(abstracted at C.S.D. 89-134(2))
CLA-2 CO:R:C:V 555462 GRV
Ms. Lori Lamp Segura
ConAgra, Inc.
Suite 300
888 17th Street, N.W.
Washington, D.C. 20006
RE: Applicability of partial duty exemption under
HTSUS subheading 9802.00.50 to diced and quick-
frozen apples from Mexico. Dolliff & Company,
Inc., (1979); 554654
Dear Ms. Segura:
This is in response to your letters of July 17, and August
4, 1989, requesting a ruling on the applicability of subheading
9802.00.50, Harmonized Tariff Schedule of the United States
(HTSUS), to diced and quick-frozen apples to be imported from
Mexico.
FACTS:
You state that you are considering purchasing apples in the
U.S. and exporting them to Mexico, where they will be diced and
individually quick-frozen, after which they will be returned to
the U.S.
ISSUE:
Whether the foreign dicing and quick-freezing operations
constitute acceptable "alterations," for purposes of HTSUS
subheading 9802.00.50, thereby rendering the returned apples
eligible for the partial duty exemption under this tariff
provision.
LAW AND ANALYSIS:
Articles returned to the U.S. after having been exported to
be advanced in value or improved in condition by repairs or
alterations may qualify for the partial duty exemption under
HTSUS subheading 9802.00.50 provided the foreign operation does
not destroy the identity of the exported articles or create new
or different articles. Further, entitlement to this tariff
treatment is precluded were the exported articles are incomplete
for their intended use and the foreign processing operation is a
necessary step in the preparation or manufacture of finished
articles. Dolliff & Company, Inc., v. United States, 81 Cust.Ct.
1, C.D. 4755, 455 F.Supp. 618 (1978), aff'd, 66 CCPA 77, C.A.D.
1225, 599 F.2d 1015, 1019 (1979). Articles entitled to this
partial duty exemption are dutiable only upon the cost or value
of the foreign repairs or alterations, provided the documentary
requirements of section 10.8, Customs Regulations (19 CFR 10.8),
are satisfied.
In Headquarters Ruling Letter (HRL) 554654 (July 28, 1987),
whole peaches were exported to be sliced abroad. Customs found
that the slicing operation not only destroyed the identity of the
exported peaches, but resulted in new and different articles of
commerce with many uses different from those for whole peaches.
Accordingly, we denied the partial duty exemption available under
item 806.20, Tariff Schedules of the United States (TSUS) (the
precursor provision to HTSUS subheading 9802.00.50), as the
slicing process was deemed to exceed the scope of the term
"alteration."
We believe that the above-referenced ruling is dispositive
of the dicing aspect of the foreign operation presented in this
case, and accordingly hold that the dicing of the apples would
result in new and different commercial articles having uses
different from those for whole apples.
HOLDING:
On the basis of the described foreign operation, the dicing
and freezing of the apples exceed the scope of the term
"alteration," thereby precluding the classification of the
returned apples under HTSUS subheading 9802.00.50.
Sincerely,
John Durant, Director