Applicability of HTSUS subheading 9802.00.60 to aluminum flag poles created by tapering, cutting, and drilling. C.S.D. 84-49, HRL 555536, HRL 555620

HQ 555882 June 10, 1991 CLA-2 CO:R:C:S 555882 SER CATEGORY: Classification TARIFF NO.: 9802.00.60 Mr. Gary Brunell A.N. Deringer, Inc. 30 West Service Road Champlain, NY 12919-9703 RE: Applicability of HTSUS subheading 9802.00.60 to aluminum flag poles created by tapering, cutting, and drilling. C.S.D. 84-49, HRL 555536, HRL 555620 Dear Mr. Brunell: This is in reference to your letter of February 5, 1991, on behalf of Pole-Lite Marketing Corp., concerning the applicability of subheading 9802.00.60, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), to aluminum flag poles. FACTS: Aluminum tubes manufactured in the U.S. are sent to Canada for further processing. In Canada, the aluminum tubes undergo several operations. The tubes are first tapered using a mechanical or numerical control tapering machine. A circular plate is then added to the tubes to enable the ultimate purchaser to add a pole cap. The poles are then heat treated "to obtain the maximum of mechanical properties", sanded, and then packaged for shipment back to the U.S. If the poles are in two sections, an internal sleeve is installed to join the two pieces together. The operations performed in the U.S. on the partially completed flagpoles depend on which of two styles of flagpoles is to be produced-- the guardian ground set flagpole or the double masted nautical flagpole. For the guardian style, the aluminum pole is sanded and a rectangular 4 x 6 inch hole is cut four feet above the bottom of the pole. Next, a sleeve and plate are welded to the pole, followed by the drilling and tapping of two holes in the plate. Another plate, the size of the rectangular cut-out, is fabricated and attached to the pole to serve as a door. When required, a pipe coupling is arc-welded to the aluminum poles. The poles are then anodized or painted the color requested by the consumer. -2- The first domestic operation on the double masted nautical model is cutting a section from the pole one-third from its top. Next, the "cut" pole is arc welded to another pole with an overlap of approximately two feet. Several aluminum plates, straps and a sleeve are then welded to the pole for support and function, and holes are drilled in various positions on the plates and pole. The pole is then anodized or painted the color required by the consumer. ISSUE: Whether the flag poles will be eligible for the partial duty exemption available under subheading 9802.00.60, HTSUSA, when imported into the U.S. LAW AND ANALYSIS: Subheading 9802.00.60, HTSUSA, 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 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 to the United States for further processing. This tariff provision imposes a dual "further processing" requirement on eligible articles of metal-- one foreign, and when returned, one domestic. Metal articles satisfying these statutory requirements may be classified under this tariff provision with duty only on the value of such processing performed outside of the U.S., provided there is compliance with the documentary requirements of section 10.9, Customs Regulations (19 CFR 10.9). In C.S.D. 84-49, 18 Cust.Bull. 957 (1983) we stated that: [f]or purposes of item 806.30, TSUS [precursor to 9802.00.60 HTSUSA], 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. -3- In this case, the aluminum poles are eligible articles of metal for purposes of subheading 9802.00.60, HTSUSA. In addition, the processing in Canada is considered "further processing" under this tariff provision. In Headquarters Ruling Letter (HRL) 555536 dated October 29, 1990, we held that stainless steel articles subjected to a heat treatment process constituted a further processing operation pursuant to subheading 9802.00.60, HTSUSA. In that case, the heat treatment process did not fundamentally change the stainless steel article, but maximized softness, ductility, and corrosion resistance properties inherent to the material. Similarly in this case, the heat treatment is performed to obtain the maximum of the material's "mechanical properties." The tapering operation clearly falls within the processing operations discussed in C.S.D. 84-49, which enumerates forming as an example of further processing. Furthermore, the operations performed in the U.S. to the returned aluminum poles (cutting, drilling, etc.) are considered sufficient processes to comply with the domestic "further processing" requirement of subheading 9802.00.60, HTSUSA, under C.S.D. 84-49. See also HRL 555620 dated August 8, 1990 (the cutting of steel discs constituted "further processing" under subheading 9802.00.60, HTSUSA). HOLDING: On the basis of the information submitted, it is our opinion that the processes performed abroad and upon return to the U.S. to create flag poles, constitute "further processing" as that term is used in subheading 9802.00.60, HTSUSA. Therefore, the imported aluminum flagpoles will be entitled to classification under this tariff provision with duty only on the cost or value of such processing performed outside the U.S., upon compliance with the documentary requirements of 19 CFR 10.9. Sincerely, John Durant, Director Commercial Rulings Division