CLA-2 CO:R:C:V 555744 GRV
Gunter von Conrad, Esq.
Barnes, Richardson & Colburn
1819 H Street, N.W.
Washington, D.C. 20006
RE: Applicability of partial duty exemption under HTSUS subhead-
ing 9802.00.50 to bundles of synthetic, man-made, tapered
nylon bristles tipped and/or flagged and variously dyed in
Mexico to be used in the manufacture of paint brushes.
Alterations;multiple operations;Dolliff & Company, Inc
(1979);Guardian Industries Corp (1982);C.J. Tower & Sons of
Niagara, Inc. (1960);Royal Bead Novelty Co. (1972);555124;
T.D. 56462(2);555478;T.D. 70-76(1);USITC publications.
Dear Mr. Conrad:
This is in response to your letters of September 27, and
October 17, 1990, on behalf of MFC Corp., requesting a ruling on
the applicability of subheading 9802.00.50, Harmonized Tariff
Schedule of the United States (HTSUS), to bundles of nylon
bristles from Mexico. Catalogue material, affidavits and samples
of the bristles representing their conditions as exported and
imported were submitted for examination. In addition,
information provided in a meeting at Customs Headquarters on
November 15, 1990, was also considered in this ruling.
FACTS:
The present ruling request follows-up a previous request
for a ruling dated May 4, 1989, to which we responded by
information letter (555406) dated April 27, 1990. In our April
27, 1990, letter, we informed MFC that the partial duty exemption
available under HTSUS subheading 9802.00.50 was applicable only
to completed articles, and did not extend to foreign processing
operations which constituted a necessary step in the preparation
or manufacture of finished articles. Based on the information
provided at that time, we found that the bunches of raw nylon
bristles had no commercial use until after the foreign operations
of tipping, flagging and/or dyeing were performed, and that,
even then, the bristles had to be placed in metal paint brush
receptacles in the U.S. before they attained a commercial
status. Accordingly, we stated that this circumstance indicated
that the exported bristles were not completed articles when
exported and that they would not be eligible for entry under
HTSUS subheading 9802.00.50.
You claim that the preceding request was incomplete and
that the merchandise under consideration is tapered nylon fibers
that are used in the further manufacture of paint brushes. You
state that neither the synthetic fibers nor the finished paint
brushes are manufactured by your client. The bristles are
received by your client from a third party in individual bristle
bundles (temporarily bound at the bottom and middle of each
bundle with rubber bands) that are bulk-packaged in 100 pound
boxes. In this condition, the bristles are exported to Mexico.
Abroad, an individual bristle bundle is placed in a chuck, which,
in turn, is placed in a tipping/flagging machine. This machine
either tips the bristles, causing the ends to become more pointed
by passing them over a grinding stone, or flags the bristles,
causing the ends to split by bringing them in contact with knives
when they pass over the grinding stone. Sometimes the nylon
bristles are also dyed. The merchandise is then returned to the
U.S. in the same 100 pound boxes in which it was exported, and
is ready to be made into paint brushes; no further working of the
bristles is required.
Concerning the condition of the bristles at the time of
their exportation to Mexico, you state that the nylon bristles
are ready to be incorporated into finished paint brushes, and
that both the "altered" and "unaltered" bristles are used in the
manufacture of paint brushes. Further, your client attests that
the factors which affect the quality of bristles include the
raw, synthetic material used to extrude the bristles, as well as
the taper, thickness, length, and durability of the extruded
bristles, all of which are established during the original
manufacture of the synthetic bristles.
Concerning the tipping, flagging and dyeing operations, you
state that they constitute mere cosmetic changes in the
merchandise--ostensibly to give them the appearance of natural
hog bristles so as to enhance their marketability. Your client
attests that the essential characteristics of the bristles are
established during their original manufacture and that these
operations create neither a price nor qualitative break point in
the bristle or brush industry. Further, affidavits submitted
claim that the bundles of bristles are traded as a commercially
recognized commodity within the brush industry and that the
dyeing, tipping and flagging operations are not required to
complete the bundles for their intended use.
