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HQ 554940


March 27, 1989

CLA-2 CO:R:C:V 554940 DBI

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.60, HTSUS (806.30, TSUS)

Mr. Dennis B. Dickey
Department of Engineering
Tol-O-Matic
1028 South 3rd Street
Minneapolis, Minnesota 55415

RE: Applicability of subheading 9802.00.60, HTSUS, to stainless steel strips exported to Canada for processing

Dear Sir:

This is in response to your letter to the Area Director of Customs, New York Seaport, dated October 7, 1987, in which you request a ruling concerning the applicability of item 806.30, Tariff Schedules of the United States (TSUS), to stainless steel strips that are exported to Canada to have a strip of rubber extruded onto the steel and then returned to the U.S. for further processing. Your letter has been forwarded to this office for a response.

FACTS:

You advise that your firm purchases stainless steel strips from a U.S. vendor which has been cut, sized and edged by the vendor, transforming the strip from industry-standard rawstock into coilstock. When the coilstock is received, it is either heat treated or inspected for quality control purposes. The product is then shipped to Canada.

In a telephone conversation with a member of my staff on November 1, 1988, you indicated that the processing in Canada consisted of a chemical treatment of the steel surface called "electrochemical cleaning" of the metal. The steel surface is changed 50 millionths of an inch. Following this process, a dimethyl polysiloxane-related strip of rubber is extruded onto the stainless steel. After the extrusion process, the combined materials are inspected and analyzed for conformance to acceptability standards.

The product is then shipped back to the U.S. where a proper length of the strip is cut off of the coilstock and assembled to the final assembly of the "BC Series" band cylinder for use in air machine tool application. You state that the cut piece cannot be used for any other purpose and has been intended from its inception to be only a part of the larger article for which it was designed.

ISSUE:

Whether the described stainless steel coilstock, when returned to the U.S., will be eligible for the partial exemption from duty provided for in subheading 9802.00.60, Harmonized Tariff Schedule of the United States, HTSUS (806.30, TSUS).

LAW AND ANALYSIS:

As you are probably aware, the HTSUS replaced the TSUS, effective January 1, 1989. Item 806.30, TSUS, has been carried over into the HTSUS without change as subheading 9802.00.60. Under subheading 9802.00.60, HTSUS, articles of metal (except precious metal) manufactured in the U.S. or subjected to a process of manufacture in the U.S., if exported for further processing, and if the exported article as processed outside the U.S., or the article which results from the processing outside the U.S., is returned to the U.S. for further processing, may be entered with duty on the cost or value of the processing abroad upon compliance with section 10.9, Customs Regulations (19 CFR 10.9).

We have previously held that for purposes of subheading 9802.00.60, HTSUS, 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. C.S.D. 84-49, 18 Cust. Bull. 957 (1983).

In this respect, the described processes of cleaning the metal surface and extruding a dimethyl polysiloxane-related strip of rubber onto the stainless steel do not change the shape of the metal nor does it impart a new and different characteristic which has become an integral part of the metal itself.

HOLDING:

On the basis of the information submitted, it is our opinion that the foreign cleaning and extrusion processes do not
constitute further processing as that term is used in subheading 9802.00.60, HTSUS. Therefore, the returned stainless steel coilstock may not be entered under subheading 9802.00.60, HTSUS. Sincerely,


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