HQ 555914: Applicability of duty exemption under subheading 9802.00.60, HTSUS, to aluminum can ends; stamping; assembling; C.S.D. 84-49; 555037; 555377

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 555914

                          July 25, 1991

CLA-2  CO:R:C:S  555914 LS

CATEGORY:  Classification

TARIFF NO.:  9802.00.60

Ms. Patty Iacono
Gladish & Associates
215 Long Beach Boulevard, #511
Long Beach, California 90802-3100

RE:  Applicability of duty exemption under subheading 9802.00.60,
     HTSUS, to aluminum can ends; stamping; assembling; C.S.D.
     84-49; 555037; 555377

Dear Ms. Iacono:

     This is in response to your letter of February 20, 1991, on
behalf of Nissho Iwai American Corp. ("Nissho"), requesting a
ruling concerning the applicability of subheading 9802.00.60,
Harmonized Tariff Schedule of the United States (HTSUS), to
aluminum beverage can ends imported from Saudi Arabia.

FACTS:

     The following facts are based upon your letter dated January
29, 1991, which was forwarded to us through our Customs office in
New York, and a telephone conversation between yourself and a
member of my staff.

     Nissho plans to export U.S.-manufactured aluminum sheet in
coil form to a manufacturer in Saudi Arabia.  In Saudi Arabia,
the sheet will undergo a stamping operation whereby shapes are
cut to form can ends.  The remaining scrap metal is retained in
Saudi Arabia.  The can ends, i.e., the bottoms and tops of
beverage or aerosol aluminum containers, will then be returned to
Nissho in the U.S. where they will be processed into complete
cans filled with designated contents.  In a letter dated
June 5, 1991 and in several telephone calls, we requested
further information as to this processing performed in the U.S.

     Since we have not received a response to our June 5, 1991,
letter within a 30 day period, we cannot definitively determine
whether the U.S. operations satisfy the domestic "further
processing" requirement of subheading 9802.00.60, HTSUS.  Since
we found in C.S.D. 84-49, 18 Cust. Bull. 957 (1983), that can
ends were joined to can bodies by means of a mere assembly
operation such as seaming, we will assume, for purposes of this
ruling, that this same operation is performed by Nissho on the
can ends when they are returned to the U.S., and that the can
ends are not subjected to any other process in the U.S.

     You also request that we address the question of the value
upon which the duty will be assessed.

ISSUE:

     Whether the can ends will be eligible for the partial duty
exemption under subheading 9802.00.60, HTSUS, when returned to
the U.S.

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 subjected 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 subheading
9802.00.60, HTSUS, with duty payable 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).  U.S. Note 3(a) to Subchapter
II, Chapter 98, HTSUS, provides that the value of the foreign
processing is based upon the cost to the importer of such
processing, as set out in the invoice and entry papers.

     In C.S.D. 84-49, 18 Cust. Bull. 957 (1983), we held that:

          [f]or purposes of item 806.30, TSUS [the
          predecessor tariff provision to 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.

     The operation performed in Saudi Arabia, i.e., stamping can
ends from aluminum sheet in coil form, constitutes sufficient
"further processing" so as to satisfy the foreign processing
requirement of subheading 9802.00.60, HTSUS.  In Headquarters
Ruling Letter (HRL) 555037 dated June 24, 1988, we held that the
process of stamping steel coils, sheets, bars and wires
constitutes "further processing" within the meaning of item
806.30, TSUS.  Stamping can ends out of aluminum sheet clearly
impacts upon the aluminum by changing its shape.

     In C.S.D. 84-49, we held that aluminum beverage can bodies
which are manufactured in Mexico from aluminum produced in the
U.S., and then imported into the U.S. for assembly with easy-
opening can ends, were not eligible for the partial duty
exemption under item 806.30, TSUS.  The manufacture of the can
bodies in Mexico was found to meet the foreign processing
requirement of this tariff provision.  However, because the can
bodies were flanged at their rims during the manufacturing
process in Mexico and, upon return to the U.S., were seamed with
the can ends, we found that the mere assembly, by seaming, of the
two finished parts did not constitute a "further processing" so
as to satisfy the domestic processing requirement of subheading
9802.00.60, HTSUS.

     If the can ends are merely assembled with the can bodies by
an operation such as seaming, and are not subjected to any other
operation which changes the shape of the metal or imparts new and
different characteristics which become an integral part of the
metal itself, the domestic processing requirement of subheading
9802.00.60, HTSUS, has not been satisfied.  See C.S.D. 84-49; HRL
555377 dated October 16, 1989 (brazing, a type of welding oper-
ation constituting an assembly, is not considered to be "further
processing," within the meaning of subheading 9802.00.60, HTSUS).
Therefore, the can ends will not be eligible for the partial duty
exemption under subheading 9802.00.60. HTSUS.

     We are not aware of any other provision under which the can
ends would be entitled to a duty exemption upon their return to
the U.S.  Assuming the can ends are not eligible for the partial
duty exemption under subheading 9802.00.60, HTSUS, they will be
subject to duty upon their full appraised value when imported
into the U.S.  That value is determined pursuant to 19 U.S.C.
1401a and sections 152.100-152.108, Customs Regulations (19 CFR
152.100-152.108).


HOLDING:

     The operation performed in Saudi Arabia, i.e., stamping can
ends from aluminum sheet in coil form, constitutes sufficient
"further processing" so as to satisfy the foreign processing
requirement of subheading 9802.00.60, HTSUS.  If, however, the
can ends, upon importation into the U.S., are merely assembled
with the can bodies by an operation such as seaming, and are not
subjected to any other operation which changes the shape of the
metal or imparts new and different characteristics to the metal,
the domestic "further processing" requirement under subheading
9802.00.60, HTSUS, will not be satisfied.  Based upon the latter
assumption, the can ends will not be eligible for the partial
duty exemption under subheading 9802.00.60, HTSUS.

                                   Sincerely,



                                   John Durant, Director
                                   Commercial Rulings Division