HQ 555105

October 31, 1988

CLA-2 CO:R:C:V 555105 GRV

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.60; 806.30

Mr. Howard Shube

Shube\'s Manufacturing, Inc.

2010 Ridgecrest Dr. SE

Albuquerque, New Mexico 87108

RE: Applicability of partial duty exemption under TSUS item

806.30, and country of origin marking requirements to

certain U.S.-made pewter castings processed in Mexico

Dear Mr. Shube:

This is in response to your letter of August 9, 1988, re-

questing a ruling on the applicability of item 806.30, Tariff

Schedules of the United States (TSUS), and country of origin

marking requirements to certain U.S.-made pewter castings pro-

cessed in Mexico. Two sets of three samples were submitted for

examination as well as technical descriptions of the various

steps employed in the manufacture of pewter figurines.

FACTS:

You state that the first few steps are performed in the U.S.

where the pewter figurines are initially cast in molds. The cast

figurines are then exported to Mexico, where intermediate pro-

cessing steps are performed.

These steps entail (1) subjecting portions of each figurine

to various metal cutting and grinding operations to remove

\"flash\" mold lines and other surface imperfections; (2) chemi-

cally-inducing an oxidizing/blacking process to each figurine by

dipping it into an antiquing solution, so that surface details

will be accentuated; and (3) removal of the oxidized/blacked

layer by means of abrasive tumbling and buffing with an abrasive

fiber wheel.

The semi-finished figurines are then imported into the U.S.

where the final processing steps are performed. These steps en-

tail (1) subjecting all figurines to further surface perfecting

operations described as \"satin buffing,\" wherein a small layer of

the surface metal is removed with a buffing wheel utilizing a

fine-grain abrasive surface to give a uniform \"satin finish;\" (2)

subjecting approximately 65% of the pieces to a faceting opera-

tion described as \"diamond cutting,\" wherein some metal is cut

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away by a high-speed diamond flywheel to impart a jewel-like

sparkle; and (3) application of a clear acrylic lacquer to all

figurines. Selected figurines are also subjected to final as-

sembly operations (attachment of other pewter parts and/or small

pieces of crystal). Of the three enumerated steps, only the sec-

ond, identified as \"optional,\" involves a metal cutting opera-

tion.

ISSUES:

I. Whether the pewter figurines will be eligible for the

partial duty exemption under TSUS item 806.30 (subheading

9802.00.60, Harmonized Tariff Schedule of the United States

(HTSUS)) when returned to the U.S.

II\. Whether the pewter figurines will be considered products of

the U.S. for country of origin marking purposes.

LAW & ANALYSIS:

I. Applicability of TSUS item 806.30

TSUS item 806.30 (19 U.S.C. 1202) provides a partial duty

exemption to:

\[a\]ny article of metal (except precious metal) manu-

factured in the United States or subjected to a pro-

cess 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. (Emphasis supplied).

TSUS item 806.30 imposes a dual \"further processing\" requirement

on metal articles: one must be accomplished in the foreign

country where the metal is exported to and one must be accom-

plished in the U.S. when the metal is returned. Metal articles

satisfying these statutory requirements may be classified under

TSUS item 806.30 with duty only on the value of such processing

done outside the U.S., upon compliance with section 10.9, Customs

Regulations (19 CFR 10.9).

In C.S.D. 84-49, 18 Cust. Bull. 957 (1983) we held that:

\[f\]or purposes of item 806.30, TSUS, 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

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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.

The described manufacturing operation that occurs in Mexico

comprises various grinding and metal cutting steps, i.e., \"flash

removal,\" and other steps that occasion a further loss of metal

on the figurines by means of a chemically-induced oxidation pro-

cess that is not analogous to painting. Taken as a whole, these

various described manufacturing steps impact the metal itself and

constitute \"further processing\" within the ambit of the statute.

The samples submitted evidence these manufacturing steps.

Of the manufacturing operations that occur in the U.S., only

the faceting-operation step, described as \"diamond cutting\" and

identified as optional, truly impacts on the metal itself and

imparts a new and different characteristic, i.e., a \"jewel-like

sparkle,\" to the metal. The \"satin buffing\" step, at best, only

marginally affects the metal and, therefore, we believe that this

step, by itself, is insufficient to constitute \"further process-

ing\". Thus, only that portion of the pewter figurines (identi-

fied as approximately 65% of the pieces) that undergo the facet-

ing process described as \"diamond cutting\" are deemed to have

been \"further processed\" within the meaning of the statute and

will, upon their importation into the U.S. and compliance with

all the requirements set forth in 19 CFR 10.9, be entitled to the

partial duty exemption under TSUS item 806.30. The pewter fig-

urines that merely undergo the \"satin buffing\" step will be sub-

ject to full tariff treatment, for the reasons stated.

II\. Country of Origin Marking Requirements

Headnote 2 to Part 1 of Schedule 8, TSUS, provides, in part,

that:

\[a\]ny product of the United States which is returned

after having been advanced in value or improved in

condition abroad by any process of manufacture or other

means\...shall be treated for the purposes of this Act

as a foreign article\.... (Emphasis supplied).

In applying this provision, Customs has determined that,

except in the case of textiles and textile articles covered by

section 12.130, Customs Regulations (19 CFR 12.130), treatment

\"as a foreign article\" shall not supersede the rules otherwise

applicable in determining the country of origin of imported

articles. Since the processing performed in Mexico does not

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subtantially transform the castings into new and different

articles of commerce having a new name, character, and use, they

remain products of the U.S. for country of origin marking pur-

poses. Accordingly, the finished figurines should carry no

marking indicating a foreign country of origin.

HOLDING:

On the basis of the described manufacturing processes, and

after viewing the samples submitted, only those pewter figurines

that are subjected to the faceting operation will be entitled,

upon return to the U.S. and compliance with the certification of

registration requirements, to the partial duty exemption provided

by TSUS item 806.30. The remaining figurines are not subjected

to sufficient further processing upon their return to the U.S.

and will be assessed duty upon their full appraised value. The

foreign processing will not render the finished pewter figurines

articles of foreign origin for country of origin marking purposes

and they should not be so marked.

Sincerely,

John Durant, Director

Commercial Rulings Division

CO:R:CV:V:VILDERS\"GRV:8/30/88:10/6/88