Temporary Importation under Bond; Steel Plates; United States-Mexico-Canada (USMCA); Antidumping and Countervailing Duties; Section 232 Duties

H310990
July 9, 2026
OT:RR:CTF:EPDR H310990 SAB
CATEGORY: Entry Mr. Bruce H. Leeds, Esq. Braumiller Law Group, PLLC 5220 Spring Valley Road, Suite 200 Dallas, TX 75254 RE: Temporary Importation under Bond; Steel Plates; United States-Mexico-Canada (USMCA); Antidumping and Countervailing Duties; Section 232 Duties Dear Mr. Leeds: This letter is in response to your ruling request of May 4, 2020, submitted on behalf of your client, DMC Global. DMC Global seeks a determination as to whether steel plates imported for purposes of being subjected to cladding operations are eligible for duty-free treatment under subheading 9813.00.05 of the Harmonized Tariff Schedule of the United States (“HTSUS”) as a temporary importation under bond (“TIB”). Additionally, DMC Global requests guidance on the application of antidumping and countervailing duties (“AD/CVD”) and Section 232 duties to goods entered under a TIB. Finally, DMC Global seeks a determination as to the applicability of the United States-Mexico-Canada Agreement (“USMCA”) – specifically the applicability of its duty-deferral provisions to goods exported to Canada.1 We regret the delay in our response. Our decision follows. FACTS: DMC Global imports steel plates from Germany. DMC Global states that at importation these steel plates are classified under subheadings 7208.51.0060, 7208.52.0000, or 7225.40.3050, of the HTSUS. DMC Global notes that these steel plates may be subject to both AD/CVD and Section 232 duties if entered for consumption. See Certain Carbon and Alloy Steel Cut-To-Length Plate from Austria, Belgium, France, the Federal Republic of Germany, Italy, Japan, the Republic of Korea, and Taiwan: Amended Final Affirmative Antidumping Determinations for France, the Federal Republic of Germany, the Republic of Korea and Taiwan, and Antidumping Duty Orders, 82 Fed. Reg. 24096 (May 25, 2017); Chapter 99, 1 While DMC Global requested clarification concerning the application of its goods under the North American Free Trade Agreement (“NAFTA”), due to the USMCA going into effect on July 1, 2020, all prospective entries would be subject to the provisions of the USMCA.
2 Subchapter III, HTSUS. Once imported into the United States, the steel plates will undergo a cladding operation called explosion welding. Explosion welding is described by DMC Global as a “solid-state process where welding is accomplished by accelerating [a component] at extremely high velocity through the use of chemical explosives.” This operation is generally utilized to clad carbon steel plates with a layer of corrosion resistant material. The cladding, or layer of corrosion resistant material, may consist of aluminum, copper, titanium, or stainless steel. DMC Global explains that the process first entails inspecting the materials to be used, specifically the backing and cladding alloy. Next, DMC Global grinds the mating surfaces and assembles the backer, cladder alloy, and explosive. The explosion welds the assembled materials together, and the cladded steel plates are then flattened and cut. Finally, the cladded steel plates are tested and inspected. DMC Global further explains that no bulk heating occurs during explosion welding, signifying that none of the metals are diluted, diffused, or subjected to intermetallic formation. A key feature of the process is to ensure “high shear strength and high tensile strength” steel plates, in addition to conferring corrosion resistance. Once the cladded steel plates pass inspection and testing, DMC Global will export them from the United States to Canada for further processing into pressure tanks and similar applications. DMC Global states that, at exportation, the cladded steel plates are classified under subheadings 7210.90.1000 or 7225.99.0090 of the HTSUS. DMC Global states that exported plates would be subject to the USMCA’s duty-deferral provisions, meaning if entered under a TIB at exportation “the plates would be assessed duty as if they had been withdrawn for domestic consumption.” DMC Global posits that the explosion welding cladding process to which the imported steel plates will be subjected constitutes “processing” for purposes of entry under TIB subheading 9813.00.05, HTSUS. DMC Global notes that CBP has previously determined that “welding and integration” may constitute processing which confers eligibility for duty-free treatment of merchandise entered under a TIB. DMC Global also posits that if CBP determines its imported steel plates are eligible for entry under TIB subheading 9813.00.05, HTSUS, they would be exempt from any AD/CVD and Section 232 duties that would otherwise be applicable at entry for consumption. Citing to Headquarters Ruling Letter (“HQ”) 223491, dated March 30, 1992, DMC Global notes that CBP has previously determined TIB entries are not entries for consumption and are therefore not subject to payment of AD/CVD. DMC Global inquires whether the cladded steel plates would nevertheless become subject to AD/CVD and Section 232 upon exportation to Canada due to the UMSCA’s duty-deferral provisions. ISSUES: I. Whether explosion cladding constitutes a “process” under subheading 9813.00.05, HTSUS. II. Whether goods entered under TIB subheading 9813.00.05, HTSUS, and exported to Canada, are subject to Section 232 duties and AD/CVD.
