H315664

HQ H315664 August 17, 2023 OT:RR:CTF:EPDR H315664 SLJ CATEGORY: ENTRY Michael Dahm Cole International USA Inc. 1775 Baseline Road Grant Island, NY 14072 RE: Eligibility for temporary importation under bond for aluminum coil exported to Canada Dear Mr. Dahm: This letter is in response to your submission on November 10, 2020, on behalf of your client, Trim Stamping Inc. (“Trim”). Trim is requesting a ruling on whether aluminum coils imported to the United States for slitting and the addition of a protective poly liner is a process under subheading 9813.00.05 of the Harmonized Tariff Schedule of the United States (“HTSUS”) so as to allow for Temporary Importation under Bond (“TIB”) of the aluminum coils. Additionally, as Trim’s goods will be exported to Canada, we will also consider any applicable duty deferral limitations under the United States-Mexico-Canada Agreement (“USMCA”). FACTS: Trim ships German-made aluminum finish sheet material in 48- to 49-inch-wide master coils (“aluminum master coils”) into Canada from Germany. Subsequently, Trim will import the aluminum master coils into the United States to apply a protective poly liner and slit the master coils into different widths ranging from 1.55 inches up to 21 inches or more. In an email dated September 24, 2021, you noted that the protective poly liner is an adhesive film used to protect the bright metal surface of the aluminum from scratches during the slitting process. The liner is applied at a slitter and rewind operation after the aluminum is in coil form. You noted that it is industry standard to apply the poly liner to protect the aluminum surface, and that although the coils can be sold without the liner, Trim requires the poly liner and sells the aluminum coils with the poly liner still applied. The poly liner remains on the material throughout the slitting process and through to the finished good. The aluminum material is then exported to Canada where the material is ultimately used as automotive decorative trim. ISSUES: Whether the slitting and the application of a protective poly liner to the aluminum coils are a “process” for purposes of subheading 9813.00.05, HTSUS. Whether, after the coils are slit and poly liner applied, the aluminum material is in the “same condition” as when imported, rendering the aluminum not subject to the USMCA lesser of duty rule. LAW AND ANALYSIS: General Note 1, HTSUS, mandates that all merchandise imported into the United States is subject to duty unless specifically exempted therefrom. Under subheading 9813.00.05 of the HTSUS, “articles to be repaired, altered, or processed (including processes which result in articles manufactured or produced in the United States)” are eligible for duty free treatment if temporarily imported under bond. Pursuant to U.S. Notes 1(a) and (c) of Subchapter XIII of Chapter 98 of the HTSUS, which contains subheading 9813.00.05, HTSUS, articles to be processed may enter the United States temporarily free of duty under a bond, for exportation within one year from the date of importation. This one-year period may be extended for one or more additional periods, which when added to the initial period may not exceed three years. See 19 C.F.R. § 10.37. The imported merchandise may not be imported for the purpose of a sale or sale on approval. See Subheading 9813.00.05, HTSUS, U.S. Note 1(a). Subheading 9813.00.05, HTSUS, does not define the term “processed.” Through its rulings, however, U.S. Customs and Border Protection (“CBP”) has explained the term for purposes of TIB. In HQ 224661, dated January 11, 1994, we explained that “processing can be a relatively minor procedure or extensive enough to be considered a manufacture or production.” CBP has consistently held that slitting constitutes “processing” for purposes of subheading 9813.00.05, HTSUS. In HQ H075337, dated November 18, 2009, an American company imported coils of stainless-steel strips from Germany to be slit into thinner strips. The ruling concluded that the slitting operation qualified as processing within the meaning of subheading 9813.00.05, HTSUS. HQ H075337; see also HQ 230110, (Dec. 12, 2003). Thus, slitting is a process for purposes of subheading 9813.00.05, HTSUS. In the scenario you describe, aluminum master coils that start between 48-49 inches wide are slit into different widths ranging from 1.55 inches up to 21 inches or more. As in HQ H075337, where slitting of steel strips was found to be a process when no physical characteristics other than the width of the strips were altered, the slitting operation for Trim’s aluminum is a process. Therefore, Trim’s slitting operation action qualifies as a processing for the purposes of subheading 9813.00.05, HTSUS. CBP has also held that the addition of protective layers constitutes processing under subheading 9813.00.05, HTSUS. In HQ 230110, dated December 12, 2003, a company imported stainless steel from Japan into the United States under a TIB. A second company in