HQ 953414: Steel Sheet in Coils Galvanized in Mexico From Previously Annealed Full Hard Cold Rolled Sheet; Country of Origin

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 953414

                            APRIL 12, 1993

CLA-2:CO:R:C:M   953414 JAS

CATEGORY:   Classification

TARIFF NO.: None

Mr. Vincent Bowen, Esq.
Willkie Farr & Gallagher
1155 21st. Street, N.W.
Washington D.C. 20036-3384

RE:  Steel Sheet in Coils Galvanized in Mexico From Previously
     Annealed Full Hard Cold Rolled Sheet; Country of Origin

Dear Mr. Bowen:

     In your letter of February 5, 1993, on behalf of Duferco
Ltd., U.S.A., you inquire as to the country of origin of certain
galvanized steel sheet in coils.  There is no classification
issue presented.  As agreed to in your letter dated March 29,
1993, the country of origin of merchandise described as ASTM A-
446 grade E and A-792 grade 80 will be addressed in a subsequent
ruling.

FACTS:

     The merchandise entering Mexico is full hard cold rolled
steel sheet conforming to Society of Automotive Engineers/
American Iron and Steel Institute (SAE/AISI) carbon steel grades
1006 and 1008.  This steel sheet is sourced variously in
Argentina and Czechoslovakia, and is shipped to Mexico for
processing into corrosion-resistant steel sheet that conforms to
American Society for Testing and Materials (ASTM) specifications
for annealed and galvanized cold-rolled sheet of commercial
quality (A-526) and lock-forming quality (A-527), for use in non-
structural applications. 

     You state that prior to entering Mexico, the steel sheet is
annealed at temperatures above the lower critical temperature (at
least 1350 degrees F).  This softens the steel and results in a
substantial reduction in yield strength, tensile strength and
hardness.  
     
     Upon importation into Mexico, the sheet is uncoiled, the
sides are trimmed and the steel cleaned.  The sheet is then
heated to a temperature of 600 degrees C (1112 degrees F), then                              - 2 -

cooled to temperatures of between 800 to 900 degrees F, after
which it is galvanized by dipping either in molten zinc or a
mixture of zinc and aluminum.  After galvanizing, the sheet is
cooled, tested to insure uniform application of the metal
coating, a chromate solution applied as a preservative, and the
sheet recoiled.

     The steel sheet entering Mexico is very hard with high yield
and tensile strengths.  You state the heat treatment in Mexico
cannot be so high as to weaken the high yield and tensile
strengths of this sheet, and that such treatment is closely
controlled to that of the coating substance.  You state further
that the heat treating temperatures are well beneath the critical
temperatures that result in changes in mechanical properties in
the steel, and that any changes in tensile strength and yield
point of the steel after the heat treatment are inconsequential. 
In any event, you note that mechanical property standards do not
apply to commercial quality or lock-forming quality steel.  

ISSUE:

     Whether galvanizing full hard cold rolled steel sheet that
has previously been annealed in another country effects a
substantial transformation for tariff purposes. 

LAW AND ANALYSIS:

     In order for the full hard cold rolled steel sheet of
Argentine or Czech origin to be considered substantially
transformed in Mexico, so as to be regarded as a product of
Mexico for tariff purposes, the evidence must show that the
processing operation in Mexico results in a product other than or
materially different from the product that entered Mexico.  That
is, a new and different article of commerce must emerge from
Mexico, one having a new name, character or use.  Anheuser-Busch
Brewing Association v. United States, 207 U.S. 556 (1908).  A
mere change in a product's name, without more, is a relatively
unimportant consideration in most cases.  As to character and
use, however, there must be evidence to show that the processing
in Mexico transforms the full hard cold rolled steel sheet in
such a way that it is no longer the essence of the finished
product.  

     The steel sheet that becomes cold rolled commercial quality
and lock-forming quality ASTM A-526 and ASTM A-527 steel sheet
has been annealed, as described, prior to entering Mexico.  This
process relieves the stresses of cold rolling and makes the steel
less strong, but more ductile or formable.  This annealing
process typically reduces tensile and yield strengths of the
steel from in excess of 120,000 psi to between 30,000 to 55.000
psi.                                - 3 -
     
     Heating the steel in Mexico to the approximate temperature
of the coating bath appears to be solely for the purpose of
removing oxides from the steel's surface.  This creates the
proper hydrogen-nitrogen atmosphere that enables the zinc to
properly bond to the steel's surface.  Significant differences in
temperature may also cause the zinc to harden prematurely as it
is applied to the steel's surface.  We are informed that the
secondary heating results in no appreciable change in the steel's
tensile and yield strengths. 

     We have previously held that galvanizing, by itself, does
not constitute a substantial transformation because it is viewed
as a mere finishing operation.  See 081888, dated August 1, 1988. 
A similar result was reached in a case involving the gold-plating
of watch bracelets.  See 554692, dated March 8, 1988.  The latter
decision stressed that the plating did not change the character
of the bracelets, nor did it create a new and different article.  

     Both decision 081888 and a similar decision on gold
electroplating (555511, dated September 13, 1990), differentiated
the hot-dip galvanizing process discussed in Ferrostaal Metals
Corp. v. United States, 664 F. Supp. 535 (CIT 1987).  In that
case, annealing and galvanizing in a continuous operation
resulted in a new and different article in which both the
mechanical and chemical properties of the sheet were
significantly changed.  It is apparent that in this case the use
or uses of the steel are established by the annealing operation
that takes place before the steel enters Mexico.  The subsequent
galvanizing process in Mexico is a corrosion-resistant feature
designed merely to extend the useful life of the product.  

HOLDING:

     Full hard cold rolled SAE/AISI grade 1006 and 1008 steel
sheet that has been annealed, as described, in Argentina or
Czechoslovakia, is not substantially transformed by virtue of the
described galvanizing operation in Mexico, and is not a product
of Mexico for tariff purposes.  This steel sheet remains a
product either of Argentina or Czechoslovakia. 

     This decision is not a definitive ruling for the purposes of
interpreting the scope of an antidumping duty determination on
this merchandise by the Department of Commerce.
                              

                              Sincerely,


                              John Durant, Director
                              Commercial Rulings Division