United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 1991 HQ Rulings > HQ 0555716 - HQ 0555869 > HQ 0555817

Previous Ruling Next Ruling

HQ 555817

April 17, 1991

CLA-2 CO:R:C:S 555817 KCC


TARIFF NO.: 9801.00.10

Mr. Octavio Saavedra
Corrigan Dispatch Company
Box 3610
1350 Cheers Boulevard
Brownsville, Texas 78523-3610

RE: Foreign and domestic scrap metal subjected to a shredding process in the U.S. and then shipped to Mexico for sorting.19 CFR 10.12(e); substantial transformation

Dear Mr. Saavedra:

This is in response to your letter dated November 14, 1990, to the District Director, Laredo, Texas, on behalf of Newell International Inc., requesting a ruling concerning the applicability of subheading 9801.00.10, Harmonized Tariff Schedule of the United States (HTSUS), to scrap metal imported from Mexico. Your request was forwarded to this office for the preparation of a response.


Newell International Inc. intends to purchase old crushed scrap cars and other miscellaneous metal items from junk and salvage yards in the U.S. In the U.S., these metal items of domestic- and foreign-origin are put in a high power shredding machine to reduce the size of the pieces. The mixed shredded scrap metal is then shipped to Mexico where it will be separated into different piles by type of metal, such as copper, aluminum, zinc, etc. Once a full trailer load of one type of metal is accumulated, it will be imported into the U.S.


Whether the scrap metal will qualify for the duty exemption available under subheading 9801.00.10, HTSUS, when imported into the U.S.


Subheading 9801.00.10, HTSUS, provides for duty-free entry of U.S. products that are exported and returned without having been advanced in value or improved in condition by any process of manufacture or other means while abroad. Articles satisfying the above conditions of the statute will be afforded duty-free treatment, provided the documentary requirements of section 10.1, Customs Regulations (19 CFR 10.1), are met.

According to section 10.12(e), Customs Regulations (19 CFR 10.12(e)), a "product of the United States" is an article manufactured within the customs territory of the U.S. and may consist wholly of U.S. components or materials, of U.S. and foreign components or materials, or wholly of foreign components or materials. If the article consists wholly or partially of foreign components or materials, the U.S. manufacturing process must be such that the foreign components or materials are substantially transformed into a new and different article, or are merged into a new and different article.

A substantial transformation occurs when, as a result of manufacturing processes, a new and different article emerges, having a distinctive name, character, or use, which is different from that originally possessed by the article or material before being subjected to the manufacturing process. See, Anheuser- Busch Association v. United States, 207 U.S. 556 (1908), and section 10.14(b), Customs Regulations (19 CFR 10.14(b)).

We have held that foreign-origin scrap subjected to processes such as dismantling, shredding, and crushing, whether or not accompanied by sorting, grading, or other similar activities to promote the stability or utility of the scrap, was not subjected to a process of manufacture in the U.S. so as to make it an eligible article of metal for purposes of subheading 9802.00.60, HTSUS. See, Headquarters Ruling Letter (HRL) 554750 dated September 23, 1988, and HRL 555557 dated April 15, 1991.

We are of the opinion that shredding the scrap metal does not result in a substantial transformation of the foreign- origin metal into a "product of the U.S." The metal does not undergo a name change during the shredding operation. Scrap metal exists before and after the shredding operation. Additionally, the character and use of the metal has not changed. The shredding operation merely reduces the scrap metal from large pieces into smaller pieces. Therefore, as the exported shredded scrap consists of both U.S.- and foreign- origin metal, the sorted scrap metal will not be entitled to duty-free treatment under subheading 9801.00.10, HTSUS, when imported into the U.S.


The foreign scrap metal is not substantially transformed into a "product of the U.S." by the U.S. shredding process. As the mixed foreign and domestic shredded scrap metal is not totally a U.S. product, it is not eligible for duty-free treatment under subheading 9801.00.10, HTSUS.


John Durant, Director
Commercial Rulings Division

Previous Ruling Next Ruling

See also: