CLA-2-7498:OT:RR:NC:1:117
Mr. Michael T. Shor
Arnold & Porter LLP
555 Twelfth Street, NW
Washington, DC 20004-1206
RE: The tariff eligibility of copper flat-rolled strip products from Germany and the United Kingdom for 9802.00.6000 HTSUS
Dear Mr. Shor:
In your letter dated July 26, 2013 you requested a tariff classification ruling on behalf of your client Wieland Metals Inc.
The products which are intended to be imported are described as semi-finished copper and copper alloy flat-rolled strip products produced in Germany and the United Kingdom from scrap metal generated by Weiland Metals from their U.S. processing plant and scrap metal purchased from other U.S. manufacturers.
Two distinct types of transactions are described regarding the tolling arrangements for the use of Wieland scrap for the products intended to be imported and the disposition of the imported flat products made from that scrap. In the first case, Wieland will generate scrap at their U.S. facility. Wieland has one part of the U.S. plant dedicated to the slitting and cutting of the imported flat- rolled products into customer-specified lengths and widths. In a separate part of the plant further processing steps are performed including cold-rolling, annealing, pickling and brushing to reshape the surface of the metal. All of the slitting, cutting and further processing operations in the U.S. generate scrap. Since the two types of scrap are generated in different parts of the plant the scrap is segregated and is not to be included in the scrap exported for further processing abroad. At issue in this request is not the cutting and slitting operation scrap since simple cutting or slitting of foreign made metal does not qualify for consideration in subheading 9802.00.6000, Harmonized Tariff Schedule of the United States, (HTSUS).
This request is concerned only with the scrap resulting from the separable processing of cold- rolling, annealing, pickling and brushing. It is indicated that not all foreign made material would be subject to all the named processing steps. Some may be only cut and slit in one section of the facility and not at issue here, while other material may be subject to one or all of the processing steps of cold-rolling, annealing, pickling, and brushing. In the foreign manufacturing plant the producer is said to segregate Wieland’s scrap material from other scrap material and use the Wieland scrap exclusively to cast and roll new semi-finished metal coils that will then be imported by Wieland.
The processing steps described as cold-rolling, annealing, pickling, and brushing all satisfy the criteria provided in subheading 9802.00.6000 HTSUS for changing the shape of the metal or imparting new and different characteristics. Those four steps individually or together qualify the described scrap for 9802.00.6000, HTSUS.
Upon importation, Wieland will either sell the semi-finished coils to U.S. manufacturers directly or subject the flat-rolled products to the processing steps of cutting and slitting and/or further processing by cold-rolling, annealing, pickling and brushing. All of Wieland’s further processed copper and copper alloy flat-rolled products, as well as the product sold directly without Wieland processing, will be sold to U.S. manufacturers to produce finished products such as electrical connectors, vent grates, keys, etc. When further processed in the U.S., the common fabrication processes which the imported product would undergo at the final U.S. manufacturing facility include drawing, stamping, shaping or forming.
In the second case, Wieland would purchase scrap metal from U.S. scrap dealers who would certify that the scrap originated from U.S. made metal. Again the foreign primary producers would segregate the scrap furnished by Wieland and use that exclusively in the production of the copper flat-rolled products to be sold to Wieland. The subsequent processing and sale in the U.S. would be the same as described in the first case scenario.
Subheading 9802.00.6000, HTSUS, provides a partial duty exemption for:
[a]ny article of metal (as defined in U.S. note 3(d) 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 is 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.
This tariff provision imposes a dual "further processing" requirement on eligible metal articles: one foreign, and when returned, one domestic. Articles of metal satisfying these statutory requirements may be classified under subheading 9802.00.6000, HTSUS, with duty only upon the value of such processing performed outside the U.S., upon compliance with the documentation requirements of section 10.9, Customs Regulations (19 CFR 10.9).
Customs and Border Protection has consistently held that subheading 9802.00.6000, HTSUS, is inapplicable to scrap obtained directly from non-manufacturing processing of foreign-made metal in the U.S. The requirement that scrap be a metal article "manufactured or subjected to a process of manufacture" in the U.S. is satisfied only if the metal article from which the scrap was obtained was initially manufactured or subjected to a process of manufacture in the U.S. Customs does not consider processes such as the dismantling (by whatever means), shredding, crushing, ripping and grinding of obsolete articles and industrial scrap to be manufacturing processes, whether or not accompanied by sorting, grading or other similar activities to promote the salability or utility of the scrap. Manufacturing begins once raw materials are available and does not include reclamation activities undertaken with respect to obsolete and industrial scrap prior to the creation of raw materials for new manufacturing. Based on the information submitted, the scrap in this case is obtained from metal articles which were subjected to manufacturing processes in the U.S. Thus, the metal scrap in the instant case is "manufactured or subjected to a process of manufacture" in the U.S., as required by subheading 9802.00.6000, HTSUS.
In C.S.D. 84-49, 18 Cust. Bull. 957 (1983), it was stated that:
(f)or purposes of item 806.30 (the precursor provision to subheading 9802.00.6000, HTSUS), the term "further processing" has reference to processing that changes the shape of the metal or imparts new and different characteristics which become an integral part of the metal itself and which did not exist in the metal before processing; thus, further processing includes machining, grinding, drilling, threading, punching, forming, plating and the like, but does not include painting or the mere assembly of finished parts by bolting, welding, etc.
Manufacturing copper and copper alloy flat-rolled products abroad, utilizing this qualifying scrap, clearly constitutes a "further processing" as enumerated in C.S.D. 84-49, supra at 963. In addition, the further processing in the U.S. of the imported foreign materials made from that U.S. scrap also qualifies as further processing after reimportation. As previously stated, in order to be considered "further processing," some operation must be applied to the metal which changes the shape or form of the metal or imparts new and different characteristics which become an integral part of the metal itself. Processing performed on an already completed article, incident to using it for the purpose intended, is not sufficient to constitute "further processing." Intelex Systems, Inc. v. United States, 59 CCPA 138, C.A.D. 1055 (1972).
Regarding the further manufacturing in the U.S. by companies other than Wieland, there is no requirement under subheading 9802.00.6000, HTSUS, that the identity of the person who performs the further processing in the U.S. be known at the time the material is exported from the U.S., or at the time the returned material enters the U.S. There is also no requirement that the same person who imports the material must perform the further processing in the U.S.
Based on the information submitted, manufacturing copper and copper alloy flat-rolled products abroad using U.S. origin copper scrap, as described, satisfies the foreign "further processing" requirement of subheading 9802.00.6000, HTSUS. Entitlement to the partial duty exemption under subheading 9802.00.6000, HTSUS, is contingent upon compliance with the documentary requirements of 19 CFR 10.9 and meeting the requirements of the "further processing" of the flat-rolled products here in the United States. In addition, you must satisfy the director at the port of entry that the actual performance of the subsequent processing of the flat rolled products in the U.S. was performed within a reasonable period of time.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at http://www.usitc.gov/tata/hts/.
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 Mary Ellen Laker at (646) 733-3020.
Sincerely,
Myles B. Harmon
Acting Director
National Commodity Specialist Division