CLA-2 CO:R:C:S 555740 DSN
Margaret R. Polito, Esq.
Coudert Brothers
200 Park Avenue
New York, New York 10166
RE: Applicability of a partial duty exemption for herbicide;
19 CFR 10.8; 076499; Burstrom; Guardian; Dolliff
Dear Ms. Polito:
This is in response to your letters of September 21, 1990,
and April 1, 1991, on behalf of ______________________________
(hereinafter referred to as the importer) requesting a ruling on
the applicability of subheading 9802.00.50, Harmonized Tariff
Schedule of the United States (HTSUS), to a herbicide imported
from France for use in agriculture. We regret the delay in
responding.
You ask that confidential treatment be accorded under 5
U.S.C. 552(b) and 19 CFR 103.12(d) regarding your request, and
this ruling letter. You state that release of this information
would cause significant harm to the importer. As requested,
confidential treatment will be accorded to the portions of your
request that are marked "confidental" and those portions of this
ruling letter that are in brackets.
FACTS:
The importer produces a herbicide in Puerto Rico referred to
as _______. This herbicide is specifically designed for
commercial agricultural use. The herbicide is intended to
destroy weeds that interfere with crop growth. The herbicide is
created through a chemical reaction between two intermediates
_____________ which creates a new molecule with a different
chemical structure. The resulting product, _______ when mixed
with water is capable of being used by farmers to control weeds
via aerial dusting or spraying.
In an effort to make _________ more marketable, and "user
friendly", your client exports the herbicide to France where it
is subjected to processess of formulation and granulation. These
processes eliminate the product's powdery consistency which makes
the chemical difficult to measure, as well as minimize the
agitation required to disperse the chemical in water. The
resulting chemical is referred to as _______________ which, like
__________ is registered with the Environmental Protection Agency
(EPA) as an herbicide. You state that different formulations of
the same product must be separately registered with the EPA.
As part of the formulation process, _________ is mixed with
inert ingredients, namely a dispersant _________________, two
wetting agents ___________________________ and a diluent clay.
The formulation process does not alter the chemical composition
of ____________ although the color of the chemical is changed.
The purpose of the formulation process is to enhance the
product's water soluability so that less agitation is required
for proper mixing.
The granulation process consists of placing the [L5300] and
inert ingredients into a granulator and spraying with water.
Heat is then applied to remove excess water. All uneven grains
are separated from the mixture leaving grains of uniform size.
This process eliminates the powdery consistency thereby rendering
the product easier for a farmer to measure, while not changing
the chemical composition of _______.
ISSUE:
Whether the formulation and granulation processes performed
on the U.S.-origin herbicide constitute an alteration, thereby
entitling it to the partial duty exemption available under
subheading 9802.00.50, HTSUS, when returned to the U.S.
LAW AND ANALYSIS:
Subheading 9802.00.50, HTSUS, provides a partial duty
exemption for articles returned to the U.S. after having been
exported to be advanced in value or improved in condition by
repairs or alterations. Such articles are dutiable only upon the
value of the foreign repairs or alterations when returned to the
U.S., provided the documentary requirements of section 10.8,
Customs Regulations (19 CFR 10.8), are satisfied.
The application of this tariff provision is precluded in
circumstances where the operations performed abroad destroy the
identity of the articles or create new or commercially different
articles. See, A.F. Burstrom v. United States, 44 CPU 27, C.A.D.
631 (1956), aff'g, C.D. 1752, 36 Cust. Ct. 46 (1956); Guardian
Industries Corporation v. United States, 3 CIT 9 (1982), Slip Op.
82-4 (Jan. 5, 1982). Subheading 9802.00.50, HTSUS, treatment is
also precluded where 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 CPU 77, C.A.D.
1225, 599 F.2d 1015 (1979).
With regard to the facts that you have presented and based
on the above cases, we are of the opinion that the formulation
and granulation operations constitute an alteration within the
meaning of subheading 9802.00.50, HTSUS. The fact that the
product is referred to as ________ when exported and as _______
when returned does not compel a finding of a new and different
article of commerce. As previously stated, different
formulations of the same product must be separately registered
with the EPA.
Moreover, on the basis of your submissions, we find that the
_______ in its exported condition is complete for its intended
use as an herbicide, and, in fact, can be marketed within the
agricultural industry in this condition. You have demonstrated
to our satisfaction that a market exists for _______ prior to
exportation. For example, as part of the registration statement
filed with EPA, directions for use of ________ is outlined.
We find that the operations performed in France do not
destroy the identity of the _______ because the chemical
composition has not been changed by the addition of certain inert
ingredients. The foreign operations do not appear to result in
any significant change in the quality or character of the
herbicide. The herbicide retains its weed killing properties.
The primary purpose of the operation is to render the herbicide
more "user friendly" by making it easier for the farmer to dilute
and measure the herbicide prior to its application.
We note that this case is distinguishable from the facts in
Headquarters Ruling Letter (HRL) 076499 of November 20, 1986,
because the herbicide in question in that case was converted
abroad by the addition of limestone which changed the product's
identity from an acidic substance to one with a pH suitable for
use on soil. The addition of limestone greatly affected the
acidity and alkalinity of the product, thereby changing the
chemical composition of the herbicide. The limestone acted as
more than an inert carrier or diluent for the herbicide. In the
present case, as discussed above, we find that no change in
chemical composition results from the processing performed
abroad.
HOLDING:
On the basis of the information submitted, we find that the
formulation and granulation processes constitute alterations
within the meaning of subheading 9802.00.50, HTSUS. Therefore,
the herbicide will be entitled to classification under this
tariff provision with duty only on the value of the foreign
processing upon compliance with the documentary requirements of
section 10.8, Customs Regulations (19 CFR 10.8).
Sincerely,
John Durant, Director
Commercial Rulings Division