HQ 555508: Applicability of the partial duty exemption under HTSUS subheading 9802.00.50 to stainless steel bars imported from Spain

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 555508

                        January 30, 1990

CLA-2 CO:R:C:V  555508 KAC

CATEGORY:    CLASSIFICATION

TARIFF NO.:  9802.00.50

Mr. L. Klestadt
Trans-World Shipping Corporation
53 Park Place
New York, New York  10007

RE:  Applicability of the partial duty exemption under HTSUS
     subheading 9802.00.50 to stainless steel bars imported from
     Spain

Dear Mr. Klestadt:

     This in response to your letter of October 24, 1989, on
behalf of Sovereign Metal Corporation, requesting a ruling on the
applicability of subheading 9802.00.50, Harmonized Tariff
Schedule of the United States (HTSUS), to stainless steel bars
imported from Spain.

FACTS:

     Well over three years ago, Sovereign Metal imported square
stainless steel bars 1 1/8 inch in diameter from Spain for sale
in the U.S.  Because the bars proved to be unsalable, Sovereign
Metal has arranged with the Spanish mill to return the bars for
further operations.  The bars will be reduced to 1 inch in
diameter by heating and drawing operations in Spain.  Upon
completion of the foreign operations the 1 inch in diameter
square bars will be imported into the U.S.

ISSUE:

     Whether the operations performed on the stainless steel bars
in Spain will entitle the merchandise to the partial duty
exemption in subheading 9802.00.50, HTSUS, when returned to the
U.S.

LAW & ANALYSIS:

     Articles returned to the U.S. after having been exported to
be advanced in value or improved in condition by repairs or
alterations may qualify for the partial duty exemption under
HTSUS subheading 9802.00.50 provided the foreign operations do
not destroy the identity of the exported articles or create new
or different articles.  See, Guardian Industries Corporation v.
United States, 3 CIT 9 (1982).  See also, A.F. Burstrom v. United
States, 44 CCPA 27, C.A.D. 631 (1957), which held that when
foreign processing creates a new article of commerce, the
processing is not an alteration.  The court in Dolliff &
Company, Inc. v. United States, 81 Cust.Ct. 1, C.D. 4755, 455
F.Supp. 618 (1978), aff'd, 66 CCPA 77, C.A.D. 1225, 599 F.2d 1015
(1979), found no merit to the argument that because the exported
and imported articles were classifiable under the same tariff
item the processing merely comprised an alteration and stated
that this difference is immaterial where the foreign processing
has created a new article.  Articles entitled to this partial
duty exemption are dutiable only upon the cost or value of the
foreign repairs or alterations, provided the documentary
requirements of section 10.8, Customs Regulations (19 CFR 10.8),
are satisfied.

     In the instant case, we are of the opinion that the foreign
operations performed on the stainless steel bars do not
constitute alterations within subheading 9802.00.50, HTSUS.  The
1 1/8 inch diameter stainless steel bars are finished products
when exported to Spain.  However, the heating and drawing
operations performed in Spain are further processing steps that
create a new article.  See, Headquarters Ruling Letter 047665
dated November 13, 1976, which held that drawing exported steel
wire to small diameters constitutes "further processing" for
purposes of item 806.30, Tariff Schedules of the United States
(TSUS) (now subheading 9802.00.60, HTSUS).  The process of
heating and drawing the bars, reducing their diameter from 1 1/8
inch to 1 inch, results in a 12 1/2 percent change in the bars
size, which destroys the identity of the 1 1/8 inch stainless
steel bar and creates the new 1 inch stainless steel bar.
Contrary to the underlying premise of this tariff provision, the
articles that are returned are not the same articles that were
exported.

HOLDING:

     On the basis of the information presented, it is our opinion
that the foreign operations comprise further processing steps
which create a new article.  Accordingly, the stainless steel
bars are not eligible for the partial duty exemption available
under HTSUS subheading 9802.00.50 when returned to the U.S.

                                   Sincerely,



                                   John Durant, Director
                                   Commercial Rulings Division