OT:RR:CTF:FTM H301494 PJG
Mr. Alex Romero
A.F. Romero Co.
1749 Stergios Road
Calexico, CA 92231
RE: Revocation of NY N298549; Country of origin of steel tubing from Mexico; 2018 Section 232 trade remedy; Subheading 9903.80.01, HTSUS
Dear Mr. Romero:
This letter is to inform you that U.S. Customs and Border Protection (“CBP”) has reconsidered New York Ruling Letter (“NY”) N298549, which was issued to you, on behalf of Merchant Metals Inc., on July 31, 2018. In NY N298549, CBP considered the country of origin of steel tubing, classified under subheading 7306.61.50, Harmonized Tariff Schedule of the United States (“HTSUS”), which provides for “[o]ther tubes, pipes and hollow profiles (for example, open seamed or welded, riveted or similarly closed), of iron or steel: Other, welded, of noncircular cross section: Of square or rectangular cross section: Having a wall thickness of less than 4mm: Of iron or nonalloy steel.” CBP determined the country of origin of the product is the United States pursuant to 19 C.F.R. Part 102. We have reviewed NY N298549 and found it to be incorrect. For the reasons set forth below, we are revoking NY N298549.
Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. § 1625(c)(1)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act, Pub. L. No. 103-182, 107 Stat. 2057, 2186 (1993), notice of the proposed action was published on September 25, 2019, in Volume 53, Number 34, of the Customs Bulletin. No comments were received in response to this notice.
FACTS:
In NY N298549, the product was described as a “steel tubing/pipe for use as fence posts in ornamental fence panels.” The steel tubing was manufactured in the United States, exported to Mexico for powder painting, iron phosphate treatment to inhibit rust, and chemical etching. The steel tubing was then imported back into the United States. You state that the steel tubing is classified under subheading 7306.61.50, HTSUS, when it is exported to Mexico and when it is imported back into the United States.
CBP issued NY N298549 in response to your request for a country of origin determination for the purposes of application of subheading 9903.80.01 HTSUS, which provides for “[p]roducts of iron or steel provided for in the tariff headings or subheadings enumerated in note 16 to this subchapter, except products of Australia, of Argentina, of South Korea, of Brazil, of Turkey or any exclusions that may be determined and announced by the Department of Commerce” and which applies an additional 25 percent ad valorem rate of duty to the column one general rate of duty in the applicable subheading.
ISSUE:
What is the country of origin of the steel tubing imported from Mexico for purposes of application of the 2018 Section 232 trade remedy for goods under subheading 9903.80.01, HTSUS?
LAW AND ANALYSIS:
Effective March 23, 2018, the Department of Commerce imposed an additional tariff on certain steel articles classified in the subheadings enumerated in Section XXII, Chapter 99, Subchapter III, U.S. Note 16, HTSUS. For additional information, see the Federal Register Notice entitled “Adjusting Imports of Steel Into the United States.” 83 Fed. Reg. 11625 (March 15, 2018). Certain steel articles classified in the subheadings enumerated in Section XXII, Chapter 99, Subchapter III, U.S. Note 16, HTSUS, referenced in subheading 9903.80.01, HTSUS, shall continue to be subject to antidumping, countervailing, or other duties and charges that apply to such products. In particular, products classified in subheading 7306.61.50, HTSUS, are subject to the additional tariff under subheading 9903.80.01, HTSUS.
Subheading 9903.80.01, HTSUS, provides for an additional duty of 25 percent ad valorem, in addition to the duty provided in the applicable subheading. Subheading 9903.80.01, HTSUS, is applicable to “[p]roducts of iron or steel provided for in the tariff headings or subheadings enumerated in note 16 to this subchapter, except products of Australia, of Argentina, of South Korea, of Brazil, of Turkey or any exclusions that may be determined and announced by the Department of Commerce.”
U.S. Note 16 to Chapter 99, Subchapter III, Section XXII, HTSUS, provides, in pertinent part:
This note and the tariff provisions referred to herein set forth the ordinary customs duty treatment applicable to all entries of the iron or steel products of all countries other than of the United States, when such iron or steel products are classifiable in the headings or subheadings enumerated in subdivision (b) of this note. All anti-dumping, countervailing, or other duties and charges applicable to such goods shall continue to be imposed, except as may be expressly provided herein.
