Applicability of subheading 9802.00.60, HTSUS, to copper tubing manufactured abroad and returned for further processing

HQ 555654 July 5, 1990 CLA-2 CO:R:C 555654 RA CATEGORY: Classification TARIFF NO.: 9802.00.60 Richard C. King, Esq. Fitch, King and Caffentzis 116 John Street New York, New York 10038 RE: Applicability of subheading 9802.00.60, HTSUS, to copper tubing manufactured abroad and returned for further processing Dear Mr. King: This is in response to your letters dated May 1, and 22, 1990, concerning the applicability of subheading 9802.00.60, Harmonized Tariff Schedule of the United States (HTSUS), to copper tubing manufactured abroad from U.S.-made cathodes and processed into air conditioner condenser coils upon return. FACTS: The imported merchandise consists of seamless copper tubing in coils produced abroad from U.S.-made copper cathodes. After return to the U.S., the coiled tubing is processed in an automatic machine which rerounds and straightens the tubing. The product is then cut at a beveled angle and bent into U-shaped articles known as "hairpins." The "hairpins" are later combined with aluminum fins to make "cores." The straight sections of the "hairpins" are expanded to lock the fins in place and both ends are flared. The "hairpins" are connected to various fittings by brazing and the finished products are incorporated into air conditioning units as condenser coils. ISSUE: Do the operations performed on the copper tubing in the U.S. constitute "further processing" which will qualify the imported merchandise for tariff treatment under subheading 9802.00.60, HTSUS? - 2 - LAW AND ANALYSIS: Subheading 9802.00.60, HTSUS, provides a partial duty exemption for: Any 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 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. Metal articles satisfying these statutory requirements may be classified under this tariff provision with duty only on the value of such processing performed outside the U.S., provided there is compliance with the documentary requirements of section 10.9, Customs Regulations (19 CFR 10.9). In Headquarters Ruling Letter (HRL) 091396 dated July 15, 1969, we held that copper cathodes of U.S. manufacture which were exported to a foreign country where they were made into copper tubes of finished diameter were "further processed" abroad, within the meaning of item 806.30, Tariff Schedules of the United States (TSUS) (the precursor provision to subheading 9802.00.60, HTSUS). Therefore, it only remains to consider whether the domestic operations in the instant case constitute "further processing" under the statute. We have consistently held that 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, such as machining, grinding, drilling, threading, punching, forming, plating, and the like. See C.S.D. 84-49, 18 Cust. Bull. 957 (1983). 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). However, legislative history and judicial authority do not support a highly restrictive interpretation of the manufacturing operations necessary to qualify as "further processing." The Firestone Tire & Rubber Company v. U.S., 71 Cust.Ct. 63, C.D. 4474 (1973). - 3 - In HRL 067516 dated October 16, 1981, we held that steel bar stock made abroad from U.S.-made ingots was "further processed" upon return when it was machine straightened and cut to a specific length for final use. In HRL 058832 dated March 1, 1979, we stated that the bending of alloy tubes into "U" shapes and welding the ends closed would be sufficient to satisfy the domestic "further processing" requirement. In view of these holdings, we are of the opinion that the bending, straightening, and cutting operations performed on the subject copper tubing in the U.S. constitute "further processing" and qualify the importation for the partial duty exemption in subheading 9802.00.60, HTSUS. HOLDING: Imported copper tubing made abroad from U.S.-made ingots which, when returned to the U.S., is bent into "U" shapes, straightened, and cut to length satisfies the foreign and domestic "further processing" requirements of subheading 9802.00.60, HTSUS. Therefore, the tubing is entitled to the partial duty exemption under this tariff provision, upon compliance with documentation requirements of 19 CFR 10.9. Sincerely, John Durant, Director Commercial Rulings Division