The applicability of subheading 9802.00.6000, Harmonized Tariff Schedule of the United States, to certain brass and copper wire made from scrap.

NY C81229 November 3, 1997 CLA-2-98:RR:NC:1:118 C81229 CATEGORY: Classification TARIFF NO.: 9802.00.6000 Mr. Emil Klipstein Mechwin Corporation 460 Nepperhan Avenue Yonkers, NY 10701 RE: The applicability of subheading 9802.00.6000, Harmonized Tariff Schedule of the United States, to certain brass and copper wire made from scrap. Dear Mr. Klipstein: This is in response to your ruling request dated October 21, 1997. In your letter dated September 26, 1997, you requested a tariff classification ruling for this same matter which we responded to in ruling letter number C80374 dated October 7, 1997. This subsequent correspondence provides additional information and clarifying information. In your original correspondence you stated that brass and copper scrap was the resulting by-product of a manufacturing process done to wire you produced. You requested guidance as to the applicability of subheading 9802.00.6000, Harmonized Tariff Schedule of the United States (HTS), for imported brass and copper wire which would be manufactured from this exported scrap. You stated it was your intention to further process this wire after importation. The subsequent correspondence, dated October 21, 1997, elaborates further on what this manufacturing process entails as well as how the scrap was obtained. You indicate you are a brass and copper wire manufacturer. These products are manufactured from imported wire in coils as well as domestically procured wire. You further state that the foreign manufactured wire is produced from the scrap which resulted from your wire processing. You explain that the scrap is exported, melted and cast into billets with a diameter of approximately nine inches. The billets are heated and pressed through a small hole in an extrusion press, producing wire of various diameters. Inasmuch as this wire is unsuitable for any commercial application because of the very coarse grain structure, this product must be further processed. Upon importation, you draw the wire to break down the coarse grain cast structure and then anneal it in order to produce a fine grain. How many times this is done is dependent on the final end use of the product. You state this process changes the grain size, tensile strength, yield strength and elongation. The cross sectional dimension of the wire is generally reduced about 60% prior to the annealing process. Subheading 9802.00.6000, HTS, 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 is 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 metal articles: one foreign, and when returned, one domestic. Articles of metal satisfying these statutory requirements may be classified under subheading 9802.00.60, HTS, with duty only upon the value of such processing performed outside the U.S., upon compliance with the documentation requirements of section 10.9, Customs Regulations (19 CFR 10.9). The Customs Service has consistently held that subheading 9802.00.60, HTS, is inapplicable to scrap obtained directly from processing foreign-made metal in the U.S. The requirement that scrap be a metal article "manufactured or subjected to a process of manufacture" in the U.S. is satisfied only if the metal article from which the scrap was obtained was initially manufactured or subjected to a process of manufacture in the U.S. Customs does not consider processes such as the dismantling (by whatever means), shredding, crushing, ripping and grinding of obsolete articles and industrial scrap to be manufacturing processes, whether or not accompanied by sorting, grading or other similar activities to promote the salability or utility of the scrap. Manufacturing begins once raw materials are available and does not include reclamation activities undertaken with respect to obsolete and industrial scrap prior to the creation of raw materials for new manufacturing. Based on the subsequent information you have provided, the scrap which is exported is obtained directly from processing foreign-made metal in the U.S. which was not first subjected to a process of manufacture in the U.S. Accordingly, your imported product would not be eligible for subheading 9802.00.60, HTS. Your October 21, 1997 correspondence also indicates you procure 50% of your raw materials domestically. If these raw materials were foreign made, acquired domestically, the imported material manufactured with this scrap material would not qualify for subheading 9802.00.60, HTS. If however, you can substantiate that the domestically procured raw materials were domestically produced, and the scrap obtained from these U.S. products is not comingled with the foreign scrap, the metal scrap in this situation is "manufactured or subjected to a process of manufacture" in the U.S., as required by subheading 9802.00.60, HTS, and would be considered qualifying scrap. In C.S.D. 84-49, 18 Cust. Bull. 957 (1983), it was stated that: [f]or purposes of item 806.30 [the precursor provision to subheading 9802.00.60, HTS], 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. As previously stated, in order to be considered "further processing," some operation must be applied to the metal which changes the shape or form of the metal or imparts new and different characteristics which become an integral part of the metal itself. Processing performed on an already completed article, incident to using it for the purpose intended, is not sufficient to constitute "further processing." Intelex Systems, Inc. v. United States, 59 CCPA 138, C.A.D. 1055 (1972). Manufacturing brass and copper wire abroad, utilizing qualifying scrap, clearly constitutes a "further processing" as enumerated in C.S.D. 84-49, supra at 963. This would satisfy your foreign further processing requirement if qualifying scrap is utilized. Upon return to the U.S., this wire will go through a cold forming and annealing process. This cold forming process will change the shape of the metal so as to satisfy the domestic "further processing" requirement. Based on the information submitted, manufacturing brass and copper wire abroad utilizing scrap obtained from directly further processing foreign-made metal in the U.S. would not qualify for subheading 9802.00.60, HTS. Manufacturing brass and copper wire abroad using qualifying U.S. origin brass and copper scrap which was obtained from the further processing of U.S. manufactured wire, satisfies the foreign "further processing" requirement of subheading 9802.00.60, HTS. In addition, drawing this imported wire will change the shape of the metal whereby satisfying the domestic further processing requirement. Entitlement to the partial duty exemption under subheading 9802.00.60, HTS, is contingent upon compliance with the documentary requirements of 19 CFR 10.9. In addition, you must satisfy the director at the port of entry that the actual performance of the subsequent processing of the wire in the U.S. was performed within a reasonable period of time. This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 CFR 177). A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Kathy Campanelli at 212-466-5492. Sincerely, Robert B. Swierupski Director, National Commodity Specialist Division