which becomes an integral part of the metal is not "further processing"). Similarly, the foreign operations at issue here do not impart new and different characteristics which become an integral part of the aluminum die castings and, therefore, these operations do not constitute "further processing."n -4- HOLDING: On the basis of the information submitted, it is our opinion that the operations performed abroad do not satisfy the requisite foreign "further processing" requirement under subheading 9802.00.60, HTSUSA. Therefore, the aluminum die castings will not be entitled to classification under this tariff provision, and will be dutiable on their full value when returned to the U.S. Sincerely, John Durant, Director