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HQ 554976

February 21, 1989

CLA-2 CO:R:C:V 554976 GRV


TARIFF NO.: 9802.00.80, HTSUS (formerly 806.30, TSUS)

Mr. William McKeown
McKeown Customs Brokers
1809 Farragut Street
Laredo, Texas 78040-0909

RE: Applicability of partial duty exemption under HTSUS subhead- ing 9802.00.60 to certain steel purlin channels to be imported from Mexico

Dear Mr. McKeown:

This is in response to your letter of February 1, 1988, to the Regional Commissioner of Customs, New York Region, requesting a ruling on the applicability of subheading 9802.00.60, Harmo- nized Tariff Schedule of the United States (HTSUS) (formerly item 806.30, Tariff Schedules of the United States (TSUS)), to certain steel purlin channels to be imported from Mexico. Your letter has been referred to this office for a response.


You state that hot-rolled steel coil of U.S. origin will be exported to Mexico where it will be cut and slit into blanks, which will then be cold roll-formed into steel C-channel beams denominated "purlins." No standard lengths are specified. The black purlins will then be returned to the U.S. where they will be painted with a red oxide and two holes will be punched at each end to facilitate the incorporation of the purlins into metal buildings. You also indicate that individual purlins will be cut and perforated by the ultimate U.S. purchaser after sale.


Whether the steel purlin will be subjected to "further pro- cessing" in Mexico and in the U.S., thereby rendering it eligible for the partial duty exemption provided for under HTSUS subhead- ing 9802.00.60 (formerly TSUS item 806.30) when imported.


Effective January 1, 1989, the HTSUS superseded and re- placed the TSUS. TSUS item 806.30 was carried over into the HTSUS without change as subheading 9802.00.60. This tariff provision provides a partial duty exemption for:

[a]ny article of metal...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.

HTSUS subheading 9802.00.60 imposes a dual "further processing" requirement on metal articles--one foreign, and when returned, one domestic. Metal articles satisfying these statutory require- ments may be classified under HTSUS subheading 9802.00.60 with duty only on the value of such processing done outside the U.S., upon compliance with section 10.9, Customs Regulations.

In C.S.D. 84-49, 18 Cust. Bull. 957 (1984) we held 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.

In the present case, the cutting, slitting and cold roll- forming of coil steel into C-channel purlins in Mexico are manu- facturing processes sufficient to change the shape of the metal and qualify the exported metal under the foreign processing as- pect of the provision. We have held that slitting operations constitute further processing for purposes of TSUS item 806.30. See, Headquarters Ruling Letters 553950 (December 23, 1985) and 063601 (April 18, 1980). The punching of two holes in the pur- lins in the U.S. is an acceptable 'further processing' operation, as delineated above, and qualifies the returned metal under the domestic processing aspect of the provision. We have held that the boring of holes to accommodate the hinge pin in a grapple yarder tower and the match drilling of safety guards to a yarder main frame are significant processes required to achieve a com- plete functional article. Headquarters Ruling Letter 054830 (February 17, 1978). Accordingly, the steel purlins will be eligible for the partial duty exemption available under HTSUS 9802.00.60 when returned to the U.S., with duty only upon the value or cost of the foreign processing, upon compliance with the Customs Regulations (19 CFR 10.9).


On the basis of the described manufacturing operations, the steel purlin channels are subjected to sufficient manufacturing processes both abroad and on return to the U.S. to qualify for the partial duty exemption under HTSUS subheading 9802.00.60, upon compliance with the certification of registration require- ments at 19 CFR 10.9 (copy enclosed).


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