HQ 554940: Applicability of subheading 9802.00.60, HTSUS, to stainless steel strips exported to Canada for processing

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 554940

                                   March 27, 1989

          CLA-2  CO:R:C:V  554940 DBI

          CATEGORY:  Classification

          TARIFF NO.:  9802.00.60, HTSUS (806.30, TSUS)

          Mr. Dennis B. Dickey
          Department of Engineering
          Tol-O-Matic
          1028 South 3rd Street
          Minneapolis, Minnesota  55415

          RE:   Applicability of subheading 9802.00.60, HTSUS, to stainless
                steel strips exported to Canada for processing

          Dear Sir:

                This is in response to your letter to the Area Director of
          Customs, New York Seaport, dated October 7, 1987, in which you
          request a ruling concerning the applicability of item 806.30,
          Tariff Schedules of the United States (TSUS), to stainless steel
          strips that are exported to Canada to have a strip of rubber
          extruded onto the steel and then returned to the U.S. for further
          processing.  Your letter has been forwarded to this office for a
          response.

          FACTS:

                You advise that your firm purchases stainless steel strips
          from a U.S. vendor which has been cut, sized and edged by the
          vendor, transforming the strip from industry-standard rawstock
          into coilstock.  When the coilstock is received, it is either
          heat treated or inspected for quality control purposes.  The
          product is then shipped to Canada.

                In a telephone conversation with a member of my staff on
          November 1, 1988, you indicated that the processing in Canada
          consisted of a chemical treatment of the steel surface called
          "electrochemical cleaning" of the metal.  The steel surface is
          changed 50 millionths of an inch.  Following this process, a
          dimethyl polysiloxane-related strip of rubber is extruded onto
          the stainless steel.  After the extrusion process, the combined
          materials are inspected and analyzed for conformance to
          acceptability standards.

                The product is then shipped back to the U.S. where a proper
          length of the strip is cut off of the coilstock and assembled to
          the final assembly of the "BC Series" band cylinder for use in
          air machine tool application.  You state that the cut piece
          cannot be used for any other purpose and has been intended from
          its inception to be only a part of the larger article for which
          it was designed.









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          ISSUE:

                Whether the described stainless steel coilstock, when
          returned to the U.S., will be eligible for the partial exemption
          from duty provided for in subheading 9802.00.60, Harmonized
          Tariff Schedule of the United States, HTSUS (806.30, TSUS).

          LAW AND ANALYSIS:

                As you are probably aware, the HTSUS replaced the TSUS,
          effective January 1, 1989.  Item 806.30, TSUS, has been carried
          over into the HTSUS without change as subheading 9802.00.60.
          Under subheading 9802.00.60, HTSUS, articles of metal (except
          precious metal) manufactured in the U.S. or subjected to a
          process of manufacture in the U.S., if exported for further
          processing, and if the exported article as processed outside the
          U.S., or the article which results from the processing outside
          the U.S., is returned to the U.S. for further processing, may be
          entered with duty on the cost or value of the processing abroad
          upon compliance with section 10.9, Customs Regulations (19 CFR
          10.9).

                We have previously held that for purposes of subheading
          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.  C.S.D. 84-49, 18 Cust.
          Bull. 957 (1983).

                In this respect, the described processes of cleaning the
          metal surface and extruding a dimethyl polysiloxane-related strip
          of rubber onto the stainless steel do not change the shape of the
          metal nor does it impart a new and different characteristic which
          has become an integral part of the metal itself.

          HOLDING:

                On the basis of the information submitted, it is our
          opinion that the foreign cleaning and extrusion processes do not

















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          constitute further processing as that term is used in subheading
          9802.00.60, HTSUS.  Therefore, the returned stainless steel
          coilstock may not be entered under subheading 9802.00.60, HTSUS.
                                     Sincerely,





                                     John Durant
                                     Director, Commercial
                                     Rulings Division