CLA-2 CO:R:C:V 555124 GRV
TARIFF NO: 9802.00.40; 806.20
Mr. Douglas A. Brook
Northern Textile Association
1620 I St., N.W., Suite 716
Washington, D.C. 20006
RE: Applicability of partial duty exemption under TSUS item
806.20 to certain fabric processed in Canada
Dear Mr. Brook:
This is in response to your letter of September 15, 1988, on
behalf of Eastland Woolen Mills, Inc. (importer), requesting a
ruling on the applicability of item 806.20, Tariff Schedules of
the United States (TSUS), to certain fabric to be imported from
Canada after a brushing process. Samples of both the fabric to
be exported to Canada and the brushed fabric to be returned to
the U.S. were submitted for examination.
FACTS:
You state that the fabric to be exported to Canada is a fin-
ished product and that it is currently sold in the U.S. market
for use in making women's raincoats (specifically the outside
cover). You further state that the importer is proposing to send
the fabric to Canada for "an additional process" which consists
of running the fabric through a wire brush to impart a slightly
different appearance to the fabric, but that this process "other-
wise does not change the material." You advise in this regard
that, as a result of this process, the ultimate consumer will be
offered a choice between a "shiny" or "more nappy-in-appearance"
raincoat.
ISSUE:
Whether the brushed fabric qualifies for the partial duty ex-
emption under TSUS item 806.20 (subheading 9802.00.40, Harmonized
Tariff Schedule of the United States (HTSUS)) when imported into
the U.S.
LAW & ANALYSIS:
Articles, returned to the U.S. after having been exported for
repairs or alterations, may be classified under TSUS item 806.20
(19 U.S.C. 1202), with duty only on the value of the repairs or
alterations, upon compliance with the requirements of section
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10.8, Customs Regulations (19 CFR 10.8). However, the applica-
tion of this tariff provision is precluded where the foreign
operation destroys the identity of the exported article or cre-
ates a new or different commercial article. LeGran Manufacturing
Co. v. U.S., 59 Cust. Ct. 58, C.D. 3070 (1967).
Moreover, as the court stated in Dolliff & Company, Inc., v.
United States, 66 CCPA 77, C.A.D. 1225, 599 F. 2d 1015 (1979), at
page 1019:
... repairs and alterations are made to completed
articles and do not include intermediate processing
operations which are performed as a matter of course
in the preparation or the manufacture of finished
articles. (Court's emphasis).
Thus, "the focus is upon whether the exported article is 'incom-
plete' or 'unsuitable for its intended use' prior to the foreign
processing. Guardian Industries Corp. v. United States, 3 CIT 9
(1982), at page 13.
In ruling letter 554945 CW (June 14, 1988), certain fabric
was exported to France to undergo a "crushing" operation to im-
part a permanent "crushed" or wrinkled look to fabric used in
swimsuits. Finding that the fabric in its exported condition was
complete for its intended use as material for swimsuits, that the
identity of the fabric was not lost or destroyed by the
"crushing" operation and that no new or different commercial
article was created, we held that the "crushing" process consti-
tuted an "alteration," as the term is used in TSUS item 806.20.
In regard to this case, the fact that the fabric in its
exported condition is currently marketed as material for women's
raincoats, and will be marketed for the same use after the
brushing process, attests to the fabric's suitability for its
intended use and, therefore, its completeness prior to the
foreign processing. Moreover, although the brushing process
imparts a slightly different appearance to the fabric, it does
not appear that this process results in any significant change in
the quality, texture or character of the fabric.
Given the facts in this case, it is clear that the fabric to
be exported is a "completed article," that its identity will not
be lost or destroyed by the foreign brushing operation, and that
no new or different commercial article will be created thereby.
Further, an examination of the samples submitted indicates that
the fabric to be exported is in a finished state or condition.
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CONCLUSION:
On the basis of the information and samples presented, it is
our opinion that the process of brushing the fabric in Canada
constitutes an "alteration," as that term is used in TSUS item
806.20. Therefore, upon its return to the U.S. and compliance
with the requirements of 19 CFR 10.8, the fabric will be entitled
to classification under TSUS 806.20, with duty only on the value
of the processing performed abroad.
Sincerely,
John Durant, Director
Commercial Rulings Division
CO:R:CR:V:VILDERS:GRV:9/29/88:10/12/88