3 LAW AND ANALYSIS: I. Whether explosion welding cladding constitutes a “process” under subheading 9813.00.05, HTSUS. General Note 1, HTSUS, dictates that all merchandise imported into the United States is subject to duty unless specifically exempted therefrom. Such an exemption is accorded to articles temporarily imported for repair, alteration, or processing, including processing that results in articles manufactured or produced in the United States, under subheading 9813.00.05, HTSUS. See U.S. Notes 1-2 of Subchapter XIII, Chapter 98, HTSUS. Duty-free treatment under this subheading is conditioned on the imported merchandise being exported or destroyed within one year from the date of importation. See 19 C.F.R. § 10.37. This one-year period may be extended to one or more additional periods, which, when added to the initial period may not exceed three years. Id. The imported merchandise may not be imported for the purpose of a sale or sale on approval. See U.S. Note 1(a) of Subchapter XIII, Chapter 98, HTSUS; see also 19 C.F.R. § 10.31(a)(3)(ii). CBP has considered the scope of the term “processed” as used in the article description for subheading 9813.00.05, HTSUS, for articles intended to be “repaired, altered, or processed” in the United States. In HQ 224661, dated January 11, 1994, CBP explained that “processing can be a relatively minor procedure or extensive enough to be considered a manufacture or production.” Significantly, CBP has specifically considered whether cladding constitutes a process. In HQ 556530, dated June 12, 1992, CBP determined that cladding carbon steel pipe constituted a process because without cladding the pipe was “incomplete for its intended use in the oil and gas industry . . . [or] suitable for its use in refineries.” The overlay or cladding was necessary to provide the pipe with a “protective coating for corrosion resistance . . . and enhance [its] durability and longevity,” thereby rendering the pipe fit for its intended use. See also Guardian Industries Corp. v. United States, 3 C.I.T. 9, 12 (1982) (holding that processing is performed to render articles suitable for manufacture and their intended use as finished articles) (internal citations omitted). Similarly, in HQ H264562, dated April 3, 2017, CBP determined that hardening steel pipes through an operation called nitriding constituted a process for purposes of subheading 9813.00.05, HTSUS, because it was critical to their intended use as a seal assembly. Although “the pipes treated with and without the nitride process have the same uses,” the nitride treated pipes had an improved ability “to withstand wear, fatigue and corrosion over a longer period of time” which would prevent the seal assembly from failing. CBP further concluded that nitriding was a “vital step in the steel pipes’ manufacturing process.” In deciding whether a process constitutes a manufacture or production of articles temporarily entered under bond, CBP has applied the “‘distinctive name, character, and use’ standard.” HQ H198355 (March 7, 2013) (citing to HQ 230942 (June 6, 2005)). If a process such as welding yields a new or different article with a distinctive name, character, or use, then that process constitutes a manufacture or production. See HQ H326829 (Aug. 21, 2023) (finding that a treatment conferring “performance characteristic that substantially distinguish[] how [merchandise] may be used” constituted a manufacture for drawback purposes).
