HQ 555037: Applicability of partial duty exemption of item 806.30, TSUS, to processed steel in the form of scrap, ingot and slab

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 555037

                                    June 24, 1988


          CLA-2  CO:R:C:V   555037DBI

          CATEGORY:  Classification

          TARIFF NO.:  9802.00.60; 806.30

          Mr. John Kingery
          Ussex, Inc.
          P.O. Box 1368
          292 Arnold Mill Road
          Woodstock, Georgia  30188

               RE:      Applicability of partial duty exemption of item
                        806.30, TSUS, to processed steel in the form of
                        scrap, ingot and slab

          Dear Mr. Kingery:

               This is in response to your letter dated May 26, 1988, in
          which you request a ruling on behalf of Ussex, Inc., concerning
          the applicability of item 806.30, Tariff Schedules of the United
          States (TSUS), to processed steel in the form of scrap, ingot and
          slab to be exported to Yugoslavia to be processed into hot
          rolled, cold rolled, galvanized and stainless coil or sheet, bars
          and wires.

          FACTS:

               You advise that your company will be purchasing processed
          steel in the form of scrap, ingot and slab from a U.S. supplier.
          You will then ship the steel to Yugoslavia where the steel will
          be manufactured into hot rolled, cold rolled, galvanized and
          stainless coils or sheets, bars and wires.  The steel will be
          returned to the U.S. where the manufacturers will perform further
          processing consisting of rollforming, machine punching, stamping,
          drawing, spot or arc welding, peeling, polishing or a combination
          of the above.

          ISSUE:

               Whether the described steel products, when returned to the
          U.S., will be eligible for the partial duty exemption of item
          806.30, TSUS (9802.00.60 (HTSUS))?
















                                        - 2 -

          LAW AND ANALYSIS:

               Under item 806.30, TSUS, 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 in a ruling dated June 22, 1987, (HQ
          554626), that in order for base metal scrap to qualify under item
          806.30, TSUS, the scrap metal must be obtained from American
          metal and not from processing of foreign-made metal.  Your letter
          does not indicate whether the processed steel you will purchase
          was U.S. metal.  However, it must be U.S. metal and not foreign
          made in order for any of the scrap to qualify for 806.30, TSUS,
          treatment.

               With respect to the foreign processing, we have previously
          held that for the 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 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 the present case, the manufacture of steel into hot
          rolled, cold rolled, galvanized and stainless coils or sheets,
          bars and wires changes the shape of the metal and imparts a new
          and different characteristic which has become an integral part of
          the metal itself that did not exist prior to the processing.

               Furthermore, we have previously held that processing steel
          into hot and cold rolled sheet (HQ 554549, April 20, 1987) and
          galvanized steel (HQ 554344, November 19,1986) constitute
          sufficient processing of the steel to comply with the "further
          processing" requirement of the foreign segment of item 806.30,
          TSUS.

               In Intelex Systems, Inc. v. United States,  59 CCPA 138,
          C.A.D. 1055,  460 F.2d 1083  (1972), the court said that the
          expression "returned to the United States for further processing"
          means "that the articles processed abroad and returned to the
          United States is no more than an advanced material or article
          which will be subjected to further manufacturing process in the
          U.S. to get a complete article."  











                                        - 3 -

               In this case, the steel is advanced by the manufacturing
          process performed abroad and is returned to the U.S. for further
          processing.  The rollforming, stamping, drawing, machine punching
          and spot or arc welding would appear to comply with the
          requirements of item 806.30, TSUS, since such operations, when
          performed alone, are a necessary further fabrication that finish
          completed steel articles.  However, the peeling and polishing, if
          performed alone, are not necessarily a further fabrication that
          finishes a completed steel article, and would not satisfy the
          requirements of item 806.30, TSUS.  Therefore, these processes
          must be performed in combination with one of the other described
          processes in order to comply with item 806.30, TSUS.

          HOLDING:

               On the basis of the information submitted, it is our opinion
          that the manufacturing performed abroad and the U.S. processing
          constitute further processing as that term is used in item
          806.30, TSUS, and, therefore, allowances in duty may be made
          under item 806.30, TSUS, for the cost or value of the processing
          abroad, upon compliance with section 10.9, Customs Regulations
          (19 CFR 10.9).

                                     Sincerely,




                                     John Durant, Director
                                     Commercial Rulings Division
          































          1cc: CLA-2 CO:R:C:V:DIZZO:6/20/88































































                                  Mr. John Kingery
                                  Ussex, Inc.
                                  P.O. Box 1368
                                  292 Arnold Mill Road
                                  Woodstock, GA 30188