CLA-2 CO:R:C:S 556320 SER
Margaret R. Polito, Esq.
Coudert Brothers
200 Park Avenue
New York, NY 10166
RE: Applicability of partial duty exemption for certain
herbicides; 19 CFR 10.8; HRL 555740
Dear Ms. Polito:
This is in reference to your letter of September 13, 1991,
on behalf of E.I. Du Pont de Nemours & Co., Inc. ("Du Pont"),
concerning the applicability of the partial duty exemption under
subheading 9802.00.50, Harmonized Tariff Schedule of the United
States Annotated (HTSUSA), to six herbicides imported from
France or Australia.
You requested that confidential treatment be accorded under
5 U.S.C. 552(b) and 19 CFR 103.12(d) regarding certain
proprietary information included in your submission. You state
that the 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
"confidential". The proprietary information is not included in
this ruling letter.
FACTS:
Du Pont produces six different sulfonylurea-based herbicides
in the U.S. These herbicides are designed for commercial
agricultural applications, and are intended to impair the growth
of weeds without causing injury to the cash crops or the soil in
which they are grown.
The basic herbicides are created in the U.S. by a chemical
reaction between two intermediate chemicals which create a new
molecule with a different chemical structure. The resulting
products, when mixed with water, are stated to be capable of use
as a herbicide. However, in an effort to make these herbicides
more marketable and more "user friendly", primarily by allowing
for easier dissolution in water and easier capability of
measurement, Du Pont exports the herbicides to France or
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Australia where they are subjected to processes 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 actual formulation and granulation process, in France or
Australia, involves mixing each of the six herbicides, in
varying quantities, with dispersants, diluents, wetting agents,
and, in regard to some of the herbicides, with binders, buffers,
and defoamers. The addition of these ingredients creates the
desired characteristics in the herbicides. After the herbicides
have been formulated, they are placed into a granulator and
sprayed with water so that the fine powder clumps into coarser
grains. Thereafter, the water is removed by the application of
heat, and irregular sized grains are sifted out. As stated, the
purpose of the granulation process is to render the herbicides
easier to measure, but it does not change the chemical
composition of the active and primary ingredients of the
herbicides.
The imported herbicides are designated as: Accent 75 DF,
Escort 60 DF, Ally 60 DF, Glean 75 DF, and Harmony 75 DF, Londax
60 DF.
ISSUE:
Whether the formulation and granulation processes performed
abroad on the U.S.-origin herbicides constitute an alteration,
thereby entitling them to the partial duty exemption available
under subheading 9802.00.50, HTSUSA, 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
HTSUSA 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.
Accordingly, entitlement to this tariff treatment is precluded
where the exported articles are incomplete for their intended
purpose prior to the foreign processing. Dolliff & Company Inc.,
v. United States, 455 F.Supp. 618 (1978), 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 section 10.8 Customs Regulations (19 CFR 10.8),
are satisfied.
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In Headquarters Ruling Letter (HRL) 555740 dated May 28,
1991, Customs held that formulation and granulation operations
(virtually identical to the operations in this case), performed
on a herbicide constituted an alteration within the meaning of
subheading 9802.00.50, HTSUSA. In that ruling, the herbicide in
its condition upon exportation from the U.S. was considered
complete for its intended use as an herbicide, and, in fact,
could have been marketed within the agricultural industry in that
condition. It was determined, based largely on the fact that
directions for use of the herbicide in its condition as exported
were included as part of the registration statement filed with
the Environmental Protection Agency (EPA), that a market existed
for the U.S.-origin herbicide.
In HRL 555740, Customs also found that, since the chemical
composition was not changed by the addition of the diluents,
dispersants, wetting agents, buffers, etc., the identity of the
exported herbicides was not destroyed. In addition, the foreign
operations did not appear to result in any significant change in
the quality or character of the herbicide, inasmuch as the
herbicide retained its weed killing properties. Therefore, the
formulation and granulation operations were held to be an
alteration under this subheading.
The foreign operations at issue in this case are nearly
identical to those addressed in HRL 555740. Therefore,
consistent with HRL 555740, we find that the operations in the
instant case constitute an alteration within the meaning of
subheading 9802.00.50, HTSUSA.
HOLDING:
On the basis of the information submitted, we find that the
formulation and granulation processes constitute an alteration
within the meaning of subheading 9802.00.50, HTSUSA. Therefore,
the herbicides will be entitled to classification under this
tariff provision with duty to be assessed only on the cost or
value of the operations performed in France or Australia, upon
compliance with the documentary requirements of 19 CFR 10.8.
Sincerely,
John Durant, Director
Commercial Rulings Division