HQ 555915: HTSUS subheading 9802.00.60; eligible article; further processing; galvanizing; C.S.D. 84-89; 19 CFR 10.9; 555530; 553869; 086289; 555432; Intelex

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 555915

                          June 17, 1991


CLA-2 CO:R:C:S  555915 DSN

CATEGORY:  Classification

TARIFF NO.:  9802.00.60

Mr. Jeffrey J. Kost
Project Manager-Substations
R Jennings Manufacturing Company, Inc.
8 Glens Falls Technical Park
Glens Falls, New York 12801

RE:  HTSUS subheading 9802.00.60; eligible article; further
     processing; galvanizing; C.S.D. 84-89; 19 CFR 10.9; 555530;
     553869; 086289; 555432; Intelex

Dear Mr. Kost:

     This is in response to your letter of January 11, 1991,
requesting a ruling on the applicability of subheading
9802.00.60, Harmonized Tariff Schedule of the United States
(HTSUS), to certain steel structural components imported from
Canada.

FACTS:

     According to your submission, U.S.-origin material
consisting of angles, channels, wide flanges, pipes, plates, and
fasterners are sent to Canada for a hot dip galvanizing
operation.  The steel structural components are then returned to
the U.S. for what you describe as the "final stages of
fabrication."

     You state that the operations performed on the components
when returned to the U.S. "might include grinding, drilling,
punching, threading, forming, etc."  We understand from
information you provided by telephone to our New York office that
the threading operation is performed in the U.S. after
galvanization because, if performed prior to galvanizing, the
zinc will eradicate any pre-existing threads.  With respect to
grinding, in some instances, it may be necessary to remove any
zinc icicles which may have formed during the galvanization
process.  The process described as "forming" consists of
straightening the components by using large clamping devices or
vices to correct any warping that may have occurred due to the



steel being subjected to extremely high temperatures in the
galvanizing tank.  The "punching" process involves reaming out
pre-existing holes which may have become filled with zinc during
the Canadian galvanizing operation, while new holes may have to
be drilled at the customers' request.  Subsequent to the
performance of any of the above-described operations, the
structural components are partially assembled and then shipped to
U.S. buyers.

ISSUE:

     Whether the steel structural components will be entitled to
the partial duty exemption under HTSUS subheading 9802.00.60
when returned to the U.S.

LAW AND ANALYSIS:

     HTSUS subheading 9802.00.60 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).

     In C.S.D. 84-89, 18 Cust.Bull. 957 (1983) we stated that:

     [f]or 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.




(The precursor provision to HTSUS subheading 9802.00.60 was item
806.30, Tariff Schedules of the United States (TSUS).)

     In this case, the steel structural components are eligible
articles of metal for purposes of HTSUS subheading 9802.00.60.
The galvanization process performed in Canada is considered a
"further processing" operation, as it imparts new and different
characteristics which become an integral part of the steel.
See, Headquarters Ruling Letters (HRL) 555530 of February 7, 1990
and HRL 553869 of November 4, 1985, which held that
electroplating with nickel, brass, or chrome is an operation
sufficient to comply with the "further processing" requirement of
TSUS, item 806.30.

     With respect to the operations performed in the U.S. upon
return of the components, we find that the threading and drilling
processes satisfy the domestic "further processing" requirement
of HTSUS subheading 9802.00.60, as they clearly impact upon the
metal and impart new and different characteristics which become
an integral part of the steel.  See C.S.D. 84-89 and HRL 554965
dated September 6, 1989.

     However, we are not satisfied from the information presented
that the remaining operations to which the structural components
may be subjected in the U.S. are sufficient to satisfy the
domestic "further processing" requirement.  In Intelex Systems
Inc. v. United States, 59 CCPA 138, C.A.D. 1055, 460 F.2d 1083
(1972), the court discussed the type of processing that would
qualify as "further processing".  In that case, copper wire and
insulating paper were processed abroad into lead-covered
telephone cable and imported into the U.S. on cable rolls.  The
cable was then merely strung on poles after wire stripping and
splicing operations.  The issue presented was whether the
imported telephone cable was "returned to the U.S. for further
processing," within the meaning of paragraph 1615(g)(2)(B),
Tariff Act of 1930, as amended (a precursor provision of HTSUS
subheading 9802.00.60).  The court considered the words "process"
and "processing" and stated that:

     ...its meaning [processing] must be controlled by the
     particular context in which it is used here and the
     legislative intent. (Citation omitted).  When we look to
     the context of [paragraph] 1615(g)(2), we do not think that
     Congress had in mind that any and all kinds of 'processing'
     would suffice to bring the article within the purview of
     'processing' related to the kind of processing to which the
     article had been subjected before--namely, 'a process of
     manufacture,' as expressed in [paragraph] 1615(g)(2)(A).  We
     continue of the view that Congress used the expression
     'subjected to a process of manufacture' as synonymous with


     'processing' (citation omitted), and that the 'further
     processing' referred to in {paragraph} 1615(g)(2) is a
     further manufacturing process.


The court stated that it did "...not think that processes to
which an already completed article were subjected, incident to
using it for the purpose intended, were necessarily part and
parcel of manufacturing processes performed on that article."
(Court's emphasis).  Therefore, finding no evidence that the
operations performed in the U.S. on the imported telephone cable
constituted a process of manufacture in any common or commercial
sense, the court determined that the partial duty exemption was
inapplicable to the imported cable.

     In the instant case, we find that the operations of removing
by grinding any zinc icicles which may have formed during the
foreign galvanizing process, and removing by punching any zinc
which may have filled pre-existing holes, are minor finishing
operations performed on essentially completed articles.  These
operations clearly do not impart new and different
characteristics which become an integral part of the steel.  See,
HRL 555432 of July 26, 1990 (smoothing out the weld surface on
the inside of a flange and pipe by grinding appears to be a minor
finishing operation which is incidental to the assembly of the
flange and pipe), and HRL 086289 dated March 13, 1990 (minor
grinding of bracket edges is not "further processing."

     Similarly, straightening the components to correct any
warping that may have occurred during the heating and galvanizing
operation in Canada serves merely to restore the structural
components' original shape and does not, in our opinion, impart
new and different characteristics which become an integral part
of the metal.  We do not view this operation as a process of
manufacture in any common or commercial sense.

     The subsequent partial assembly operations performed in the
U.S. prior to the shipment of the components to U.S. buyers is
also not considered "further processing" under this tariff
provision.  See C.S.D. 84-89 and HRL 555432 dated July 26, 1990.

HOLDING:

     On the basis of the information submitted, it is our opinion
that the galvanizing process performed in Canada to the steel
structural components satisfy the foreign "further processing"
requirement under HTSUS subheading 9802.00.60.  However, of the
operations to which the returned components may be subjected in
the U.S., only the threading and drilling operations satisfy the
domestic "further processing" requirement.  Therefore, only those


structural components which are threaded and/or drilled upon
return to the U.S. will be entitled to the partial duty
exemption available under this tariff provision, assuming
compliance with the documentary requirements of 19 CFR 10.9.

                              Sincerely,



                              John Durant, Director
                              Commercial Rulings Division


cc:  Assistant Area Director,
     NIS (859640)