…
The rates of duty set forth in headings 9903.80.01 and subheadings 9903.80.05 through 9903.80.58, inclusive, apply to all imported products of iron or steel classifiable in the provisions enumerated in this subdivision:
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(iii) tubes, pipes and hollow profiles provided for in heading 7304 or 7306; tubes and pipes provided for in heading 7305;
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Any reference above to iron or steel products classifiable in any heading or subheading of chapter 72 or 73, as the case may be, shall mean that any good provided for in the article description of such heading or subheading and of all its subordinate provisions (both legal and statistical) is covered by the provisions of this note and related tariff provisions.
When determining the country of origin for purposes of applying current trade remedies under Section 301, Section 232, and Section 201, the substantial transformation analysis is applicable. See HQ H301619 (Nov. 6, 2018); see also HQ 563205 (June 28, 2006); and Belcrest Linens v. United States, 741 F.2d 1368, 1370-71 (Fed. Cir. 1984) (stating that “the term ‘product of’ at the least includes manufactured articles of such country or area” and that substantial transformation “is essentially the test used…in determining whether an article is a manufacture of a given country”). In accordance with 19 C.F.R. § 102.0, the 102 marking rules are applicable for the limited purposes of: country of origin marking specified in paragraph 1 of Annex 311 of the North American Free Trade Agreement (“NAFTA”), as implemented under the NAFTA Implementation Act, Pub. L. 103-182, 107 Stat. 2057 (December 8, 1993); determining the rate of duty and staging category applicable to originating textile and apparel products as set out in Section 2 (Tariff Elimination) of Annex 300–B (Textile and Apparel Goods); and determining the rate of duty and staging category applicable to an originating good as set out in Annex 302.2 (Tariff Elimination). As stated above, the Part 102 rules do, however, continue to be applicable for purposes of country of origin marking of NAFTA goods, as defined in 19 C.F.R. § 134.1. See HQ H301619 (Nov. 6, 2018); and HQ H302252 (Feb. 27, 2019).
The test for determining whether a substantial transformation will occur is whether an article emerges from a process with a new name, character or use, different from that possessed by the article prior to processing. See Texas Instruments Inc. v. United States, 69 C.C.P.A. 151 (1982). This determination is based on the totality of the evidence. See National Hand Tool Corp. v. United States, 16 Ct. Int’l Trade 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993).
In National Hand Tool Corp. v. United States, the court held that hand tool components imported from Taiwan and used to make flex sockets, speeder handles, and flex handles were not substantially transformed in the United States. Id. at 313. The court focused on the fact that the components had been cold-formed or hot-forged into their final shape before importation and their use was predetermined at the time of importation. Id. at 311-312. The court stated that the fact that there was only one predetermined use of the imported articles did not preclude the finding of substantial transformation but that the finding would be based on a “totality of the evidence.” Id. at 312.
In this case, the steel tubing is manufactured in the United States and exported to Mexico for powder painting, iron phosphate treatment, and chemical etching. Similar to National Hand Tool Corp. v. United States, the steel tubing did not undergo a change in name, character, or use due to the processing performed in Mexico. Based on the information provided, the processing performed in Mexico is akin to finishing operations and the steel tubing is not substantially transformed. See id.; see also HQ H302252 (Feb. 27, 2019) (CBP determined that the U.S.-origin steel tube was not substantially transformed after undergoing assembly operations in Mexico, which “involve[d] welding a flange to the bottom of the tube, powder coating the tube and flange, and soldering a steel cap on the end of the tube”).
As the steel tubing of U.S. origin is not substantially transformed in Mexico, the steel tubing remains a product of the United States. Therefore, in accordance with U.S. Note 16 to Chapter 99, Subchapter III, Section XXII, the steel tubing is not subject to the additional 25 percent ad valorem rate of duty under subheading 9903.80.01, HTSUS, because it is a steel product of the United States.
HOLDING:
The country of origin of the steel tubing for purposes of the 2018 Section 232 trade remedy is the United States. Therefore, the steel tubing is not subject to the Section 232 trade remedy measures and the additional 25 percent ad valorem rate of duty under subheading 9903.80.01, HTSUS, will not apply.
EFFECT ON OTHER RULINGS:
NY N298549, dated July 31, 2018, is hereby REVOKED.
In accordance with 19 U.S.C. § 1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division