CLA-2 CO:R:C:S 557443 MLR
Ms. Janne Markala
Kemira Fibres Filaments
P.O. Box 24
37601 Valkeakoski, Finland
RE: Applicability of partial duty exemption under HTSUS
subheading 9802.00.50 to textured polyamide 66 (nylon)
filament yarn; texturizing
Dear Ms. Markala:
This is in response to your letter of June 7, 1993,
forwarded to our branch by the Chief, Textiles & Plastic Branch,
New York Seaport, regarding the applicability of subheading
9802.00.50, Harmonized Tariff Schedule of the United States
(HTSUS), to textured polyamide 66 (nylon) filament yarn.
FACTS:
Kemira Fibres of Finland ("Kemira") proposes to ship
untexturized, continuous extruded multifilament yarn to Finland
where it will be texturized by an air jet process. The
untexturized yarn may be of U.S.-origin. The resulting product
will be textured polyamide 66 (nylon) filament yarn.
ISSUE:
Whether untexturized yarn exported from the U.S. to Finland
to be texturized is eligible for a partial duty exemption 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 United States after having
been exported to be advanced in value or improved in condition by
repairs or alterations. Such articles 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. However, entitlement to this tariff
treatment is precluded in circumstances where the operations
performed abroad destroy the identity of the exported articles or
create new or commercially different articles. See A.F. Burstrom
v. United States, 44 CCPA 27, C.A.D. 631 (1956), aff'g C.D. 1752,
36 Cust. Ct. 46 (1956); Guardian Industries Corp. v. United
States, 3 CIT 9 (1982). Tariff treatment under subheading
9802.00.50, HTSUS, is also precluded where the exported articles
are incomplete for their intended purpose prior to the foreign
processing. Guardian; Dolliff & Company, Inc. v. United States,
455 F. Supp. 618 (CIT 1978), aff'd, 599 F.2d 1015 (Fed. Cir.
1979).
In Dolliff supra, certain dacron polyester fabric goods were
subjected to multiple operations abroad, including dyeing, heat-
setting, chemical-scouring and treating with chemicals. 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 were exported and subjected to stretching,
dyeing, and sizing operations. The cotton cloth that was
returned to the U.S. was similarly denied the partial duty
exemption under item 806.20, Tariff Schedules of the United
States (TSUS) (now subheading 9802.00.50, HTSUS), 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, 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.
In general, texturizing changes the dimensions of the yarn
and may make it softer or give it greater elasticity. The air
jet process (which is used by Kemira) involves feeding continuous
filament yarn through an air jet onto take-up rollers which draw
off the yarn at a speed lower than the speed at which it is fed
into the jet, causing the formation of numerous random loops.
See HRL 073917 dated September 29, 1985. Customs has long held
that texturizing operations exceed the meaning of the term
alteration for the purposes of item 806.20, TSUS. See DB 474.5
dated February 24, 1964, which held that the texturizing process
that gave the yarn twist and resulted in greater elasticity
exceeded an alteration; TC 511.4 dated July 30, 1963; and SP
511.1 dated June 11, 1968. Therefore, in the instant case, we
find that texturizing the yarn in Finland exceeds an alteration
because it is a step in the manufacture of finished yarn.
Accordingly, the texturized yarn will not be entitled to a
partial duty exemption under subheading 9802.00.50, HTSUS, upon
importation into the U.S.
HOLDING:
On the basis of the information submitted, texturizing the
yarn in Finland creates a new or commercially different article
and completes the yarn for its intended use, thereby precluding
it from receiving a partial duty exemption under 9802.00.50,
HTSUS.
Sincerely,
John Durant, Director