Subheading 9802.00.60, Harmonized Tariff Schedule of the United States; Copper Scraps

HQ H281950 January 26, 2017 OT:RR:CTF:VS H281950 RMC CATEGORY: Classification Laura Siegel Rabinowitz Kelley Drye & Warren LLP 101 Park Avenue New York, NY 10178 Re: Subheading 9802.00.60, Harmonized Tariff Schedule of the United States; Copper Scraps Dear Ms. Rabinowitz: This is in response to your letter, dated July 18, 2016, on behalf of your client, [Company A], concerning the eligibility of certain copper products for a partial duty exemption under subheading 9802.00.60, Harmonized Tariff Schedule of the United States (“HTSUS”). Your request was forwarded to this office from the National Commodity Specialist Division for review. Our ruling is set forth below. We note that you have asked for certain information submitted in connection with this decision to be treated as confidential. Inasmuch as this request conforms to the requirements of 19 C.F.R. § 177.2(b)(7), the request for confidentiality is approved. The information contained within brackets and all attachments to this ruling request, forwarded to our office, will not be released to the public and will be withheld from published versions of this ruling. FACTS: [Company A] is a manufacturer of copper and other metal products. [Company A] proposes to procure copper scrap in the United States under three scenarios: Scrap From Foreign Copper Processed in the United States You state that [Company A] plans on importing refined copper alloy sheets that include phosphor bronzes containing tin in quantities from 3.5-11.0%. In the United States, [Company A] “intends on performing a variety of manufacturing processes” on the foreign metal including “splitting, annealing, milling, rolling, brushing, and leveling,” which will produce a certain amount of copper scrap. Scrap From Domestic Copper Processed in the United States [Company A] also plans to purchase domestic copper sheets and copper alloy sheets and to perform the same processing operations (i.e., splitting, annealing, milling, rolling, brushing, and leveling), which will produce scrap metal. Scrap From Wires Made From Domestic Copper Finally, [Company A] intends to buy copper scrap in the United States, made from domestic copper wire. [Company A] proposes to send the scrap from these three scenarios abroad to be manufactured into new copper sheets. The new copper sheets derived from the scrap will then be imported into the United States. Your inquiry asks whether the copper products under these three scenarios will be eligible for a partial duty exemption under subheading 9802.00.60, HTSUS. [Company A] provided sample documentation for each of the proposed scenarios. The sample documentation for Scenario 1 is a pro-forma invoice documenting a sale of German-origin copper sheets to [Company A] which states that the copper is “to be further processed in the United States.” The documentation for Scenario 2 is a chemical analysis of copper sold to [Company A]. In addition to indicating the chemical composition of the metal, the documentation also notes that the metal sold to [Company A] was “melted and manufactured in the U.S.A.” Finally, with respect to Scenario 3, [Company A] provided a sales invoice listing the country of origin of the copper sold to [Company A] as the United States. ISSUE: Whether copper sheets which are manufactured abroad using scrap from Scenarios 1, 2, and 3 will be eligible for a partial duty exemption under subheading 9802.00.60, HTSUS, when they are imported into the United States. LAW AND ANALYSIS: Subheading 9802.00.60, HTSUS, 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. Subheading 9802.00.60, HTSUS, therefore imposes four requirements: (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. For purposes of subheading 9802.00.60, HTSUS, “metal” includes “base metals enumerated in note 3 to section VX,” which in turn includes copper. See U.S. Note 3(e) to Chapter 98, HTSUS. Therefore, the scrap from all three scenarios will qualify as “article[s] of metal” under subheading 9802.00.60, HTSUS. The relevant Chapter Notes do not provide definitions for the requirement that the metal be “manufactured or subject to a process of manufacture in the United States.” In this context, CBP examines the processing that the metal undergoes to determine whether a manufacturing process has occurred in the United States. See HQ 555096, dated July 7, 1989. Although this inquiry differs from the determination of the metal’s country of origin under the substantial transformation test, it is clear that U.S.-origin metal has undergone sufficient processing to qualify as “manufactured . . . in the United States” under 9802.00.60, HTSUS. Id. With respect to metal that was not “manufactured . . . in the United States,” CBP has clarified which processes qualify as “processes of manufacture in the United States” under subheading 9802.00.60, HTSUS. In HQ H265781, dated December 7, 2015, CBP revoked HQ H560430, dated June 30, 1997, which incorrectly concluded that imported copper sheets had not been “subject to a process of manufacture” in the United States when the importer performed “splitting, annealing, milling, rolling, brushing, and leveling” on the imported copper in the United States. CBP also noted that there are two types of scrap metal: “obsolete” and “industrial.” See id.; and HQ 555096. “Obsolete” scrap consists of worn-out or discarded metal articles, and “industrial scrap” consists of leftover metal from manufacturing operations performed on metal articles. As explained above, because U.S.