CLA-2-CO:R:C 555291 RA
TARIFF NOS.: 9802.00.50 and 9802.00.60, HTSUS
Mr. Charles A. Snodderly
Import Contract Administrator
SKW Metals and Alloys, Inc.
P.O. Box 368
Niagara Falls, New York 14302
RE: Applicability of subheading 9802.00.50 or 9802.00.60, HTSUS,
to aluminum alloy products
Dear Mr. Snodderly:
This is in response to your letter of December 22, 1988,
addressed to the Regional Commissioner of Customs, New York
Region, which has been referred to us for reply on the question
of a partial duty allowance for certain aluminum alloy products
made in England from aluminum ingots of U.S. origin.
FACTS:
You indicate that aluminum ingots from domestic supplies are
exported to England where they will be melted and blended with
metals of foreign origin to form various finished grain refining
alloy products for use as additives in alloy manufacture. Upon
return to the U.S., aluminum producers will further blend the
imported alloy products with raw aluminum to produce metal stock
for use in the manufacture of finished aluminum products, such as
automobile or airplane parts.
ISSUE:
Will the provision for products exported for alterations in
subheading 9802.00.50, Harmonized Tariff Schedule of the United
States (HTSUS), or the provision for metal articles processed
abroad and further processed on return in subheading 9802.00.60,
HTSUS, apply to the aluminum alloy products made abroad?
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LAW AND ANALYSIS:
Subheading 9802.00.50, HTSUS, provides for the assessment of
duty on the value of repairs or alterations performed on articles
sent abroad for that purpose. However, the application of this
tariff provision is precluded in circumstances where the
operations performed abroad destroy the identity of the articles
or create new or commercially different articles. Guardian
Industries Corporation v. U.S., 3 CIT 9 (1982). Subheading
9802.00.50, HTSUS, treatment also is precluded where the exported
articles are incomplete for their intended use and the foreign
processing operation is a necessary step in the preparation or
manufacture of finished articles. Dolliff & Company, Inc. v.
U.S., 66 CCPA 77, C.A.D. 1225 (1979). As the aluminum ingots in
the instant case are sent abroad to be finished into new and
different alloy products, the foreign operations clearly exceed
the meaning of the term "alterations."
Subheading 9802.00.60, HTSUS, is applicable only to articles
of metal (except precious metal) which are manufactured in the
U.S. or subjected to a process of manufacture in the U.S.,
exported for further processing, and returned after such
processing for further processing in the U.S. Articles which
satisfy these requirements are dutiable only upon the value of
the processing performed outside the U.S., assuming compliance
with section 10.9, Customs Regulations (19 CFR 10.9; copy
enclosed). Thus, this tariff provision is applicable in this
case only if the returned alloy products are not finished for the
purposes of their intended use and are further processed in the
U.S. to advance them towards their end use in making finished
aluminum products. When they are melted and blended with other
metal, the additives have been further processed in the U.S. as
required by subheading 9802.00.60, HTSUS. In C.I.E. 1240/55,
dated December 9, 1955, we held that purified metals returned to
be alloyed and the resultant alloys used in the manufacture of
automobile and similar parts would be considered as further
processed in the U.S.
HOLDING:
Aluminum alloy products made by melting domestic-made ingots
and blending with foreign-made metals have been subjected to
operations abroad which exceed the scope of the term
"alterations," thereby precluding application of subheading
9802.00.50, HTSUS, to the returned alloy products. However, the
use of the alloy products when returned as additives to other
metal by melting and blending to make alloys used in the
manufacture of metal parts would be considered as further
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processing in the U.S., as required by subheading 9802.00.60,
HTSUS. Therefore, the returned alloy products will be entitled
to the partial duty exemption provided for in this tariff
provision, upon compliance with 19 CFR 10.9. Duty will be
assessed on the value of the foreign processing, which will not
include the value of the exported aluminium ingots of U.S.
origin.
Sincerely,
John Durant, Director
Commercial Rulings Division
Enclosure