Applicability of HTSUSA subheading 9802.00.60 to steel sheeting from Greece; C.S.D. 84-49; HRL 553252, 556080, 554965

HQ 556365 March 2, 1992 CLA-2 CO:R:C:S 556365/556366 SER CATEGORY: Classification TARIFF NO.: 9802.00.60 Mr. Matthew Chang C.Itoh & Co. (America) Inc. 335 Madison Avenue New York, NY 10017 RE: Applicability of HTSUSA subheading 9802.00.60 to steel sheeting from Greece; C.S.D. 84-49; HRL 553252, 556080, 554965 Dear Mr. Chang: This is in reference to your letters of September 27, 1991, requesting a ruling concerning the applicability of subheading 9802.00.60, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), to steel sheets or coils to be imported into the U.S. from Greece. FACTS: U.S.-origin coiled hot-rolled steel sheets, approximately 2.0 mm thick, and in widths varying up to 745 mm, are shipped to Greece, where the steel will be uncoiled, pickled, trimmed, oiled, and descaled. Next, the ends of the sheets will be cut, and the steel will undergo operations such as cold-reduction and annealing before being packaged for exportation. In some instances, the steel will undergo further operations involving oiling, shearing and recoiling before being packaged for exportation. The processed steel will be returned to the U.S. in both sheet and coil form. The width and thickness of the steel will vary, with the thickness ranging from less than 0.361mm up to 1.016mm. The imported steel will then be sold to various U.S. customers who will unpack and fabricate the steel into various items, such as pail cans, ceiling suspensions, lighting fixtures, furniture, shelving, caps, drapery rods, water heaters, metal roof decking, building products, radiator fins, picture frames, steel drums, and battery parts. -2- ISSUE: Whether the steel sheets or coils 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. In this case, the steel sheeting is an eligible article of metal for purposes of subheading 9802.00.60, HTSUSA. In addition, the processing of the steel in Greece would constitute "further processing" under this tariff provision. In Headquarters Ruling Letter (HRL) 553252 dated September 26, 1984, Customs held that processing operations, consistent with those operations performed in Greece-- cold-reduction, annealing and pickling, skim passing, edge trimming, and slitting-- constituted "further processing" for purposes of this tariff provision. In -3- that Ruling, as in this case, the processing operations clearly impart new and different characteristics which become an integral part of the metal itself and which did not exist in the metal before processing. It next must be determined whether the domestic aspect of the "further processing" requirement has been met. In this case, the domestic operations are to be conducted by firms, other than C.Itoh, who purchase the steel products imported from Greece. These firms will conduct various operations on the steel in the manufacture of products such as pail cans, ceiling suspensions, lighting fixtures, furniture, water heaters, radiator fins, etc. There is no requirement under subheading 9802.00.60, HTSUSA, that the identity of the person who performs the further processing in the U.S. be known at the time the material is exported from the U.S, or at the time the returned material enters the U.S. There is also no requirement that the same person who exported the material, or the same person who imports the material must perform the further processing in the U.S. However, the importer should satisfy the district or area director of the actual performance of further processing in the U.S. In addition, the domestic further processing should be conducted within a reasonable time following importation. See, 19 CFR 10.9, and HRL 556080 dated August 27, 1991. In HRL 554965 dated September 6, 1989, Customs found that under the circumstances of that case, four months was a reasonable period of time to warehouse stainless steel sheets in the U.S. before being further processed. It would appear, based on the applications and products made from the steel imported from Greece, that the domestic further processing requirement would be satisfied. The manufacture of the articles listed above, clearly would impart new and different characteristics which become an integral part of the metal itself. However, as previously stated, the district or area director must be satisfied of the actual performance of further processing in the U.S. HOLDING: On the basis of the information submitted, it is our opinion that the processes performed abroad constitute "further processing" as that term is used in subheading 9802.00.60, HTSUSA. In addition, it would appear that the operations to be performed in the U.S. would also constitute "further processing". However, since the actual processing operations to be conducted were not provided, the area or district director must be satisfied of the actual performance of further processing in the U.S. Contingent on the satisfaction of the area or district director, the imported steel sheets or coils will be entitled to entry under subheading 9802.00.60, HTSUSA, with duty only on the cost or value of such processing performed outside the U.S., upon compliance with the documentary requirements of 19 CFR 10.9. Sincerely, John Durant, Director Commercial Rulings Division