the United States applied a waterborne “dry lube” coating to the coil and then slit the master roll into narrower widths. HQ 230110. CBP found that the addition of the dry lube, as distinct from the slitting operation, was a processing of the steel for purposes of subheading 9813.00.05, HTSUS. Id. The ruling was based on two prior Customs decisions that involved the addition of protective-style coatings. In HQ 227363, dated July 22, 1998, an acrylic coating was added to fabric which was then cut to different sizes. Customs found that those actions made the fabric “different in its characteristics – it is a longer measure on a roll coated and has even edges” and thus qualified as either a process or alteration. HQ 227363. In HQ 227432, dated April 23, 1997, an adhesive coating was applied to the back of imaged film in the United States and that application also qualified as either a process or alteration under subheading 9813.00.05, HTSUS. Trim’s application of the protective poly liner is also a processing under subheading 9813.00.05, HTSUS. Like CBP’s prior decisions finding that the application or addition of protective layers and coatings such as dry lube, acrylic, and adhesive qualified as processes under subheading 9813.00.05, HTSUS, Trim’s poly liner is applied as a protective layer that coats the aluminum. See HQ 230110; HQ 227363; and HQ 227432. Like the processing operation in HQ 230110, where a dry lube coating was added to the steel before the slitting operation, here the poly liner is added before the slitting operation and protects the aluminum from any scratches or damage during the slitting process. Therefore, both the slitting operation and application of the protective poly liner are processes for the purposes of subheading 9813.00.05, HTSUS. Whether, after the coils are slit and poly liner applied, the aluminum material is in the “same condition” as when imported, rendering the aluminum not subject to the USMCA lesser of duty rule. Because the aluminum coils are exported to Canada after the slitting and application of the poly liner, the provisions of the USMCA, which entered into force on July 1, 2020, are implicated. According to U.S. Note 1(c) of Subchapter XIII of Chapter 98 of the HTSUS: [I]f an article imported into the United States for processing, under heading 9813.00.05, is withdrawn for exportation to Canada or Mexico, the duty assessed shall be waived or reduced in an amount that does not exceed the lesser of the total amount of duty payable on the article that would have been payable on importation under chapters 1 through 97, inclusive, of the tariff schedule or the total amount of customs duty paid to Canada or Mexico on the exported article, unless such article is covered by sections 208(a)(1) through 208(a)(8), inclusive, of the USMCA Implementation Act. U.S. Note 1(c), subchapter 9813, HTSUS. Thus, unless a relevant USMCA provision exempts the exported aluminum coils, upon exportation to Canada the coils are subject

General Note 1, HTSUS, mandates that all merchandise imported into the United States is subject to duty unless specifically exempted therefrom. Under subheading 9813.00.05 of the HTSUS, “articles to be repaired, altered, or processed (including processes which result in articles manufactured or produced in the United States)” are eligible for duty free treatment if temporarily imported under bond. Pursuant to U.S. Notes 1(a) and (c) of Subchapter XIII of Chapter 98 of the HTSUS, which contains subheading 9813.00.05, HTSUS, articles to be processed may enter the United States temporarily free of duty under a bond, for exportation within one year from the date of importation. This one-year period may be extended for one or more additional periods, which when added to the initial period may not exceed three years. See 19 C.F.R. § 10.37. The imported merchandise may not be imported for the purpose of a sale or sale on approval. See Subheading 9813.00.05, HTSUS, U.S. Note 1(a). Subheading 9813.00.05, HTSUS, does not define the term “processed.” Through its rulings, however, U.S. Customs and Border Protection (“CBP”) has explained the term for purposes of TIB. In HQ 224661, dated January 11, 1994, we explained that “processing can be a relatively minor procedure or extensive enough to be considered a manufacture or production.” CBP has consistently held that slitting constitutes “processing” for purposes of subheading 9813.00.05, HTSUS. In HQ H075337, dated November 18, 2009, an American company imported coils of stainless-steel strips from Germany to be slit into thinner strips. The ruling concluded that the slitting operation qualified as processing within the meaning of subheading 9813.00.05, HTSUS. HQ H075337; see also HQ 230110, (Dec. 12, 2003). Thus, slitting is a process for purposes of subheading 9813.00.05, HTSUS. In the scenario you describe, aluminum master coils that start between 48-49 inches wide are slit into different widths ranging from 1.55 inches up to