CLA-2-CO:R:C 555343 RA
Mr. Brian C. Hoyle
President
MSR Ribbon Technology
5805 Bessette
Ville St-Laurent
Quebec, Canada H4S 1P1
RE: Classification under subheading 9802.00.50, HTSUS, of
multistrike film slit abroad into ribbon material
Dear Mr. Hoyle:
This is in response to your letter of March 20, 1989,
regarding the applicability of subheading 9802.00.50, Harmonized
Tariff Schedule of the U.S. (HTSUS), to data processing ribbon
material which is produced in Canada by slitting jumbo rolls of
U.S.-made film.
FACTS:
Jumbo rolls of multistrike coated film 34 inches in width
and 20,000 feet long of U.S. manufacture are processed in Canada
by slitting the 34-inch material into ribbon material for data
processing machines which will be returned to the U.S. for
finishing into computer ribbons in plastic cartridges.
You state that your sole task is to slit the wide U.S.-made
film to ribbon width according to specification from the U.S.
tape manufacturers who supply you with plastic core material,
leader material in 18-inch width and various size rolls of
adhesive tape. These components are placed in a micro processed
slitter and slit to the customer's required size for finishing
into ribbons used in data processing tape cartridges.
ISSUE:
Does the Canadian processing qualify as an alteration under
the provisions of subheading 9802.00.50, HTSUS, with duty only on
the cost of processing?
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LAW AND ANALYSIS:
Subheading 9802.00.50, HTSUS, provides for a duty based only
on the cost of the processing abroad when articles are exported
for alterations and returned after processing which qualifies as
an alteration. However, the duty allowance is applicable only
when the exported articles are in a finished condition. As
stated by the appellate court in Dolliff & Company Inc. v. U.S.,
66 CCPA 77, C.A.D. 1225 (1979), alterations are made only to
completed articles and do not include intermediate operations
which are performed in the manufacture of finished articles. If
the foreign processing is a step in the work needed to finish the
article for its intended use, the statutory provisions for
alterations will not be applicable. Guardian Industries
Corporation v. U.S., 3 CIT 9 (1982) and U.S. v. J.D. Richardson
Co., 36 CCPA 15, C.A.D. 390 (1948).
The slitting of the wide film in issue here constitutes an
intermediate step in the manufacture of the computer tape which
is essential to render it suitable for its intended use. The
cutting of material to width or pattern to achieve a narrower or
differently shaped product has consistently been held to amount
to more than a mere alteration. In our ruling of October 24,
1988 (554830), we held that the slitting of polyester fabric into
smaller product widths exceeded an alteration. Also, in a ruling
dated November 10, 1980 (065398), we stated that the slitting of
laminated paper into narrower sheets constituted more than an
alteration. In a ruling dated November 22, 1977 (053914), the
cutting of adhesive tape 45 inches wide into tape 1 1/2 inches
wide was held to be a finishing process and beyond a mere
alteration.
HOLDING:
The slitting of wide rolls of coated film into narrow widths
of ribbon material for use in computer tape manufacture amounts
to a step in the work necessary to finish the final product and
constitutes a processing which exceeds an alteration within the
scope of subheading 9802.00.50, HTSUS.
Sincerely,
John Durant, Director
Commercial Rulings Division