HQ 555938: Dutiable status of certain exit door devices returned to the U.S. from Canada; drilling; further processing; C.S.D. 84-49; 555432

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 555938

                        May 20, 1991

CLA-2 CO:R:C:S 555983 SER

CATEGORY: Classification

TARIFF NO.: 9802.00.60

Mr. Ian D. Rodrigues
Rapid Customs Consultants Inc.
Law Chambers Suite #1900
P.O. Box 40
T.D. Centre, Royal Trust Tower
Toronto, Ontario Canada M5K 1B7

RE:  Dutiable status of certain exit door devices returned to
     the U.S. from Canada; drilling; further processing; C.S.D.
     84-49; 555432

Dear Mr. Rodrigues:

     This is in response to your letter of February 5, 1991, on
behalf of Von Duprin, concerning the dutiable status of certain
exit door devices to be returned to the U.S. from Canada
following drilling operations.

FACTS:

     The goods at issue are referred to as "lever arms" and "55
rim center/end cases" and are parts of emergency exit doors.
These items, presumably of U.S. origin, will be sent to Canada to
be drilled to provide points of access for further assembly in
the U.S. of a variety of components to the exit door devices.
When the items are returned to the U.S., you ask whether duty
will be assessed on the full value of the merchandise or only on
the Canadian "value added."

ISSUE:

     Whether the exit door devices will be dutiable on their full
value or will be entitled to partial duty exemption under
subchapter II, Chapter 98, Harmonized Tariff Schedule of the
United States Annotated (HTSUSA), when returned to the U.S.



                               -2-



LAW AND ANALYSIS:

     U.S. Note 2(a), subchapter II, Chapter 98, HTSUSA, provides
in pertinent part that "... any product of the United States
which is returned after having been advanced in value or improved
in condition abroad by any process of manufacture ..., if
subject to a duty which is wholly or partly ad valorem, shall be
dutiable, except as otherwise prescribed in this part, on its
full value ...."

     Subchapter II, Chapter 98, HTSUSA, sets forth certain tariff
provisions which permit a partial duty exemption for articles
that are returned after having been advanced in value or improved
in condition while abroad.  One such provision is subheading
9802.00.60, HTSUSA, which 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 of 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.  84-49, 18 Cust.Bull. 957 (1983) we stated that:

     [f]or purposes of item 806.30, TSUS [precursor to
     9802.00.60 HTSUSA], 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.


                               -3-


     The operations in Canada are clearly encompassed by C.S.D.
84-49, which states that drilling constitutes further processing.
However, according to your submission, upon return to the U.S.,
the metal devices will only undergo certain assembly operations
to complete the articles.  We have ruled in Headquarters Ruling
Letter 555432 dated July 26, 1990, that assembly operations do
not satisfy the domestic further processing requirement of
subheading 9802.00.60, HTSUSA.  Therefore, as the assembly
operations performed with the metal exit door devices do not
fulfill the domestic further processing requirement under this
subheading, the devices are not entitled to the partial duty
exemption.

     We are unaware of any other tariff provision which would
permit a complete or partial duty exemption for the returned exit
door devices.

HOLDING:

     On the basis of the information submitted, it is our
opinion that the assembly operations performed in the U.S. do
not satisfy the requisite domestic further processing required by
subheading 9802.00.60, HTSUSA.  Therefore, the metal exit door
devices will not be entitled to classification under this tariff
provision, and will be dutiable on their full value when returned
to the U.S.

                                   Sincerely,



                                   John Durant, Director
                                   Commercial Rulings Division