4 Comparatively, the steel plates imported by DMC Global are subjected to explosion welding cladding in order to render them suitable for use in manufacturing pressure tanks. The steel plates are cladded with a corrosion resistant material in order to achieve high shear strength, high tensile strength, and confer corrosion resistance - each of these new characteristics is necessary to render the plates fit for their intended use. Like the carbon steel pipes at issue in HQ 556530, without cladding the steel plates are not capable of being used to manufacture pressure tanks. Similar to the nitrided steel pipes at issue in HQ H264562, the cladded steel plates have improved performance characteristics that are vital to ensuring durability for purposes of being further manufactured into pressure tanks. Cf. HQ H248556 (July 23, 2015) (finding that coating pipes in prekrete was not a process because the coating did not change the pipes’ use or tariff classification). The change in performance characteristics from explosion welding cladding yields steel plates with a distinctive character, use and tariff classification.. We thus find that explosion welding cladding constitutes a process for purposes of subheading 9813.00.05, HTSUS, because cladding modifies the characteristics of the steel plates to render them fit for their intended use. We further find that explosion welding cladding constitutes a manufacture or production of the steel plates because it is a vital step in producing steel plates capable of being further manufactured into pressure tanks, yielding steel plates with a distinctive character and use. Pursuant to U.S. Note 2(b)(i) of Subchapter XIII, Chapter 98 of the HTSUS, whenever merchandise is entered under subheading 9813.00.05, HTSUS, and manufactured, “if any processing of such merchandise results in a[nother] article . . . manufactured or produced in the United States . . . a complete accounting . . . for all articles, wastes and irrecoverable losses resulting from such processing” is required and all articles or valuable wastes must be exported or destroyed or, in the alternative, duties may be paid on the waste. As explained above, for purposes of subheading 9813.00.05, HTSUS, processing “includ[es] processes which result in articles manufactured or produced in the United States.” Given that we have determined explosion welding cladding is a manufacturing process – yielding cladded steel plates that have a distinctive character, use, and tariff classification – the accounting requirements detailed in U.S. Note 2(b)(i) of Subchapter XIII are applicable. II. Whether goods entered under TIB subheading 9813.00.05, HTSUS, and exported to Canada, are subject to Section 232 duties and AD/CVD. Pursuant to 19 C.F.R. § 182.53(a)(2)(i)(A), if a “good is imported into the United States pursuant to a duty-deferral program and is subsequently withdrawn from the duty-deferral program for exportation to Canada or Mexico . . . and provided that the good is a ‘good subject to USMCA drawback’ within the meaning of 19 U.S.C. 4534 and is not described in § 182.45 of this subpart . . . the exported good must be subject to duty.” Accordingly, if an article is imported into a duty-deferral program in the United States, such as temporary importation under bond, at subsequent exportation the good will be dutiable so long as it constitutes a good subject to USMCA drawback that is not identified in 19 C.F.R. § 182.45. Id.; 19 C.F.R. § 182.53(a)(1)(ii). The term “good subject to USMCA drawback” encompasses “any imported good other than” specifically listed exceptions. 19 U.S.C. § 4534(a). Such listed exceptions include articles “exported to a USMCA country in the same condition as when imported into the United States.” 19 U.S.C. § 4534(a)(2). Accordingly, if articles entered under subheading 9813.00.05, HTSUS, are not exported in the same condition as at importation, then when such articles are
5 “subsequently exported to Canada or Mexico, duty will be assessed . . . on the basis of [their] condition at the time of its importation into the United States.” 19 C.F.R. § 182.53(b)(5). Generally, merchandise is deemed to be in the same condition as at importation if subjected to processes such as “testing, cleaning, repacking, sorting, marking, or inspecting a good, or preserving” that do not materially alter the characteristics of the good. 19 U.S.C. § 4534(a)(2)(A); see 19 C.F.R. § 182.45(b)(1). The Supreme Court of the United States has explained that “the words, ‘the same condition,’ mean not only that the identity of the article exported is preserved, but that its utility for its original purpose is unchanged.” Belcher v. Linn, 65 U.S. 533, 534–35 (1860). Accordingly, if the processing of an article materially alters its characteristics, which may be evidenced by its ability to fulfill a new or distinct purpose, the article is not in the same condition as at importation. To illustrate, in HQ H237075, dated May 19, 2016, CBP determined that a process which coated plumbing fixtures in ceramic nitrides materially altered the characteristics of the fixtures by hardening them, conferring scratch and corrosion resistance, and changing their color. Although the fixtures’ intended use in plumbing was not altered by this process, CBP nevertheless concluded the fixtures were not exported in the same condition as at importation due to their distinct characteristics. In contrast, in HQ H270737, dated March 1, 2017, CBP determined that bending pipes was not only a material alteration of their characteristics which permanently formed the pipe into a particular shape, but also rendered the pipe fit for a new or distinct purpose – the “bending process allow[ed] the pipes to be used in applications where a straight pipe cannot[,] where a change in