HQ 081659: Country of Origin of Sheet Steel in Coils Hot Rolled in Canada From Slabs

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 081659

                                      March 3, 1989

             CLA-2:CO:R:C:G   081659 JAS

             CATEGORY:   Classification

             TARIFF NO.: (no tariff number used)

             Katherine S. Nucci, Esq.
             Dykema Gossett
             1752 N Street, N.W.
             Washington, D.C. 20036

             RE: Country of Origin of Sheet Steel in Coils Hot Rolled in
                 Canada From Slabs

             Dear Ms. Nucci:

                 In letters, dated January 20, and October 31, 1988, you
             inquire as to the country of origin of steel sheets in coil
             which are hot rolled in Canada from slabs of Brazilian origin.
             There is no tariff classification issue presented.  Our ruling
             follows.

             FACTS:

                 You refer to the merchandise that enters the Customs
             territory from Canada as hot rolled steel sheet, in coils,
             ranging from .058 inch to .5 inch in thickness, and from 1,000
             feet to 3,000 feet in length.  After importation, the product
             is uncoiled, pickled and slit.  It is then suitable for use in
             the automotive industry, the building trades, and in oil and
             natural gas exploration, among other uses.

                 The steel slabs that enter Canada are semifinished
             products rolled from ingots.  They are A 607 grade 50 low
             alloy slabs ranging from 16 feet to 34 feet in length, from 30
             inches to 48 inches in width, and from 6 inches to 14 inches
             in thickness.  In Canada, they are reheated to rolling
             temperatures of between 2100 to 2300 degrees F and held there
             for approximately 2-1/2 hours.  The slabs are then rolled to
             an intermediate thickness in a process called roughing.  In
             this process, horizontal rolls reduce thickness between .8
             inch to 1.6 inches, and vertical rolls reduce width up to 2
             inches.  In addition, the length is drastically increased as
             indicated.  The product is then trimmed on both ends and
















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             finished rolled at a temperature of 1600 degrees F to final
             thickness, after which it is water cooled, then coiled.  The
             processing operations are said to represent up to fifteen (15)
             percent value added.

             ISSUE:

                 Does the described processing substantially transform the
             slabs, and make Canada the country of origin for tariff
             purposes?

             LAW AND ANALYSIS:

                 In order for the steel slabs to have been considered
             substantially transformed in Canada, the record must establish
             that the processing there resulted in a product other than or
             materially different from the merchandise of foreign origin;
             that is, a new and different article must emerge from the
             processing, one having a new name, character or use.
             Anheuser-Busch Brewing Association v. United States, 207 U.S.
             556 (1908).

                 In general, semifinished steel products such as blooms and
             slabs have no commercial use and must be reworked.  They are
             first cleaned to remove defects that might affect surface
             quality, and are thereafter converted to finished steel
             products such as plates and sheets by reheating and further
             hot working by rolling or forging coupled, in some instances,
             with cold-working operations that follow the secondary hot
             working.

                 Slabs cannot be used commercially because of their massive
             size.  In addition, their larger grain size makes them very
             brittle.  In this case, the processing operations in Canada
             result in a significant change in the shape and dimensions of
             the product, and render it commercially usable by equipment
             that will stamp, drawn or bend it.  Moreover, while there is
             no change in chemistry, the hot rolling operations effect a
             significant change in the product's microstructure.  The
             combination of hot rolling and controlled water cooling makes
             the grain size smaller and more uniform throughout the entire
             product.  This improves hardness or ductility which is commer-
             cially significant.

                 The processing operations in Canada transform a semi-
             finished steel product known as a slab, with no commercial
             uses, to a finished steel product known as a plate or a sheet,














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             with a variety of commercial applications.  The identity of
             the product that enters the Customs territory has been fun-
             damentally changed.  It is no longer the essence of the
             product that entered Canada.

             HOLDING:

                 The described processing operations in Canada result in a
             product that is substantially transformed there, one having a
             new name, character and use.  The articles entering the
             Customs territory are products of Canada for Customs purposes.


                                        Sincerely,



                                        John Durant, Director,
                                        Commercial Rulings Division