CLA-2-74:OT:RR:NC:N1:116
Ms. Sandra Tovar
CST, Inc.
500 Lanier Ave West
Fayetteville, Georgia 30214
RE: The tariff classification and applicability of 9802.00.60 to copper tubing manufactured from scrap gathered in the United States and returned to the United States for further processing
Dear Ms. Tovar:
In your letter dated May 29, 2020, you requested a tariff classification ruing on behalf of your client, JMF Company. In particular, you are seeking a determination as to whether certain copper tubing from Vietnam qualifies for a reduction in duty under 9802.00.60, Harmonized Tariff Schedule of the United States (HTSUS).
According to your submission, copper scrap of unknown origin is collected in the United States (U.S.) from obsolete and industrial waste. The copper is extracted from the waste, melted down, manufactured into billets and then exported to Vietnam. In Vietnam, the billets are melted down and formed into ingots which are cut and then sent to a rolling mill where they are manufactured into tubes measuring 800 – 1200 meters in length. Next, the tubes are wound into coils and packaged for export to the U.S. In the U.S., the tubes will be cut into lengths ranging from 6 – 10 meters, insulated with PE (polyethylene) foam, labeled and packaged for sale. You state that the finished tubing is comprised of 99.9% copper and will ultimately be used for air conditioning products.
In your submission, you state that the tubes measure 800 to 1200 meters in length. This tubing is not identifiable as suitable for use solely or principally with air-conditioning machines and therefore, the tubing is excluded from consideration in subheading 8415.90.80, HTSUS, which provides for parts of air conditioning machines, comprising a motor-driven fan and elements for changing the temperature and humidity, including those machines in which the humidity cannot be separately regulated.
The applicable subheading for the copper tubes will be 7411.10.1090, HTSUS, which provides for copper tubes and pipes: of refined copper: seamless: other. The rate of duty will be 1.5 percent ad valorem.
You have also inquired about the eligibility of subheading 9802.00.60, HTSUS, which provides a partial duty exemption for:
[a]ny article of metal . . . manufactured in the United States or subject 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 for the United States for further processing.
In order for merchandise to qualify under subheading 9802.00.60, HTSUS, four requirements must be met: (1) the merchandise must be an article of metal; (2) the metal must either be manufactured in the United States or subject to a process of manufacture in the United States; (3) the metal must be exported for further processing; and (4) the metal must be 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 9802.00.60, 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).
For purposes of subheading 9802.00.60, HTSUS, “metal” includes “base metals enumerated in note 3 to section XV,” which, in turn, includes copper. Therefore, the copper billets will qualify as an “article of metal” under subheading 9802.00.60, HTSUS, satisfying the first requirement.
The second requirement is that the metal must either be manufactured in the U.S. or subject to a process of manufacture in the U.S. You indicate that in the U.S. the copper scrap is melted down and manufactured into billets. As such, the second requirement is met.
The copper billets are then exported to Vietnam where they are melted down, formed into ingots and ultimately manufactured into tubes. In C.S.D. 84-49, 18 Cust. Bull. 957 (1983), it was stated that: [F]or purposes of item 806.30, TSUS [precursor to 9802.00.60 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. Based on the information provided, this office finds that the manufacturing which takes place in Vietnam constitutes “further processing” under this tariff provision, thus satisfying the third requirement.
Finally, the tubes are returned to the U.S. where they are cut to length, insulated with PE foam, labeled and packaged for sale. This office finds that the operations performed in the U.S. (i.e., cutting and insulating) are not considered “further processing” as defined above and therefore the fourth requirement is not met. Accordingly, the subject merchandise does not qualify for a partial duty exemption and may not be entered under subheading 9802.00.60, HTSUS.
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 at https://hts.usitc.gov/current.
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 Angelia Amerson at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division