The bristle fibers as exported and imported are classifiable
under HTSUS subheading 5404.10.20, which provides for synthetic,
man-made monofilaments.
No government, industry or independent institutional, e.g.,
American Society for Testing Materials (ASTM), standards appear
to be applicable to the imported products.
ISSUE:
Whether the synthetic, man-made nylon bristles qualify for
the partial duty exemption under HTSUS subheading 9802.00.50
when returned to the U.S.
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 through a process of manufacture. However,
entitlement to this tariff treatment is precluded where the
exported articles are incomplete for their intended use prior to
the foreign processing, Guardian Industries Corp. v. United
States, 3 CIT 9 (1982), or where the foreign operation
constitutes an intermediate processing operation, which is
performed as a matter of course in the preparation or the
manufacture of finished articles. Dolliff & Company, Inc., v.
United States, C.D. 4755, 81 Cust.Ct. 1, 455 F.Supp. 618 (1978),
aff'd, C.A.D. 1225, 66 CCPA 77, 599 F.2d 1015 (1979). Articles
entitled to this partial duty exemption are dutiable only upon
the cost or value of the foreign repairs or alterations when
returned to the U.S., provided the documentary requirements of 19
CFR 10.8 are satisfied.
In the referenced Dolliff case, certain dacron polyester
fabrics--greige goods--were exported and subjected to multiple
processing operations abroad, including dyeing. The finished
fabric that was returned to the U.S. was denied the partial duty
exemption for alterations abroad because it was determined that
the dyeing and numerous other processing steps were all
necessarily undertaken to produce the finished fabric.
In an earlier alterations case, C.J. Tower & Sons of
Niagara, Inc. v. United States, C.D. 2208, 45 Cust.Ct. 111
(1960), cotton drills--also greige goods--were exported and
subjected to multiple operations, including dyeing. The cotton
cloth that was returned to the U.S. was similarly denied the
partial duty exemption for alterations abroad because it was
determined that the merchandise exported was changed in color,
width, length, porosity, in the distribution of the threads in
the weave, in weight, tensile strength, texture, and suppleness
by the foreign processing. In holding that the foreign
processing constituted more than an alteration, the court found
that the returned merchandise was a new and different article,
having materially different characteristics and a more limited
and specialized use.
Both of these decisions were decided after Amity Fabrics,
Inc. v. United States, C.D. 2104, 43 Cust.Ct. 64, 305 F.Supp. 4
(1959), another alterations case which dealt with the dyeing,
albeit redyeing, of fabric. In Amity, unmarketable, pumpkin-
colored cotton twill-back velveteen was exported to be redyed a
black color. The court determined that the dying operation was a
change which rendered the fabric marketable and that this
improvement in the exported fabric advanced its value and
improved its condition commercially, and found that such change
constituted an alteration under the statute and Customs
Regulations. As the parties had stipulated that the redyeing in
no way changed the quality, texture, or character of the
material, the court concluded that the identity of the goods was
not lost or destroyed by the dying process; no new article was
created; there was no change in the character, quality, texture,
or use of the merchandise; it was merely changed in color.
Amity was cited in both C.J. Tower and Dolliff and was also
discussed in Royal Bead Novelty Co. v. United States, C.D. 4353,
68 Cust.Ct. 154, 342 F.Supp. 1394 (1972).
In Royal Bead, uncoated glass beads were exported so that
they could be half-coated with an Aurora Borealis finish which
imparted a rainbow-like luster to the half-coated beads. Guided
by Amity, the court found that the identity of the beads was not
lost or destroyed in the coating process and that no new article
was created. Moreover, there was no change in the beads' size,
shape, or manner of use in the making of articles of jewelry (as
the plaintiff testified that both uncoated and half-coated beads
were used interchangeably). The sole change was in the finish,
which did not change the quality, texture, or character of the
exported beads. Accordingly, the court concluded that
application of the Aurora Borealis finish constituted an
alteration within the intendment of item 806.20, Tariff
Schedules of the United States (TSUS) (the precursor tariff
provision to HTSUS subheading 9802.00.50).
