The tariff classification and applicability of 9802.00.60 to certain brass metal products manufactured from scrap gathered in the United States and returned to the United States for further processing

 N313254 August 6, 2020 CLA-2-74:OT:RR:NC:N1:116 CATEGORY: Classification TARIFF NO.: 9802.00.60 Mr. David Stepp Crowell & Moring, LLP 515 South Flower St., 40th Floor Los Angeles, CA 90071 RE: The tariff classification and applicability of 9802.00.60 to certain brass metal products manufactured from scrap gathered in the United States and returned to the United States for further processing Dear Mr. Stepp: In your letter dated July 15, 2020, you requested a tariff classification ruling on behalf of your client, Franconia Industries, Inc. In particular, you are seeking a determination as to whether certain brass rods and tubes from Germany qualify for a reduction in duty under 9802.00.60, Harmonized Tariff Schedule of the United States (HTSUS). According to your submission, brass rods and tubes are imported from Germany and manufactured into sanitary fittings by means of sawing, machining, drilling holes, threading, grinding, honing and polishing. The scrap, also known as swarf, produced during the manufacture of the fittings is collected and re-exported to Germany. In Germany, the swarf is melted, cast, and cut into billets. It is then hot formed, pickled, drawn, cut to length, heat treated, sawn, heated again, pressed, soft-annealed, and then drawn again. The products that leave Germany for the U.S. are brass rods and tubes. Once back in the U.S., the whole process repeats itself. A very small, specified amount of non-U.S. origin brass is added to the product during processing in Germany. You have stated the non-U.S. material would be included in the value of processing performed outside the U.S. and included in the dutiable value as required by Note 3(a) to Subchapter II of Chapter 98, HTSUS. The applicable subheading for the brass rods will be 7407.21.9000, HTSUS, which provides for copper bars, rods, and profiles: of copper alloys: of copper-zinc base alloys (brass): bars and rods: other: other. The rate of duty will be 2.2 percent ad valorem. The applicable subheading for the brass tubes will be 7411.21.1000, HTSUS, which provides for copper tubes and pipes: of copper alloys: of copper-zinc base alloys (brass): seamless. The rate of duty will be 1.4 percent ad valorem. You have also inquired about the eligibility of subheading 9802.00.60, HTSUS, which provides a partial duty exemption for: [a]ny article of metal . . . 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 for the United States for further processing. In order for merchandise to qualify under subheading 9802.00.60, HTSUS, four requirements must be met: (1) the merchandise must be an article of metal; (2) the metal must either be manufactured in the United States or subject to a process of manufacture in the United States; (3) the metal must be exported for further processing; and (4) the metal must be 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, HTSUS, 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). For purposes of subheading 9802.00.60, HTSUS, “metal” includes “base metals enumerated in note 3 to section XV,” which, in turn, includes copper and copper alloys such as brass. Therefore, the brass rods and tubes qualify as an “article of metal” under subheading 9802.00.60, HTSUS, satisfying the first requirement. The second requirement is that the metal must either be manufactured in the U.S. or subject to a process of manufacture in the U.S. You indicate that the brass industrial scrap is produced during the manufacture of fittings in the U.S. As such, the second requirement is met. The third requirement is that the metal must be exported for further processing. The industrial brass scrap is exported to Germany where it is are melted, cast, and cut into billets. It is then hot formed, pickled, drawn, cut to length, heat treated, sawn, heated again, pressed, soft-annealed, and then drawn into rods and tubes. In C.S.D. 84-49, 18 Cust. Bull. 957 (1983), it was stated that: [F]or purposes of item 806.30, TSUS [precursor to 9802.00.60 HTSUS], 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. Based on the information provided, this office finds that the manufacturing which takes place in Germany constitutes “further processing” under this tariff provision, thus satisfying the third requirement. The fourth requirement states that the metal must be returned to the U.S. for further processing. The rods and tubes are returned to the U.S. where they are manufactured into sanitary fittings by means of sawing, machining, drilling holes, threading, grinding, honing and polishing. This office finds that the operations performed in the U.S. are considered “further processing” as defined above and therefore the fourth requirement is also met. Accordingly, the subject merchandise qualifies for a partial duty exemption and may be entered under subheading 9802.00.60, HTSUS. Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided at https://hts.usitc.gov/current. This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 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 Angelia Amerson at [email protected]. Sincerely, Steven A. Mack Director National Commodity Specialist Division