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HQ 555997

August 14, 1991

CLA-2 CO:R:C:S 555997 RA


TARIFF No.: 9802.00.60

Ms. Jill Thomas
11-Vi Incorporated
375 Saxonburg Blvd.
Saxonburg, Pennsylvania 16057

RE: Applicability of partial duty exemption to germanium lenses processed abroad and coated after return; Firestone Tire; C.S.D. 84-49; 071396; 067328; 553833; 553630

Dear Ms. Thomas:

This is in response to your letter of December 3, 1990, addressed to our New York office and referred to us for reply, on the applicability of subheading 9802.00.60, Harmonized Tariff Schedule of the United States (HTSUS), to U.S.-manufactured lenses of germanium metal which are fabricated abroad and returned to the U.S. for a coating operation.


Your company purchases optical blanks made of germanium in the U.S. and exports them to your facility in Singapore for grinding, beveling, and polishing into optical elements. The operations performed in the U.S. upon their return include quality inspection, surface cleaning in preparation for coating, and finally the application of an infrared thin-film design coating.


Whether the surface cleaning and coating of the optical elements after their return to the U.S. satisfies the domestic further processing requirement of subheading 9802.00.60, HTSUS.


Subheading 9802.00.60, HTSUS, provides a partial duty exemption for:

Any 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.

Subheading 9802.00.60, HTSUS, imposes a dual "further processing" requirement on eligible metal articles--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 there is compliance with the documentary requirements of section 10.9, Customs Regulations 19 CFR 10.9).

Germanium is an eligible article of metal for purposes of subheading 9802.00.60, HTSUS. See U.S. Note 3(d), subchapter II, Chapter 98, HTSUS, and additional U.S. Note 1, Section XV, HTSUS.

In C.S.D. 84-49, 19 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.

(The precusor provision to subheading 9802.00.60, HTSUS, was item 806.30, Tariff Schedules of the United States (TSUS).)

In this case, the grinding and beveling operations performed in Singapore satisfy the foreign "further processing" requirement of the statute. However, it is our opinion that the cleaning and coating operations performed when the optical elements return to the U.S. are insufficient to comply with the domestic "further processing" requirement. In Headquarters Ruling Letter (HRL) 071396 dated July 19, 1983, we held that the application of a plastic coating to a metal article would not constitute "further processing" because the new characteristics imparted by the operation did not become an integral part of the metal itself. We have consistently held that, as a general rule, surface coating or painting, standing alone, is insufficent to qualify a metal article for the benefits of this tariff provision. See HRLs 067328 dated June 30, 1981, 553833 dated October 17, 1985, and 553630 dated May 24, 1985.

In The Firestone Tire and Rubber Co. V. U.S., 71 Cust. Ct. 63, 364 F.Supp. 1394, C.D. 4474 (1973), the court held that a foreign rubber coating operation, consisting of an acid pickling process designed to alter chemically the exterior surface of the metal article, and the application of a special adhesive and coating of rubber constituted "further processing" for purposes of item 806.30, TSUS. These cumulative operations, which served to impart a shock resistant quality to the article, were considered by the court to be sufficient to satisfy the "further processing" requirement. We believe the facts in Firestone are distinquishable from those in the instant case because, unlike the situation in Firestone, the only operation to which the germanium lenses are subjected (aside from cleaning) is the application of a thin infrared coating. This coating not only does not change the metal's shape or form, but the new characteristics imparted by the operation do not become an integral part of the metal itself.


The surface cleaning and infrared coating operations performed on the returned germanium lenses are not considered sufficient to qualify as "further processing" under subheading 9802.00.60, TSUS.


John Durant, Director
Commercial Rulings Division

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