direction is required.” CBP thus concluded that the bent pipes were not exported in the same condition due to their permanent modification and distinct purpose. As detailed above, the explosion welding cladding process to which the steel plates imported by DMC Global will be subjected alters the performance characteristics of the steel plates by conferring high shear strength, high tensile strength, and corrosion resistance. Explosion welding cladding is designed to render the steel plates fit for their intended use in manufacturing pressure tanks, a purpose the steel plates could not fulfill prior to cladding. Akin to the coating process in HQ H237075, we find that explosion welding cladding materially alters the characteristics of the steel plates by conferring distinct performance characteristics. Like the bending process in HQ H270737, we find that explosion welding cladding materially alters the characteristics the steel plates by permanently adhering a cladding alloy specifically to allow the steel plates to be used in the manufacture of pressure tanks. Additionally, explosion welding cladding alters the steel plates in such a manner that it yields a change in tariff classification. Prior to processing, the imported steel plates may be classified under subheading 7208.52.0000, HTSUS, applicable to “[f]lat-rolled products of iron or nonalloy steel, of a width of 600 mm or more, hot-rolled, not clad, plated or coated.” After processing, the exported steel plates may be classified under subheading 7210.90.1000, HTSUS, applicable to “[f]lat-rolled products of iron or nonalloy steel, of a width of 600 mm or more, clad, plated, or coated.” Although “whether or not articles are processed so as to affect a change in tariff classification is not conclusive as to whether the processing changed a material characteristic of the article,” here, we find that the change in classification is further evidence of a material alteration due to the article description for the exported steel plates identifying cladding as a distinct characteristic. HQ H312750 (Jan. 29, 2026). Consequently, we find that DMC Global’s steel plates are not
6 exported in the same condition as at importation and are thus dutiable on the basis of their condition at the time of importation. See 19 C.F.R. § 182.53(b)(5). DMC Global states that at importation the steel plates may be subject to AD/CVD and Section 232 duties and inquires whether such duties would be payable at exportation under the USMCA’s duty-deferral provisions. See e.g., 82 Fed. Reg. 24096 (May 25, 2017); Chapter 99, Subchapter III, HTSUS. DMC Global cites to HQ 223491, dated March 30, 1992, in which CBP held that TIB entries are not entries for consumption subject to payment of AD/CVD at importation, as grounds for also precluding payment of AD/CVD and Section 232 duties at exportation. In HQ 223491, CBP explained that “the provisions of the countervailing duty law and the antidumping law are applicable to merchandise entered, or withdrawn from warehouse, for consumption,” and its provisions are therefore inapplicable to TIB entries which are not a consumption entry. CBP further clarified that AD/CVD is instead accounted-for in the bond amount applicable to TIB entries, which is generally set at “an amount equal to double the duties and fees, which it is estimated would accrue . . . had all the articles covered by the entry been entered under an ordinary consumption entry.” 19 C.F.R. § 10.31(f); see also HQ H075337 (Nov. 18, 2009). DMC Global asserts that TIB entries are therefore exempt from such duties if exported to Canada. DMC Global’s assertion is contravened by the explicit text of 9 C.F.R. § 182.53(a)(2)(i)(A), which states that “[w]here a good is imported into the United States pursuant to a duty-deferral program and is subsequently withdrawn from the duty-deferral program for exportation to Canada or Mexico . . . [a] USMCA entry or withdrawal for consumption” is required and the exported merchandise is dutiable.” Pursuant to 19 C.F.R. § 182.53(b)(5), “where a good . . . [i]s imported temporarily free of duty for repair, alteration or processing (subheading 9813.00.05, HTSUS) and is subsequently exported to Canada or Mexico, duty will be assessed on the good on the basis of its condition at the time of its importation into the United States.” Accordingly, merchandise eligible for entry under TIB subheading 9813.00.05, HTSUS, must be entered for consumption upon exportation to Canada or Mexico. DMC Global’s reliance on HQ 223491 is therefore misplaced – although the initial TIB entry is not an entry for consumption, such that the duties that would be owed at entry for consumption are not payable, these duties become payable at exportation because the subsequent USMCA entry is an entry for consumption. Consequently, DMC Global’s steel plates will be dutiable upon exportation to Canada and any AD/CVD or Section 232 duties that would have applied at importation had an entry for consumption been filed will be owed at exportation. See 19 C.F.R. § 182.53(a)(2)(i)(A); 19 C.F.R. § 182.53(b)(5); see also HQ 228961 (Jan. 23, 2002) (finding that “there is no question that . . . avoidance of both regular and antidumping duties applicable to the imported” merchandise is precluded). HOLDING: We find that explosive welding cladding constitutes a “process,” signifying the steel plates by DMC Global are eligible for entry under TIB subheading 9813.00.05, HTSUS. At exportation to Canada, the cladded steel plates will be dutiable in their condition at importation, to include any applicable AD/CVD and Section 232 duties.
7 Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a CBP field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.”
Sincerely,
Kristina Frolova, Chief Entry Process & Duty Refund Branch