In Headquarters Ruling Letter (HRL) 555124, (abstracted as
C.S.D. 89-38(11) and C.S.D.89-9(6), 23 Cust.Bull. ___ (1989)), we
considered a brushing operation performed on fabric used in the
making of women's raincoats and found that while the brushing
process imparted a slightly different appearance to the fabric,
it did not appear to significantly change the quality, texture or
character of the fabric. Accordingly, we held that the brushing
operation constituted an "alteration" for purposes of the tariff
provision.
In the present case, although the synthetic nylon bristles,
like the greige fabric in both Dolliff and C.J. Tower, may be
subjected to multiple operations, one of which is dyeing, we
believe that the operations performed on the bristles, like the
operations in Amity and Royal Bead, constitute acceptable
alterations of the bristle merchandise. Concerning the dyeing
operation, we find that the dyeing of bristles is distinguish-
able from the dyeing of greige fabric for the reason that fabric
in the greige is, by definition, unfinished merchandise requiring
certain processing operations to render it suitable for its
intended use. However, the record before us establishes that the
nylon bristles are suitable for their intended use (incorporation
into paint brushes) in their condition as exported, and, in fact,
are so used. Therefore, we are persuaded that the dyeing of the
bristles does not constitute an intermediate processing operation
performed as a matter of course in the preparation or the
manufacture of finished bristles. Moreover, as in Amity, the
artificial color induced by dyeing in no way affects the quality,
texture, character or performance characteristics of the
bristles; the dyeing merely renders the bristles more marketable.
As the samples submitted also show that the dyeing operation does
not destroy the identity of the exported article or create a new
or different article of commerce or appear to significantly
change the quality, texture or character of the bristles, we find
that the dyeing operation constitutes an "alteration" within the
meaning of HTSUS subheading 9802.00.50.
Concerning tipping and flagging operations, these are akin
to grinding and slitting operations, respectively, which we have
held in other contexts to constitute either finishing operations
performed on unfinished goods or which produce changes in the
performance characteristics of the exported article so as to
exceed an alteration for purposes of HTSUS subheading 9802.00.50.
See T.D. 66-190(1), 101 Treas.Dec. 535 (1966) (grinding
constitutes a finishing process) and HRL 058689 (December 20,
1978) (cutting/slitting operations produce changes in the
performance characteristics of the polypropylene article
exported). You claim that these operations are not required to
complete the nylon bristles and that bristles not subjected to
these operations are used in the further manufacture of paint
brushes. Thus, you state that these operations constitute mere
cosmetic changes in the merchandise designed to enhance
marketability.
We note in this regard that the U.S. International Trade
Commission (USITC), on the occasion of investigating the paint
brush industry in connection with an antidumping petition
submitted in 1985, indicated that these operations--tipping and
flagging--improve the paint retention qualities of bristles
subjected to these operations. USITC Pub. 1805 (January 1986),
at pages 7, note 10, and A-4. However, as no industry standards
are discoverable on this issue, which address whether these
operations are required or whether they create a new or different
product, we conclude that while these operations may be more than
mere cosmetic changes, they do not result in any significant
change in the quality, texture or character of the paint brush
bristles. Nor do they appear to constitute intermediate
processing operations in the manufacture of finished synthetic
bristles per se, so far as the bristle industry is concerned.
Accordingly, the tipping and flagging operations performed on the
synthetic, nylon bristles here are deemed to constitute
"alterations" within the meaning of HTSUS subheading 9802.00.50.
HOLDING
On the basis of the information and samples presented, it is
our opinion that the flagging, tipping and dyeing operations
variously performed on the exported bundles of synthetic, man-
made nylon bristles constitute "alterations," as that term is
used in HTSUS subheading 9802.00.50. Therefore, upon their
return to the U.S. and compliance with the requirements of 19 CFR
10.8, the bristles will be entitled to classification under this
tariff provision, with duty only on the value of the processing
performed abroad.
Sincerely,
John Durant, Director
Commercial Rulings Division