CLA-2-CO:R:C 555384 RA
District Director of Customs
909 First Avenue
Room 2039
Seattle, Washington 98174
RE: Application for further Review of Protest No. 3004-7-000140,
contesting the denial of item 806.20, TSUS, treatment to
steel piling galvanized in Canada
Dear Sir:
This is in reference to your memorandum of March 15, 1988,
forwarding the above-referenced protest, filed August 18, 1987,
at the port of Blaine, Washington. The protest was filed against
the decisions in the liquidation on August 14, 1987, of entry
Nos. 110 0026965, 66, 67 and 68.
FACTS:
Steel sheet piling made in the U.S. was exported to Canada
where it was galvanized and returned to the U.S. The galvanized
piling will be used in a salt water application and the
protestant claims it did not lose its identity as a result of the
foreign processing, thereby enabling the operation to be treated
as an alteration. Protestant states that steel sheet piling
usually is not galvanized before use.
ISSUE:
Will the provision in subheading 9802.00.50, Harmonized
Tariff Schedule of the United States (HTSUS), which authorizes a
partial duty exemption for articles altered abroad, apply to
sheet steel piling subjected to a galvanizing process in Canada?
LAW AND ANALYSIS:
Subheading 9802.00.50, HTSUS, provides for an allowance in
duty for articles returned to the U.S. after having been exported
for alterations while abroad. The articles must be finished
products when they leave the U.S. and not undergo any
intermediate processing to complete them in the foreign country.
Also, its application is precluded where the foreign operations
result in commerically different articles or where they finish
the manufacturing began in the U.S. in order to meet pre-
established specifications. Dolliff & Company, Inc. v. U.S., 66
CCPA 77, C.A.D. 1225, 599 F. 2nd 1015 (1979).
The galvanizing process in Canada was the final step in the
manufacture of steel piling which was coated with zinc in order
to render it resistant to salt water corrosion. In Ferrostall
Metals Corporation v. U.S., 11 CIT , 664 F. Supp. 535 (1987),
the Court of International Trade held that hot-dip galvanizing of
sheet steel resulted in a substantial transformation and a
different product. The processing caused a change in character
by significantly altering the mechanical and chemical composition
of the steel and providing protection against corrosion. In the
case of Guardian Industries Corporation v. U.S., 3 CIT 9 (1982),
the court decided that when a foreign processing creates a new
article of commerce, the operation cannot be considered to be an
alteration. We held in a ruling dated February 12, 1982
(067675), that a foreign galvanizing process makes the steel
articles into finished products with new and enhanced
characteristics ready for their intended use as corrosion
resistant materials and this process exceeds an alteration.
HOLDING:
The galvanizing of steel piling in Canada constitutes a
substantial processing which goes beyond an alteration and
precludes any exemption from duty under the provisions of
subheading 9802.00.50, HTSUS. Accordingly, the protest should be
denied in full.
Sincerely,
John Durant, Director
Commercial Rulings Division