CLA-2-98:S:N:N1:230 873889
Ms. Loretta Kruse
Anthony Villanueva & Co., Inc.
9375 Customhouse Plaza, Suite J
Otay Mesa, CA 92173
RE: Applicability of subheading 9802.00.50, HTSUS, to wooden
shuttersshipped to Mexico to be painted. Subheading
4421.90.4000, HTSUSA. Slip Op. 82-4 (1982) and C.A.D. 1225
(1979). 806.20, TSUS.
Dear Ms. Kruse:
In your letter dated April 6, 1992, you requested a tariff
classification ruling on the applicability of subheading
9802.00.50, HTSUS, to wooden shutters shipped to Mexico to be
painted. Your request is being made on behalf of Ohline
Corporation.
In your letter, you state that the shutters in question are
manufactured in Gardena, California using wood of U.S. origin.
After manufacture, the shutters are exported to Mexico for the sole
purpose finishing them by painting.
You explain that in Mexico the shutters are processed as
follows: inspected, a barrier and a primer coat applied, lightly
sanded and repaired, inspected, top coat applied, inspected, final
top coat applied, final inspection and packed for shipping.
After processing in Mexico, the shutters are imported into the
United States where hardware is attached, and they are packaged for
retail sale.
You believe that Ohline's shutters should be eligible for the
partial duty exemption under subheading 9802.00.50, Harmonized
Tariff Schedule of the United States (HTSUS) when returned to the
U.S. In addition, it is your opinion that the tariff does not
limit but rather subheading 9802.00.50, HTSUS, provides for "any
process of manufacture".
It is your belief that the shutters are complete articles upon
exportation from the U.S., and they can be purchased in "this
unfinished condition at your local hardware store." You also
state that the process of painting does not change the article, it
simply enhances it by "further process". You cite General Motors
Corp. v. United States, Slip Op. 91-62 in support of you position.
As you are aware, the issue before the court in Slip Op. 91-
62 was the application of item 807.00, TSUS, (subheading
9802.00.80, HTSUS) which provides for a tariff allowance for
American articles assembled abroad. This is a distinct and
separate provision from the subheading in question, that is,
subheading 9802.00.50, HTSUS; therefore, the General Motors Corp.
(supra) decision is not applicable to the subject issue.
Subheading 9802.00.50, HTSUS, specifically provides as
follows:
Articles exported for repairs or alterations:
other.
This provision, as you are aware, was carried over
into the HTSUS from item 806.20, TSUS.
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 subheading
9802.00.50, HTSUS, provided the foreign operation does
not destroy the identity of the exported articles or
create new or different articles. See Press Wireless,
Inc. v. United States, C.D. 438, 6 Cust. Ct. 102
(1941). However, this allowance is precluded where
the exported articles are incomplete for their
intended use prior to the foreign processing 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. See Guardian Industries Corp. v.
United States, 3 CIT 9 (1982) and Dolliff & Company,
Inc., v. United States, 81 Cust. Ct. 1, C.D. 4755
(1978), aff'd, 66 CCPA 77, C.A.D. 1225 (1979).
Customs has held that where the exported article
is incomplete for its intended use and requires a
further manufacturing process to make it complete,
that process is not an alteration. Operations
performed on the articles must not constitute a part
of the total manufacturing process began in the United
States. This is consistent with prior court
decisions.
In the present case, the wood shutters will not be
completed articles when they are sent to Mexico for
finishing operations, namely the painting. The fact
that the same retailers purchase unfinished shutters
as well as finished (painted) shutters does not change
the fact that the processing operations performed in
Mexico are necessary to the preparation of the
finished article. The shutters have to be finished
for their intended use.
On the basis of the information submitted, it is
our opinion that the subject shutters exported to
Mexico are not finished products and that the painting
performed in Mexico may not be considered an
alteration as that term is used in subheading
9802.00.50, HTSUS. Therefore, the subject shutters
are ineligible for the duty exemption under subheading
9802.00.50, HTSUS.
This ruling is being issued under the
provisions of Section 177 of the Customs Regulations
(19 C.F.R. 177).
A copy of this ruling letter should be attached to
the entry documents filed at the time this merchandise
is imported. If the documents have been filed without
a copy, this ruling should be brought to the attention
of the Customs officer handling the transaction.
Sincerely,
Jean F. Maguire
Area Director
New York Seaport