Applicabi1ity of subheading 9802.00.60, HTSUS, to jewelry subjected to a coating operation in Canada and set with stones or painted upon return

HQ W555421 July 3, 1990 CLA-2 CO:R:C W555421 RA CATEGORY: Classification TARIFF NO.: 9802.00.60 Mr. Vic Valach A.N. Deringer, Inc. 30 West Service Road Champlain, New York 12919-9703 RE: Applicabi1ity of subheading 9802.00.60, HTSUS, to jewelry subjected to a coating operation in Canada and set with stones or painted upon return Dear Mr. Valach: This is in response to your letter of May 16, 1989, addressed to our Champlain, New York, office and referred to us for reply, on the application of the partial duty exemption provision in subheading 9802.00.60, Harmonized Tariff Schedule of the United States (HTSUS), to certain jewelry pins plated in Canada and returned to the U.S. to be set with stones or painted. FACTS: You state that your client, a plating company in Montreal, Canada, will obtain certain jewelry pins from the U.S. and subject them to an aluminum plating operation in Canada. Upon their return to the U.S., the pins will be set with rhinestones or painted in different colors. ISSUE: Will the partial duty exemption provided for in subheading 9802.00.60, HTSUS, apply to jewelry items plated abroad and set with stones or painted upon return? LAW AND ANALYS1S: Subheading 9802.00.60, HTSUS, provides a partia 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 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 subheading 9802.00.60, HTSUS, with duty only on the value of such processing performed outside the U.S., upon compliance with section 10.9, Customs Regulations (19 CFR 10.9). In C.S.O. 84-49, 18 Cust. Bull. 957 (1983), we stated that: [f]or purposes of item 806.30, TSUS [the erecursor provision to subheading 9802.00.60, HTSUSJ, the term 'further pro essing' has reference to processing thlt 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. In Headquarters Ruling Letter (HRL) 554011 dated February 21, 1986 (554011), we held that assembling parts of automobile wheels together by welding will not satisfy the domestic "further processing" requirement under this statutory provision. The painting and assembly of aluminum tubing into outdoor furniture was held not to constitute "further processing" in HRL 553630 dated May 24, 1985 (553630). See, also, HRL 555377 dated October 16, 1989 (assembling part_s_ together by brazing (a welding operation) and with screws, nuts or similar devices to create heat exchangers is insufficient to satisfy the domestic "further processing" requirement). In the instant case, the aluminum plating operation to be performed in Canada is considered a "further processing" operation as it changes the metal and imparts new and different characteristics which become an integral part of the metal. See HRL 553860 dated October 22, 1985 (electroplating metal witnnickel, brass, or chrome constitutes "further processing" under this tariff provision). However, in view of C.S.O. 84-49 and the other cited precedents, we are of the  opinion that, upon return of the pins to the U.S., neither the painting nor the attachment of rhinestones will qualify as "further processing" under subheading 9802.00.60, HTSUS. HOLDING: Jewelry pins of U.S.-origin base metal which are plated in Canada and painted or assembled upon return to the U.S. cannot be considered as "further processed'' upon return, as required for tariff treatment under subheading 9802.00.60, HTSUS. Sincerely, John Durant, Director Commercial Rulings Division