HQ 555568: Applicability of partial duty exemption under HTSUS sub- heading 9802.00.60 to, and country of origin of, stainless steel bar, wire rod in coil, and angle imported from Korea. U.S. billets;C.S.D. 84-49;555356;T.D. 66-181(1);country of origin;substantial transformation;Torrington (1985);555103

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 555568

                        November 26, 1990

CLA-2 CO:R:C:V 555568 GRV

CATEGORY:      CLASSIFICATION

TARIFF NO.:    9802.00.60

Mr. Jason Lee
Sales Manager
Sammi (America) Corp.
13942 Orange Avenue
Paramount, California 90723

RE:  Applicability of partial duty exemption under HTSUS sub-
     heading 9802.00.60 to, and country of origin of, stainless
     steel bar, wire rod in coil, and angle imported from Korea.
     U.S. billets;C.S.D. 84-49;555356;T.D. 66-181(1);country of
     origin;substantial transformation;Torrington (1985);555103

Dear Mr. Lee:

     This is in response to your letter of December 20, 1989,
requesting a ruling on the applicability of subheading
9802.00.60, Harmonized Tariff Schedule of the United States
(HTSUS), to, and the country of origin of, stainless steel bar,
wire rod in coil, and angle produced in Korea from U.S. billets
and returned to the U.S. for further processing.  We regret the
delay in responding to your request.

FACTS:

     Stainless steel billets of U.S. origin will be exported to
Korea for processing into stainless steel bar, wire rod in coil,
and angle.  The processing in Korea entails hot-rolling, heat
treating, turning or cold drawing, and pickling the billets into
the various articles of metal.  Upon return to the U.S., the
stainless steel bar, wire rod, and angle will be further
processed by cutting the bar and angle to length and further
machining these products to make machine, automobile and
industrial parts.  The stainless steel wire rod will be cold
drawn into bar or wire.

ISSUES:

I.   Whether the stainless steel articles will qualify for the
partial duty exemption under subheading 9802.00.60, Harmonized
Tariff Schedule of the United States (HTSUS), when imported into
the U.S.
II.  Whether the stainless steel articles will be considered
products of the U.S. or Korea when imported into the U.S.

LAW AND ANALYSIS:

I.  Applicability of HTSUS subheading 9802.00.60

     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
     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 domestic 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., upon compliance with 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, the term 'further
     processing' has reference to processing that changes the
     shape of the metal or imparts new and different character-
     istics 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.

     We have previously ruled that converting primary forms of
metal, e.g., ingots, into semi-finished or finished articles of
metal by hot or cold rolling operations constitutes "further
processing" for purposes of HTSUS subheading 9802.00.60, as such
operations clearly change the shape of the metal.  See,
Headquarters Ruling Letters (HRLs) 555356 (December 26, 1989,
abstracted as C.S.D. 90-32(6), 24 Cust.Bull. ___ (1990)), 037347
(July 14, 1975), 063601 (April 18, 1980), 553252 (September 26,
1984) and 845453 (October 17, 1989).  Therefore, the imported
stainless steel articles will satisfy the foreign "further
processing" requirement.
     Moreover, we find that the processing performed in the U.S.
on the wire rod and angle, consisting of cutting to appropriate
lengths and manufacturing into various machine, automobile and
industrial parts, satisfies the domestic "further processing"
requirement.  See, HRL 555356 (pre-sensitized offset printing
press plates specially cut to length on a guillotine shearing
machine--a technical process--found to constitute a "further
processing" under the statute) and T.D. 66-181(1), 101 Treas.Dec.
518 (1966) (cutting metal electron tube parts to length for
incorporation into the tubes constitutes "further processing").
Cold drawing the stainless steel wire rod into bar or wire in the
U.S. clearly changes the shape of the metal and, therefore, also
constitutes "further processing" under the statute.

     In this case, the stainless steel article is an eligible
article of metal for purposes of HTSUS subheading 9802.00.60, as
it is a base metal as provided for at additional U.S. note 1 to
section XV, HTSUS.  The foreign and domestic operations
identified are sufficient to meet the dual "further processing"
requirements of the statute applicable in this case.
Accordingly, the proposed transaction will qualify for the
partial duty exemption under HTSUS subheading 9802.00.60.

II.  Country of origin

     The country of origin of merchandise is the country where
the merchandise is manufactured, produced, or grown.  However,
where manufacturing operations are performed on the merchandise
in another country, resulting in the substantial transformation
of the article, the second country will be considered the country
of origin of the merchandise for Customs' purposes.  See, for
example, 19 CFR 134.1(b).  A substantial transformation occurs
when an article emerges from a manufacturing process with a name,
character or use which differs from those of the original
material subjected to the process.  See, The Torrington Co. v.
United States, 3 Fed.Cir. 158, 764 F.2d 1563 (1985).

     We have previously ruled that the hot rolling of billets
into bar stock and wire rod in coil substantially transforms the
metal into products of the country where the processing occurs.
HRL 555103 (February 2, 1989).  Accordingly, the country of
origin of the stainless steel bars, wire rod in coil and angles
in this case will be Korea.

     Regarding the applicability of voluntary restraint agreement
(VRA) certification requirements, as this program is administered
by the U.S. Department of Commerce, we recommend that you contact
the Office of Agreements Compliance, International Trade
Administration, U.S. Department of Commerce, Washington, D.C.
20230, telephone number (202) 377-3793, for the VRA requirements
applicable to these articles of metal.
HOLDING:

     On the basis of the information submitted, the stainless
steel bar, wire rod in coil and angle to be imported will be
subjected to sufficient processes of manufacture both abroad and
on return to the U.S. to meet the "further processing"
requirements of HTSUS subheading 9802.00.60, and are eligible
for the partial duty exemption under this tariff provision, upon
compliance with the documentary requirements of 19 CFR 10.9.

     The country of origin of the returned metal products will be
Korea, as the manufacturing processes performed in that country
on the U.S. billets substantially transform the metal articles.

                              Sincerely,





                              John Durant, Director
                              Commercial Rulings Division