HQ 555342: Applicability of partial duty exemption under HTSUS subhead- ing 9802.00.60 to truck leaf spring assemblies from Mexico

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                            HQ 555342

                        February 7, 1990

CLA-2 CO:R:C:V 555342 GRV

CATEGORY:  CLASSIFICATION

TARIFF NO.:  9802.00.60

Mr. Richard G. Seley
Rudolph Miles & Sons, Inc.
Customhouse Brokers
4950 Gateway East
P.O. Box 144
El Paso, Texas  79942

RE:  Applicability of partial duty exemption under HTSUS subhead-
     ing 9802.00.60 to truck leaf spring assemblies from Mexico

Dear Mr. Seley:

     This is in response to your letters of March 20, and July
10, 1989, on behalf of Detroit Steel Products Co., Inc.,
requesting a ruling on the applicability of subheading
9802.00.60, Harmonized Tariff Schedule of the United States
(HTSUS), to truck leaf spring assemblies to be imported from
Mexico.  Additional information was forwarded directly to this
office from Detroit Steel Products by letters dated January 19,
and 25, 1990.

FACTS:

     You state that U.S. origin flat bars of spring steel in 30-
foot lengths will be shipped to Mexico for processing and
assembly into truck leaf springs, which will then be returned to
the U.S. for further processing.  In Mexico, the exported bars
will be subjected to the following operations:

     (1) cutting-to-length and hole-punching;
     (2) hot forging, to create the proper shape;
     (3) heat treating some 90% of the leaf spring parts;
     (4) shot peening; and,
     (5) assembly of the individual leafs into leaf springs.

     The assembled leaf springs will then be returned to the U.S.
where they will be subjected to a process referred to as
"presetting," which you assert changes the molecular structure in
both the tension and compression surfaces of the assembled leaf
springs by forming at ambient temperatures.

     Regarding the "presetting" operation, literature which you
provided to us from the Society of Automotive Engineers, Inc.
(SAE), describes it as one of three types of mechanical
prestressing operations (the other two operations being stress
peening and shot peening), which produce large increases in
fatigue durability without increasing the size of the spring.  An
SAE chart illustrating the effect(s) of the various operations on
spring assemblies shows that, within this trinity of mechanical
prestressing operations, while stress peening produces the most
dramatic compressive stresses, presetting also produces residual
stresses.  Thus, all three operations, either independently or
in conjunction with each other, serve to increase the fatigue
properties of a spring.  Regarding "presetting" (the operation
under consideration here), the descriptive literature states that
it:

     produces residual compressive stresses in the tension
     surface and residual tensile stresses in the compression
     surface by forcing the leaves to yield or take a permanent
     set in the direction of subsequent service loading.  While
     this operation is beneficial to fatigue life, its primary
     effect is the reduction of "settling" (load loss) in
     service.  Presetting is usually done on the spring assembly.

The SAE literature further states that the curvature of a leaf
spring will be changed by mechanical prestressing.

     You also assert that while the preset operation does not
change the load capacity of the springs, the free camber of the
spring is permanently altered--the loaded height (height at a
particular load) of the finished spring is affected--when it is
subjected to presetting, and that the operation is very critical
to the final spring performance (spring life and controlled
loaded height).  You state that the height of a spring will
normally be reduced by approximately 1/4 inch after presetting.

ISSUE:

     Whether "presetting" constitutes a sufficient process of
manufacture to qualify as "further processing" within the meaning
of HTSUS subheading 9802.00.60.

LAW AND ANALYSIS:

     HTSUS subheading 9802.00.60 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 as processed outside the United
     States, or the article which results from the process-
     ing outside the United States, is returned to the
     United States for further processing.
This tariff provision imposes a dual "further processing"
requirement on qualifying metal articles:  one foreign, and when
returned, one domestic.  However, not all "processing" to which
articles of metal can be subjected are significant enough to
qualify as "further processing," within the purview of HTSUS
subheading 9802.00.60.  Intelex Systems, Inc. v. United States,
59 CCPA 138, C.A.D. 1055, 460 F.2d 1083 (1972), aff'g, 65 Cust.
Ct. 306, C.D. 4093, 318 F.Supp. 515 (1970).  Metal articles
satisfying these statutory requirements may be classified under
HTSUS subheading 9802.00.60 with duty only on the value of such
processing performed outside the U.S., upon compliance with 19
CFR 10.9.

     In the Intelex case (a case decided under paragraph
1615(g)(2) of the Tariff Act of 1930, as amended, the precursor
provision of TSUS item 806.30 and HTSUS subheading 9802.00.60),
copper wire and insulating paper were foreign processed into
lead-covered telephone cable and imported on cable rolls.  The
cable then was merely strung on poles after a wire stripping and
splicing operation.  The issue presented was whether the imported
telephone cable was "returned to the U.S. for further process-
ing," within the meaning of paragraph 1615(g)(2)(B).  The court
considered the words "process" and "processing" 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' taking place upon return of an article
     to the United States 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 'sub-
     jected 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 C.S.D. 84-49, 18 Cust. Bull. 957 (1983) we stated that:

     [f]or purposes of item 806.30, TSUS, the term 'further
     processing' has reference to processing that changes the
     shape of the metal or imparts new and different character-
     istics 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, we are satisfied that the "presetting"
operation to be performed on the returned truck leaf springs
constitutes "further processing" within the meaning of HTSUS
subheading 9802.00.60.  It is clear that presetting serves to
both change the shape of the metal (the height of the truck leaf
springs will be reduced by approximately a 1/4 inch) and to
impart a different characteristic to the metal which did not
exist before the processing--primarily by reducing the "settling"
(load loss) in service of the spring and also by improving the
fatigue life of the leaf spring by increasing its residual
compressive stresses.  Accordingly, provided the documentary
requirements of 19 CFR 10.9 are met, the truck leaf spring
assemblies will be eligible for HTSUS subheading 9802.00.60
treatment when returned to the U.S.

HOLDING:

     On the basis of the described manufacturing process, we
conclude that the "presetting" operation constitutes a sufficient
process of manufacture to qualify as "further processing" within
the meaning of HTSUS subheading 9802.00.60, and that the truck
leaf spring assemblies will be eligible for the partial duty
exemption available under that tariff provision, provided there
is compliance with the documentary requirements of 19 CFR 10.9.

                               Sincerely,




                               John Durant, Director
                               Commercial Rulings Division