-origin metal has undergone sufficient processing to qualify as “manufactured . . . in the United States,” U.S.-origin “obsolete” scrap is eligible under subheading 9802.00.60, HTSUS. However, because foreign-origin “obsolete scrap” was neither “manufactured in the United States” nor “subject to a process of manufacturing” in the United States, it is ineligible under subheading 9802.00.60, HTSUS. See HQ 555096. On the other hand, “industrial scrap” derived from foreign metal was determined to be eligible so long as it was derived from a qualifying process of manufacture in the United States, such as “splitting, annealing, milling, rolling, brushing, and leveling.” See HQ H265781. For example, CBP held that industrial scrap derived from foreign metal was eligible under subheading 9802.00.60, HTSUS, where it resulted from the production of metal tool boxes in the United States. See New York Ruling (“NY”) N018085, dated October 26, 2007. In NY N018085, an importer brought aluminum coils from Greece into the United States, where they were cut into sheets and sold to U.S. customers who manufactured them into tool boxes. As a result of the tool box manufacturing process, aluminum scrap was produced, which was sold to the aluminum supplier in Greece where it was melted down and used in the production of aluminum coils to be shipped back to the U.S. The new coils were eligible under subheading 9802.00.60, HTSUS because the metal article from which the scrap was obtained (the tool boxes) was initially subjected to a process of manufacture in the United States (the cutting of aluminum coils to produce sheets, and then the stamping, bending, welding, punching holes, and hemming of the sheets to produce the finished tool boxes). Here, Scenario 1 and Scenario 2 involve “industrial scrap” that is created when copper is processed in the United States. You state that the copper involved in Scenario 2 is “U.S. copper.” As explained above, U.S.-origin metal has undergone sufficient processing in the United States to qualify as “manufactured . . . in the United States” for purposes of subheading 9802.00.60, HTSUS. With respect to Scenario 1, which involves foreign copper, you state that U.S. processing operations include “splitting, annealing, milling, rolling, brushing, and levelling.” These operations are sufficient to satisfy the requirement that the foreign metal be “subject to a process of manufacture” in the United States. See HQ H265781 (holding that “splitting, annealing, milling, rolling, brushing, and leveling” were “processes of manufacture” for purposes of subheading 9802.00.60, HTSUS). According to your description, the copper scrap that derives from wires made of U.S. copper in Scenario 3 is “obsolete scrap.” Here, as explained above, U.S.-origin obsolete scrap has undergone sufficient processing to qualify as “manufactured . . . in the United States” for purposes of subheading 9802.00.60, HTSUS. See HQ 555096. Finally, subheading 9802.00.60, HTSUS requires that the metal be exported for further processing and then returned to the United States for further processing. CBP regulations require the importer to file declarations describing both the processing that has occurred abroad and the processing that will occur in the United States. Here, the scrap copper will be sent abroad to be manufactured into copper sheets, which qualifies as “further processing.” See HQ H265781 (holding that scrap copper exported from the United States underwent “further processing” for purposes of subheading 9802.00.60, HTSUS, when it was used to create copper sheets abroad). With respect to the requirement that the resulting copper products be returned to the United States for further processing, [Company A] does not specify which further processing operations will be performed in the United States or who will perform them. For purposes of this ruling, we therefore are not determining whether this requirement will be satisfied. We note that evidence of further processing in the United States is subject to verification, as is evidence of the origin of the scrap collected in the United States. HOLDING: Based on the information presented, and provided that further processing will occur in the United States, copper sheets which are manufactured abroad using the scrap from Scenarios 1, 2, and 3 will be eligible for a partial duty exemption under subheading 9802.00.60, HTSUS, when they are imported into the United States. Please note that this ruling letter is “issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect.” See 19 C.F.R. § 177.9(b)(1). The application of this ruling letter is “is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.” See id. CBP therefore reserves the right to verify all facts including the origin of the scrap in each scenario, as well as whether further processing will occur in the United States. Furthermore, this ruling letter will be “applied only with respect to transactions involving articles identical to the sample submitted with the ruling request or to articles whose description is identical to the description set forth in the ruling letter.” See 19 C.F.R. § 177(b)(2). Sincerely, Monika R. Brenner, Chief Valuation and Special Programs Branch