HQ 555701: Applicability of partial duty exemption under HTSUS subhead- ing 9802.00.60 to steel plates. Rolling steel slabs into plates and variously cutting, heat treating and/or welding the returned plates into use-specific sizes and test materials constitute "further processing."084776;037347; C.S.D. 89-27(10);C.S.D.84-49;C.S.D.90-32(6);T.D. 66-181(1); 555103;085222

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 555701

                         August 29, 1990

CLA-2 CO:R:C:V 555701 GRV

CATEGORY:  CLASSIFICATION

TARIFF NO.:  9802.00.60

Kenneth G. Weigel, Esq.
Webster & Sheffield
2000 Pennsylvania, N.W., Suite 7400
Washington, D.C.  20006

RE:  Applicability of partial duty exemption under HTSUS subhead-
     ing 9802.00.60 to steel plates.  Rolling steel slabs into
     plates and variously cutting, heat treating and/or welding
     the returned plates into use-specific sizes and test
     materials constitute "further processing."084776;037347;
     C.S.D. 89-27(10);C.S.D.84-49;C.S.D.90-32(6);T.D. 66-181(1);
     555103;085222

Dear Mr. Weigel:

      This is in response to your letters of July 26, and August
9, 1990, requesting a ruling on the applicability of subheading
9802.00.60, Harmonized Tariff Schedule of the United States
(HTSUS), to 4 grades of steel plates to be imported from Japan
following processing.

FACTS:

     U.S.-manufactured steel slabs will be exported to Japan for
processing into 4 grades of steel plates.  In Japan, the steel
slabs will be hot-rolled by the continuous, on-line cooling (CLC)
process into steel plates.  When returned to the U.S., the steel
plates will be subjected to one of two processes.  Some plates
will be cut (the thinner plates will be cold sheared and the
thicker plates will be thermal cut using oxyfuel torches) into
various, use-specific sizes, and the remainder will be sectioned
(cut) and subjected to some machining (e.g., turning, threading,
milling, etc.) and welding operations to form test materials for
various mechanical and ballistic tests.  A small number of plates
will undergo heat treatments.

     You submit that the steel plates to be imported are eligible
for the partial duty exemption under HTSUS subheading 9802.00.60,
based on applicable tariff provisions and certain of our holdings
in previous rulings.  You state that the steel plates are
"articles of metal," as defined in U.S. Note 3(d) of subchapter
II, chapter 98.  (You also have indicated that the steel plates
will be classified in chapter 72 (under either heading 7208 or
7211) when imported).  You assert that the CLC processes
performed in Japan on the slabs to manufacture the plates
constitute further processing, citing Headquarters Ruling Letters
(HRLs) 084776 (September 21, 1989) (holding that the processing
of steel slabs into steel plates constitutes "further
processing" within the ambit of the statute) and 037347 (July 14,
1975) (holding that the flattening and cutting to either specific
or standard warehouse lengths constitutes further processing for
purposes of this tariff provision).  Lastly, you assert that the
further cutting and welding or heat treatment operations
performed on the plates when they are returned to the U.S.
constitute "further processing," citing C.S.D. 84-49, 18
Cust.Bull. 957 (1983) (stating that wine cans undergoing a
cutting operation were entitled to tariff treatment under the
provision under consideration), HRL 554889 (October 24, 1988)
(abstracted as C.S.D. 89-27(10), and holding that the cutting,
bending, rolling, punching and/or shaping of stainless steel
sheet constitutes further processing).  You also reference HRL
555356 (abstracted as C.S.D. 90-32(6)) and T.D. 66-191(1), 101
Treas.Dec. 518 (1966) (both dealing with cutting operations).

ISSUE:

     Whether the steel plates will be eligible for the partial
duty exemption available 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
     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, U.S. 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 the documentary requirements
of section 10.9, Customs Regulations (19 CFR 10.9), are met.

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

     [f]or purposes of item 806.30, TSUS [the predecessor tariff
     provision to HTSUS subheading 9802.00.60], the term 'further
     processing' has reference to processing that changes the
     shape of the metal or imparts new and different characteris-
     tics 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 also stated that rolling operations which change
the shape of the metal constitute "further processing" for
purposes of HTSUS subheading 9802.00.60.  C.S.D. 90-32(6), 24
Cust.Bull. ___ (1989) (dealing with printing press plates) and
HRL 084776 (September 21, 1989) (processing of steel slabs into
steel plates constitutes "further processing" within the ambit of
the statute).  Further, we have held that heat treatments which
impart new and different characteristics which become an integral
part of the metal itself and which did not exist in the metal
before processing constitute "further processing" for purposes of
this tariff provision.  HRL 555103 (February 2, 1989) (dealing
with stainless steel bars and wire rod).  However, we have
consistently held that mere assembly operations, such as the
welding together of finished parts, do not constitute "further
processing" for purposes of the statute.  HRL 085222 (November
17, 1989) (dealing with bumper hitch plates).

     In this case, the steel slabs are eligible articles of metal
for purposes of HTSUS subheading 9802.00.60.  Also, the foreign
hot-rolling of the exported steel slabs into steel plates and,
taken as a whole, the domestic manufacturing operations performed
on the steel plates are sufficient to meet the dual further
processing requirements the statute imposes on U.S. articles of
metal.  Accordingly, the steel plates will be eligible for the
partial duty exemption under this tariff provision when returned
to the U.S.
HOLDING:

     On the basis of the information submitted, the steel plates
to be imported constitute articles of metal for purposes of HTSUS
subheading 9802.00.60, and are subjected to sufficient "further
processing" operations both abroad and on return to the U.S. to
be eligible for the partial duty exemption available under this
statute, upon compliance with the documentary requirements of 19
CFR 10.9.

                              Sincerely,





                              John Durant, Director
                              Commercial Rulings Division