HQ 555691: Steel concrete reinforcing bars produced from prepared steel scrap. Eligible article; obsolete scrap; manufacturing process; dismantling; shredding; crushing; 554750; x554750; 555557; 555096

us-cbp-cross-rulings-hq-555691HQ 555691: Steel concrete reinforcing bars produced from prepared steel scrap. Eligible article; obsolete scrap; manufacturing process; dismantling; shredding; crushing; 554750; x554750; 555557; 555096Guidance

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 555691

                          May 10, 1991

CLA-2 CO:R:C:S 555691 KCC

CATEGORY:  Classification

TARIFF NO.:  9802.00.60

Yong Hak Kim, Esq.
Freeman, Wasserman & Schneider
90 John Street
New York, New York  10038

RE:  Steel concrete reinforcing bars produced from prepared steel
     scrap. Eligible article; obsolete scrap; manufacturing
     process; dismantling; shredding; crushing; 554750; x554750;
     555557; 555096

Dear Mr. Kim:

     This is in response to your letters dated July 12, October
8, and November 2, 1990, on behalf of Dongkuk Steel Mill Co.,
Ltd., requesting a ruling on the applicability of subheading
9802.00.60, Harmonized Tariff Schedule of the United States
(HTSUS), to steel concrete reinforcing bars produced in Korea
from steel scrap processed in the U.S.  We regret the delay in
responding to your request.

FACTS:

     Dongkuk Steel Mill Co. (Dongkuk) exports prepared steel
scrap from the U.S. to Korea where it is melted, continually
cast into billets, and rolled into steel concrete reinforcing
bars (rebars).

     The prepared steel scrap is created in the U.S. from a
variety of discarded, obsolete and worn-out metal articles,
including automobiles, railroad rails and equipment, ships and
marine equipment, aircraft and industrial machinery, of U.S.- and
foreign-origin.  The prepared scrap is created as follows:

1)   the discarded and obsolete metal articles are dismantled,
     and all reusable and unwanted parts and components are
     separated and removed to create skeleton scrap;

2)   the skeleton scrap is chemically analyzed, decontaminated,
     sized, sorted by thickness and chemical composition,
     classified and segregated by type, and blended and grouped
     with similar types of skeleton scrap to create graded scrap;
     and

3)   graded scrap is transformed into prepared scrap by one of
     three processes depending on the class of scrap to be
     produced.  The classes of prepared scrap are commercially
     known as No. 1 heavy melting steel, No. 2 heavy melting
     steel, No. 1 bundles, No. 2 bundles, and shredded scrap.

     a)   To obtain No. 1 and No. 2 heavy melting steel, graded
          scrap is cut by acetylene torches into industry-
          specified pieces of given dimensions.  The cut pieces
          are forced into a "squeeze box," which compresses and
          hoppers the cut pieces into the mouth of a "guillotine
          shear" where they are further sliced into specified
          dimensions.  Finally, the sheared pieces enter a
          hydraulic bailing press where they are further
          compressed into a bale not over 60 x 24 inches in size.

     b)   To obtain No. 1 and No. 2 bundles, graded scrap is cut
          by acetylene torches to pieces not exceeding specified
          dimensions.  The cut pieces are transferred to a
          hydraulic baling press where the pieces are compressed
          into a bundle which meets the size of the electric
          furnace's charging box but which weighs not less than
          75 pounds per cubic foot.

     c)   To obtain shredded scrap, graded scrap is flattened by
          presses.  The flattened pieces are shredded and
          crushed into fist-size pieces, passed through a ferrous
          cleaner where nonferrous and nonmetallic materials are
          separated, passed through a wet scrubber system where
          they are cleaned to remove dirt and dust, and finally
          passed through a magnetic drum separator in order to
          separate the remaining nonferrous and nonmetallic
          materials.  The resulting shredded ferrous pieces are
          homogeneous and have the average density of 50 pounds
          per cubic foot.

     The various types of prepared scrap are exported to Korea
where Dongkuk melts the scrap, continuously casts it into
billets, and then rolls it into rebars which are exported to the
U.S.  After importation into the U.S., the rebars are sold to
fabricators which cut, bend and fabricate the rebars into forms
which are then sold to concrete contractors.

ISSUE:

     Whether subheading 9802.00.60, HTSUS, is applicable to the
returned rebars derived from prepared scrap created in the U.S.
from U.S.- and foreign-origin discarded and obsolete metal
articles.



LAW AND ANALYSIS:

     Subheading 9802.00.60, HTSUS, 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 subject 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 processing outside the United States, is
     returned to the United States for further processing.

This tariff provision imposes a dual "further processing"
requirement on eligible articles of metal--one foreign, and when
returned, one domestic.  Metal articles satisfying these
statutory requirements may be classified under this tariff
provision with duty only on the value of such processing
performed outside the U.S., provided there is compliance with the
documentary requirements of section 10.9, Customs Regulations (19
CFR 10.9)

     We have consistently ruled that "obsolete scrap" metal is
eligible under subheading 9802.00.60, HTSUS, if it is shown that
all of the metal articles from which the scrap was obtained were
manufactured in the U.S. or subjected to a final process of
manufacture in the U.S.  See, Headquarters Ruling Letter (HRL)
554750 dated March 14, 1988, HRL x554750 dated September 23,
1988, and HRL 555557 dated April 15, 1991.  "Obsolete scrap" is
defined as worn-out or discarded metal articles.

     We do not consider processes such as dismantling (by
whatever means), shredding, and crushing of obsolete scrap to be
a manufacturing process, whether or not accompanied by sorting,
grading, or other similar activities to promote the salability or
utility of scrap.  We are of the opinion that manufacturing
begins once raw materials are available and does not include
reclamation activities undertaken with respect to previously-used
materials prior to the creation of raw material for new
manufacturing.  See, HRL x554750, HRL 555557, and HRL 555096
dated July 7, 1989.

     Therefore, the various types of prepared scrap will be
considered an article of metal eligible under subheading
9802.00.60, HTSUS, only if the discarded and obsolete metal
articles from which the prepared scrap was obtained were
manufactured or subjected to a final process of manufacture in
the U.S.  Since your client is unable to establish that the




discarded and obsolete metal articles subjected to previously-
described operations in the U.S. are manufactured in the U.S. or
subjected to a process of manufacture in the U.S., the imported
rebars fail to meet the requirements of subheading 9802.00.60,
HTSUS.

HOLDING:

     For the reasons set forth above, as your client is unable to
establish that all the various types of prepared scrap exported
for processing aboard were derived from metal articles
manufactured or subjected to a final process of manufacture in
the U.S., we find that the imported steel concrete reinforcing
bars are not entitled to entry under subheading 9802.00.60,
HTSUS.

                              Sincerely,



                              John Durant, Director
                              Commercial Rulings Division

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