CLA-2 CO:R:C:S 956746 WAS
Mr. Randy L. Pohler
Dal-Chrome Company, Inc.
dba/DC Bumper Exchange
3044 Morrell Street
Dallas, TX 75216
RE: Applicability of subheading 9802.00.50, HTSUS, to used
automobile and light truck bumpers; Article 509; NAFTA
Dear Mr. Pohler:
This is in reference to your letter dated May 31, 1994,
concerning the eligibility of used automobile and light truck
bumpers for duty-free treatment under subheading 9802.00.50,
Harmonized Tariff Schedule of the United States (HTSUS).
FACTS:
Based on the information submitted, Dal-Chrome will ship
used or scrap automobile and light truck bumpers from the U.S. to
a related Mexican factory for repair operations. The bumpers
will be repaired to a "like new" condition in Mexico before they
are returned to the U.S. In Mexico, the plastic bumpers will be
straightened (through immersion in hot water), repaired (through
the application of an epoxy mixture), sanded, primed, painted,
and boxed for shipment to the U.S. The steel bumpers will be
straightened (through pounding and the use of hydraulic presses),
sanded, and polished and returned to the importer's Dallas
facility for a final chroming process.
ISSUE:
Whether the used automobile and light truck bumpers which
are refurbished in Mexico will qualify for the duty-free treatment under subheading 9802.00.50, HTSUS, when returned to
the U.S.
LAW AND ANALYSIS:
Articles returned to the U.S. after having been exported to
Mexico be advanced in value or improved in condition by repairs
or alterations may qualify for duty-free treatment under
subheading 9802.00.50, HTSUS, provided the foreign operation does
not destroy the identity of the exported articles or create new
or commercially different articles through a process of
manufacture. See A.F. Burstrom v. United States, 44 CCPA 27,
C.A.D. 631 (1956), aff'd C.D. 1752, 36 Cust. Ct. 46 (1956);
Guardian Industries Corp. v. United States, 3 CIT 9 (1982).
Accordingly, entitlement to this tariff treatment is precluded
where the exported articles are incomplete for their intended
purpose prior to the foreign processing and the foreign
processing operation is a necessary step in the preparation or
manufacture of finished articles. Dolliff & Company, Inc. v.
United States, 455 F. Supp. 618 (CIT 1978), aff'd, 599 F.2d 1015
(Fed. Cir. 1979).
Section 181.64, Customs Regulations (19 CFR 181.64) defines
"repairs or alterations" for purposes of NAFTA as follows:
For purposes of this section, "repairs or alterations" means
restoration, addition, renovation, redyeing, cleaning,
resterilizing, or other treatment which does not destroy the
essential characteristics of, or create a new or
commercially different good from, the good exported from the
United States.
The replacement and/or addition of parts to restore products
to their original condition may constitute repair operations for
purposes of subheading 9802.00.50, HTSUS, provided that the
particular article does not lose its identity and the replacement
and/or additions are not so extensive as to create a new or
different article. In Press Wireless, Inc. v. United States,
C.D. 438 (1941), worn-out radio tubes were sent abroad for the
replacement of filaments damaged through use and for other
necessary repairs designed to restore the tubes to a condition
which prolonged the use for which they were originally designed.
The court held that the tubes returned to the U.S. were identical
to the tubes exported for repairs. The court further stated that
the fact that they had been restored to their original efficiency
so as to prolong their usefulness was of no consequence.
In HRL 556992 dated May 7, 1993, Customs held that the
replacement of a monochrome display on a computer with an active-matrix color display qualified as an acceptable repair or
alteration within the meaning of subheading 9802.00.50, HTSUS.
In addition, in HRL 555084 dated November 29, 1988, Customs held
that the replacement of a worn down abrasive surface in a
triangular grinding piece used in grinding machinery constituted
a repair as that term is used in subheading 9802.00.40, HTSUS.
Moreover, in HRL 554922 dated June 13, 1988, Customs held that
the replacement of defective components of a fuel nozzle in
Mexico constituted an acceptable repair operation. In that case,
the nozzle body (or body assembly) and the check valve was kept
together as a matched set throughout the repair operation. We
held that as long as the identity of the matched sets of nozzles
and check valves exported from the U.S. was maintained throughout
the repair process, other defective parts could be replaced and
the repaired complete units were eligible for the partial duty
exemption under subheading 9802.00.50.
In HRL 555135 dated October 18, 1988, passenger automobiles
were exported to Mexico to be repaired and refurbished and then
returned to the U.S. In this case, components such as the engine
and drivetrain as well as the steering and suspension, were
rebuilt and repaired in Mexico. Repairs were made to other
components, including the frame, shell, seats, etc., as needed.
In addition, disposable items, such as oil, brake shoes, tires
and filters were replaced. The frame, bumpers, and other body
parts were repaired by straightening and/or welding. Items such
as seats, headliners, carpets and dash items were repaired when
possible, but in most cases, these units were replaced or
required some replacement parts. Defective windows, windshields,
bulbs, lens covers and mirrors were replaced. The automobile was
reassembled and painted before being returned to the U.S. for
sale. Customs held that the described foreign repairs and
refurbishments did not create a new or commercially different
article. Customs stated that the automobiles that were returned
were the same articles as those exported with the described
modifications. Therefore, the foreign operations constituted an
acceptable repair operation within the meaning of subheading
9802.00.50, HTSUS, and the automobiles were entitled to a partial
duty exemption when returned to the U.S.
In the instant case, we are of the opinion that the articles
that will be returned - automobile and light truck bumpers - are
the same as the articles that will be exported for repairs.
Although the bumpers will undergo various foreign operations
which include straightening, sanding, priming, painting, and
packaging, these operations do not destroy the identity of the
article, nor do these operations create a new or different
commercial article. The foreign processing operations of the
exported bumpers do not produce changes in the performance
characteristics of the exported article that would alter its use
from that which it was originally designed. According to the
reasoning in Press Wireless and the above-cited cases, the fact
that the used automobile and light truck bumpers will be restored
to their original condition will not preclude the article from
receiving duty-free treatment under subheading 9802.00.50, HTSUS.
Accordingly, it is our position that the operations performed in
Mexico to the used automobile bumpers are considered proper
"repairs" within the meaning of subheading 9802.00.50, HTSUS.
HOLDING:
Based on the information provided, the operations performed
in Mexico to the used automobile bumpers are considered "repairs"
within the meaning of subheading 9802.00.50, HTSUS, and
therefore, the returned automobile bumpers will be entitled to
duty-free treatment under this provision, upon compliance with
the documentation requirements of 19 CFR 181.64. A copy of this
ruling letter should be attached to the entry documents filed at
the time this merchandise is entered. 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,
John Durant, Director
Commercial Rulings Divison