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HQ 557339

September 10, 1993

CLA-2 CO:R:C:S 557339 MLR


TARIFF NO.: 9802.00.60

Mr. Ian Hyland
Customs Supervisor
Alcatel Canada Wire Inc.
250 Ferrand Drive
North York, Ontario
Canada M3C 3J4

RE: Applicability of HTSUS subheading 9802.00.60 to copper strands from Canada; insulating, cabling, wrapping, armoring, jacketing performed in U.S.

Dear Mr. Hyland:

This is in reference to your letter of May 10, 1993, concerning the applicability of subheading 9802.00.60, Harmonized Tariff Schedule of the United States (HTSUS), to copper strands from Canada.


Alcatel Canada Wire Inc ("Alcatel") is considering importing U.S.-origin copper cathodes into Canada for conversion into various copper strands which would subsequently be exported to the U.S. to be made into finished conductor cables. The proposed operations are effectively identical to those performed by Alcatel in Headquarters Ruling Letter (HRL) 556345 dated February 10, 1992, in that the cathodes are melted in a furnace and passed through casting, rolling, and pickling stages in a continuous process to produce rods. However, unlike HRL 556345, where the rods were exported to the U.S. for further processing into copper strands and then cables, Alcatel proposes to transfer the rods to another Canadian plant where they are drawn to smaller diameters and stranded. The strand is then wound on reels and shipped to cable manufacturing plants in the U.S.

In the U.S., the processes to make cables are stated to include insulating, cabling, wrapping, armoring, and jacketing the copper strands. Evidently, the copper strand returned to the U.S. can only be used for further processing into electrical or communications cables. In a brochure introducing the instrumentation cables manufactured by Chester Cable Corporation, it is indicated that some of the strands are coated with a PVC jacket, twisted, and then applied with an overall shield of PVC or CPE. When increased mechanical, chemical, or environmental protection is required, a hermetically sealed aluminum tape or copper tape armor with an additional PVC or CPE jacket can be provided.


Whether the copper strand will be eligible for the partial duty exemption available under subheading 9802.00.60, HTSUS, when imported into the U.S.


Subheading 9802.0060, HTSUS, 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 subject 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 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 of the U.S., provided there is compliance with the documentary requirements of section 10.9, Customs Regulations (19 CFR 10.9).

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

[f]or purposes of item 806.30, Tariff Schedules of the United States (TSUS) (precursor to 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.

In HRL 556345, it was held that the processes performed abroad by Alcatel on the U.S.-origin copper cathodes to make copper rod, constituted "further processing." Therefore, clearly, the processes performed in Canada in this case, which also include processing the rod into copper strand, constitute "further processing." Accordingly, the only question remaining is whether the domestic "further processing" requirement is met. In this case, the domestic operations involve insulating, cabling, wrapping, armoring, and jacketing the copper strand to create finished conductor or communications cable.

In The Firestone Tire and Rubber Co. v. United States, 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 domes, 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 to be sufficient to satisfy the "further processing" requirement. However, in HRL 071396 dated July 16, 1983, we held that coating a metal article with an extruded polyvinyl plastic material to provide a moisture-proof product did not constitute "further processing" because the new characteristics incorporated by the operation did not become an integral part of the metal itself. It was stated that where a coating shield is preceded by other operations such as etching or blasting that are intended to impart significant new characteristics to the metal so as to affect the metal itself, the coating may be considered a processing within the meaning of the tariff provision. However, as a general rule, surface coating or painting, standing alone, is insufficient to qualify a metal article for the benefits of subheading 9802.00.60, HTSUS. See HRL 067328 dated June 30, 1981, HRL 553833 dated October 17, 1985, and HRL 553630 dated May 24, 1985. Therefore, although the applied plastic coating may have been the last step to process the metal article into tubing, the coating alone was not sufficient processing to qualify the imported tubing under the requirements of item 806.30, TSUS.

Furthermore, in HRL 554940 dated March 27, 1989, it was held that the processes of subjecting stainless steel strips to "electrochemical cleaning" and extruding a dimethyl polysiloxane- related strip of rubber onto the metal did not change the shape of the metal nor impart new and different characteristics which became an integral part of the metal itself, thereby precluding the application of item 806.30, TSUS, treatment. Also, in HRL 555997 dated August 14, 1991, U.S.-origin optical blanks made of germanium were exported to Singapore for grinding, beveling, and polishing into optical elements. In the U.S., the optical elements were inspected, their surface was cleaned, and an infrared thin-film design coating was applied. It was stated that unlike the situation in Firestone, the only operation to which the germanium lenses were subjected (aside from cleaning) was the application of a thin infrared coating. This coating not only did not change the metal's shape or form, but the new characteristics imparted by the operation did not become an integral part of the metal itself.

Based on the description of the operations to be performed in the U.S. on the copper strand to create the cables, it is our opinion that the domestic "further processing" requirement would not be satisfied. In HRL 556345, the emphasis on the domestic processing was on the drawing operation conducted on the imported copper rod to make copper strands. However, Alcatel now proposes to perform this drawing operation in Canada. Therefore, we find that, as in HRL 071396, although the insulating, cabling, wrapping, armoring, and jacketing operations in the U.S. may finish the copper strands for their intended purpose, these operations do not impart new characteristics which become an integral part of the copper strands.


On the basis of the information submitted, we find that the processes performed in Canada on the exported copper cathodes constitute "further processing" as that term is used in subheading 9802.00.60, HTSUS. However, the insulating, cabling, wrapping, armoring, and jacketing operations performed in the U.S. on the imported copper strands do not constitute "further processing." Consequently, the imported copper strands will not be entitled to entry under subheading 9802.00.60, HTSUS.


John Durant, Director

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