CLA-2-82:RR:NC:1:104 J81908
Mr. Craig M. Schau
Emery Customs Brokers
6940A Engle Road
Middleburg Hts., OH 44130
RE: The tariff classification of tungsten carbide tool blanks from the U.S. and other countries and eligibility for partial duty exemption under 9802.00.50 and 9802.0060
Dear Mr. Schau:
In your letter dated March 5, 2003 on behalf of Rogers Tool Works, Inc. of Rogers, Arkansas you requested a tariff classification ruling.
Samples of tungsten carbide tool blanks of various grades, part numbers P71006R, P71031R, P71014R, T2587810R and 227314R have been provided. These U.S. made blanks are in the form of rods approximately 1 ½” long. The first three are 1/8” in diameter while the fourth has a ¼” diameter. The last, part number 227314R, is also approximately 1 ½” long however it consists of a 1” shank with an 1/8” diameter brazed to a ½” long rod blank of approximately 5/16” diameter which will be machined into the cutting portion of a reversed shank drill bit. All of the blanks are produced out of a carbide powder also manufactured in the U.S. You have since confirmed by your e-mail of March 31, 2003 that the blanks are made of sintered tungsten carbide.
The samples will be returned as requested.
At present, your client manufactures these blanks and ships them overseas where they are subject to grinding, fluting, pointing, washing, inspection, ringing and packing and labeling. The order of processing does not vary. The resulting drill bits, router bits, etc. will be used for printed circuit board production. Pointing is the cutting and grinding of the tool point. Ringing is the attaching of a plastic ring to the bit in a ring setting machine. The rings serve to identify the product by labeling and color coding. In addition, the rings can be adjusted and used as a depth gauge.
The applicable subheading for the tungsten carbide blanks, except for part number 227314R, will be 8209.00.0030, Harmonized Tariff Schedule of the United States (HTS), which provides for plates, sticks, tips and the like for tools, unmounted, of cermets. The rate of duty will be 4.6 percent.
Since part number 227314R consists of a shank portion of a tool mounted to a cutting portion by brazing, classification cannot be under 8209.00.30. As noted above, part number 227314R is a sintered tungsten carbide blank for a reversed shank drill bit. (You have also indicated in your e-mail of March 31, 2003 that the blanks are created in specific sizes for use only as specific end products.)
The applicable subheading for part number 227314R will be 8207.50.2080, HTS, which provides for interchangeable tools for handtools, whether or not power operated, or for machine tools …: tools for drilling, other than rock drilling, and parts thereof: with cutting part containing by weight over 0.2 percent of chromium, molybdenum or tungsten or over 0.1 percent of vanadium. The general rate of duty will be 5 percent.
In addition to the classification, you inquire as to whether any of the tools, router bits, drill bits, etc., made from these tungsten carbide tool blanks of U.S. origin will be eligible for treatment under HTS subheading 9802.00.50 when returned to the U.S. They would not be eligible.
Subheading 9802.00.50 provides for articles returned to the United States after having been exported to be advanced in value or improved in condition by any process of manufacture or other means: articles exported for repair or alterations: other.
Subheading 9802.00.50 treatment 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. See HQ ruling 957375 of April 19, 1995.
Finally, you ask if any of the operations performed in Europe are performed in the U.S. after importation, would 9802.00.60 apply.
Subheading 9802.00.60, HTSUS, provides a partial duty exemption for “any article of metal (as defined in U.S. note 3(e) of this subchapter) manufactured in the United States or subjected 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. It provides for a duty upon the value of such processing outside the United States (see U.S. note 3 of this subchapter), provided the documentary requirements of 19 C.F.R. 10.9 are satisfied.”
Pursuant to U.S. Note 3(e) of subchapter II, Chapter 98, HTSUS, for purposes of subheading 9802.00.60)(EN), the term "metal" covers (1) the base metals enumerated in Note 3 to section XV, HTSUS; (2) arsenic, barium, boron, calcium, mercury, selenium, silicon, strontium, tellurium, thorium, uranium and the rare-earth elements; and (3) alloys of any of the foregoing.
The issue is whether or not a sintered metal (tungsten) carbide, a cermet, meets the requirements of Note 3(e) of subchapter II, Chapter 98.
Section XV, note 7 deals with the classification of composite articles. It states that “Except where the headings otherwise require, articles of base metal (including articles of mixed materials treated as articles of base metal under the General Rules of Interpretation) containing two or more base metals are to be treated as articles of the base metal predominating by weight over each of the other metals. For this purpose: … (c) A cermet of heading 8113 is regarded as a single base metal.” (This statement, that a cermet of heading 8113 is regarded as a single base metal, also appears in the General Notes of the Explanatory Notes to section XV under part (B) articles of base metals, item (3) on page 1209.)
As noted above, the sintered tungsten carbide blanks at issue here are cermets. The metal predominating by weight is tungsten, which is one of the base metals described in section XV, note 3. The sintered tungsten carbide blank (cermet) then meets the requirements of U.S. Note 3(e) of subchapter II, Chapter 98.
In addition to being a metal and made in the U.S., the dual further processing requirement of subheading 9802.00.60 must be satisfied. It must be exported for further processing and returned to the US for further processing. Of the processing steps mentioned – grinding, fluting, pointing, washing, inspection, ringing and packing and labeling – only the grinding, fluting and pointing can be considered. Since you have indicated that the order of processing does not vary, the requirement could be satisfied by grinding and fluting the blank overseas and then pointing after it is returned to the U.S. or grinding overseas and then fluting and pointing in the U.S.
Upon meeting the dual processing requirement and satisfying the documentary requirements of 19 C.F.R. 10.9, the imported tools produced from the U.S. made tungsten carbide tool blanks would qualify for a partial duty exemption under subheading 9802.00.60, HTSUS.
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 Robert Losche at 646-733-3011.
Sincerely,
Robert B. Swierupski
Director,
National Commodity
Specialist Division