Classification of titanium anode made of foreign metal cut to size and coated with ruthenium in the U.S., and then assembled in an electrolyzer in Japan.

HQ 555282 April 10, 1989 CLA-2-CO:R:C 555282 RA CATEGORY: Classification TARIFF NO.: 9802.00.80, HTSUS Mr. Kenneth G. Weigel, Esq. Morgan, Lewis & Bockius Counsellors at Law 1800 M Street, N.W. Washington, D.C. 20036 RE: Classification of titanium anode made of foreign metal cut to size and coated with ruthenium in the U.S., and then assembled in an electrolyzer in Japan. Dear Sir: This is in response to your letter of January 30, 1989, in which you requested a ruling on the classification of an anode made from foreign metal mesh which is cut to proper size and coated with ruthenium in this country and later assembled into an electrolyzer in Japan. FACTS: Titanium mesh made in Japan is cut to specific size and coated with ruthenium in the U.S. to produce a finished anode. The anode is then sent to Japan to be assembled into an electrolyzer by welding which is then imported into the U.S. ISSUE: Can an allowance in duty under the provisions of subheading 9802.00.80, HTSUS, be made for the value of the anode assembled in an electrolyzer, which is imported from Japan in a completed condition, because the cutting to size and coating transformed the foreign-made titanium mesh into a new and different article of U.S. origin? LAW AND ANALYSIS: Subheading 9802.00.80, HTSUS, provides for a partial exemp- tion from duty for articles assembled abroad in whole or in part of fabricated components of U.S. origin which have been exported ready to be assembled without loss of identity or improved in condition or advanced in value except by assembly or operations incidental thereto. The exported anode is a fabricated - 2 - component and it is attached to the electrolyzer without change by a spot welding process which is a qualified assembly operation. The sole issue is whether the anode when exported was a product of the U.S. The titanium mesh of Japanese origin was cut to shape to fit the electrolyzer and coated with ruthenium by an expensive process. These operations transform the foreign-made mesh into a new and different article which can be used only as an anode in an electrolyzer. The coating process accounts for about 88 percent of the anode's value. The processing of the titanium mesh into a completed anode not only changed the name of the product but also made a significant change in both use and character so the mesh and anode cannot be viewed as merely different stages of the same product. See Superior Wire v. U.S., Appeal No. 88-1020 (Fed. Cir., 1989). HOLDING: We are of the opinion that the processing of the imported titanium mesh by cutting to specific size and coating with metal in a complex operation is sufficient to transform the mesh into an anode of U.S. origin. As such, the exported anode will meet the requirement of domestic origin and be eligible for tariff treatment under subheading 9802.00.80, HTSUS, upon compliance with sections 10.11 to 10.24, Customs Regulations (19 CFR 10.11 to 10.24). Sincerely, John Durant, Director Commercial Rulings Division