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NY I87350

November 6, 2002

CLA-2-72:RR:NC:1:117 I87350


TARIFF NO.: 7210.49.00

Mr. Angel Andres Semporini Cardenas
Galvak, S.A. de C.V.
Av. de la Juventud 340 Nte. Col. Cuauhtemoc San Nicolas de los Garza, N.L. 66450 Mexico

RE: The tariff classification and country of origin of galvanized steel sheet processed in Mexico.

Dear Mr. Cardenas:

In your letter dated October 10, 2002, you requested a tariff classification ruling. You ask about the country of origin of the imported product and whether a substantial transformation of the product has occurred as a result of processing operations performed in Mexico. You also ask whether the imported product would be subject to the additional “steel 201 duties” and whether the NAFTA tariff shift requirements are met.

The product that will be imported from Mexico is flat-rolled hot-dip galvanized nonalloy steel in the following sizes: from 0.0085 inch to 0.0180 inch in thickness and from 27 inches to 34 inches in width and from 0.0090 inch to 0.075 inch in thickness and from 36 inches to 48 inches in width.

Galvak, Mexico, plans to purchase full hard cold-rolled steel sheet in coils from China, Holland, England, Japan, South Africa, Turkey and South Korea. This cold-rolled sheet that is imported into Mexico is classifiable under HTS subheading 7209. In Mexico, the full hard cold-rolled steel sheet will go through a continuous hot-dip galvanizing line where it first goes through an annealing furnace prior to being submerged in a hot zinc bath. The galvanized steel then undergoes skin passing and tension leveling operations and is chemically treated. A dry chemical treatment prevents white rust formation and delays dimming of the surface. This treatment is not suitable for further painting processes since it can’t be removed. A bonderite or primer protection is suitable for products that are going to be painted. The processing performed in Mexico changes the microstructure and the mechanical properties of the steel and makes it corrosion resistant. The
full hard cold-rolled sheet going into Mexico is made to ASTM Specification A 568, the Standard Specification for Steel, Sheet, Carbon, and High-Strength, Low-Alloy, Hot-Rolled and Cold-Rolled, General Requirements for and has a typical yield strength of 118 Ksi and tensile strength of 130 Ksi with an elongation of 1% - 4%. The full hard cold-rolled sheet is not corrosion resistant. After the processing performed in Mexico, the annealed and hot-dip galvanized sheet will conform to ASTM Specification A 924, the Standard Specification for General Requirements for Steel Sheet, Metallic-Coated by the Hot-Dip Process and have a yield strength of 33 - 95 Ksi and tensile strength of 45 – 95 Ksi with an elongation of 4% - 40%. The hot-dip galvanized sheet will be corrosion resistant for up to 10 years.

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.

In Ferrostaal Metals Corp. v. United States, 11 CIT 470 (1987), the court ruled that full hard cold-rolled steel sheet produced in Japan that underwent a continuous hot-dip galvanizing operation in New Zealand was substantially transformed in New Zealand. Based on the findings in Ferrostaal, the subject steel product that undergoes the above described processing in Mexico is considered to be a product of Mexico (non-NAFTA purposes).

The applicable subheading for the hot-dip galvanized steel sheet will be 7210.49.00, Harmonized Tariff Schedule of the United States (HTS), which provides for flat-rolled products of iron or nonalloy steel, of a width of 600 mm or more, clad, plated or coated, otherwise plated or coated with zinc, other. The general rate of duty will be 1.3 percent ad valorem.

On March 5, 2002, President Bush proclaimed additional tariffs and quotas on a number of steel mill products for a period of three years. Products classified under HTS subheading 7210.49.00, unless specifically excluded, are subject to additional duties. See subheadings 9903.73.07 through 9903.73.23, copy attached. Noting the superior text to headings 9903.73.07 through 9903.73.23, products of Mexico are exempt.

With regard to NAFTA eligibility, TSUSA General Note 12(t)/72.7 requires a change to headings 7208 through 7216 from any heading outside that group. Since the full hard cold-rolled steel sheet imported into Mexico is classified under HTS heading 7209 and the hot-dip galvanized steel sheet processed in Mexico is classified under HTS subheading 7210, the required tariff shift has not been made.

This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Paula Ilardi at 646-733-3020.


Robert B. Swierupski

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