CLA-2 CO:R:C:V 554942 CW
Paul E. Linet, Esq.
Aresty, Levin, Orenstein & Wernick
World Trade Center, Suite 104
Boston, Massachusetts 02210
RE: Applicability of partial duty exemption to certain glass
bulbs exported to Mexico for blue dip painting
Dear Mr. Linet:
This is in response to your letter of February 26, 1988, and
your follow-up letter of July 18, 1988, requesting a ruling on
behalf of GTE Products Corp./Sylvania Lighting ("importer") that
certain glass bulbs (also described as glass tubes) of U.S.
origin to be subjected to a blue dip painting operation in Mexico
are entitled to classification under item 806.20, Tariff
Schedules of the United States (TSUS), upon their return to the
U.S. You also request a determination concerning the duty rate
applicable to the imported glass bulbs. Samples have been
submitted for examination.
FACTS:
You state that your client plans to export U.S. manufactured
glass bulbs to its related facility in Mexico where the closed
ends of the bulbs will be mechanically dipped into a mixture of
paint thinner and medium blue paint. The dipped bulbs are oven
dried, cooled, and then packed for return to the U.S. After
their importation, the bulbs are processed into finished
projector lamps. You advise that the blue coating operation
serves a cosmetic or marketing function in that it provides a
recognizable marketing trait that is synonymous with the
importer's "blue dot" lamps. Moreover, you state that the blue
coating acts as a heat retardant and light shield and that lamps
with blue-dipped bulbs are specifically used in projection
equipment where the heat or light emitted from the top of the
lamp should be shielded.
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Information submitted with your request indicates that
approximately 40 percent of the bulbs used by your client to make
finished projector lamps are purchased from unrelated U.S.
sources, while the remainder is produced by the importer. Of the
70 projection lamp types manufactured and sold by your client, 50
have painted (blue-dipped) glass bulbs and 20 have unpainted
bulbs. The samples provided to us consist of two different
types of bulbs, one painted and one unpainted, and the finished
lamps made from each type of bulb. Concerning the interchange-
ability of painted and unpainted lamps, you advise that the blue
coated lamp may "be substituted for an uncoated lamp, as long as
a sufficient amount of light is available."
In support of your position that the blue coating of the
bulbs' tips in Mexico constitutes an alteration within the
meaning of item 806.20, TSUS, you refer us to the decisions in
Amity Fabrics, Inc. v. U.S., 43 Cust. Ct. 64, C.D. 21204 (1959),
and Royal Bead Novelty Co., Inc. v. U.S., 68 Cust. Ct. 154, C.D.
4353 (1972).
It is your opinion that the imported glass bulbs are
provided for in the TSUS under item 547.31, TSUS, and in the
proposed Harmonized Tariff Schedule of the United States (HTSUS)
under subheading 7011.10.10, with duty at the rate of 3.7 percent
ad valorem under both provisions.
ISSUE:
Whether the blue-dipped bulbs are eligible for the partial
exemption from duty provided for in item 806.20, TSUS (subheading
9802.00.40, HTSUS), and whether, for duty purposes, the bulbs are
properly classifiable in item 547.31, TSUS, and subheading
7011.10.10, HTSUS.
LAW AND ANALYSIS:
Item 806.20, TSUS, provides for the assessment of duty on
the value of repairs or alterations performed on articles that
are sent abroad for that purpose. However, the application of
this tariff provision is precluded where the operations performed
abroad create new or different articles of commerce, or where the
exported articles are incomplete for their intended use and the
foreign processing operation is a necessary step in the
preparation or manufacture of finished articles. See Guardian
Industries Corp. v. United States, USITR, 3 CIT 9 (1982), and
Dolliff & Company, Inc. v. United States, 66 CCPA 77, C.A.D. 1225
(1979).
In the Amity Fabrics case, which you cite in your ruling
request, the Customs Court held that fabric which was exported to
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be redyed a different color qualified for item 806.20, TSUS,
treatment upon its return to the U.S. The court stated that:
...the identity of the goods was not lost or
destroyed by the dyeing 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.
Using essentially the same reasoning, the court in the Royal Bead
case, which you also cite, held that glass beads which were
exported for the application of a half coating of "Aurora
Borealis" to impart a luster effect were entitled to
classification under item 806.20, TSUS. In concluding that
"beads went out and beads came back," the court noted that the
"sole change was in the finish in that the imported beads now
possessed a rainbow-like luster."
In the Dolliff case, certain greige goods were exported to
Canada where they were subjected to various operations consisting
of heat-setting, chemical scouring, dyeing, and a second heat-
setting. The fabric was returned to the U.S. as finished fabric
suitable for manufacture into curtains. The court concluded that
item 806.20, TSUS, was inapplicable to the returned fabric for
the reason that:
...repairs and alterations are made to completed
articles and do not include intermediate pro-
cessing operations which are performed as a
matter of course in the preparation or the
manufacture of finished articles. In the
instant situation, the operations performed in
Canada comprise further processing steps which
are performed on unfinished goods which lead to
completed articles, i.e., the finished fabrics,
and, therefore, the processing cannot be consid-
ered alterations.
It is our understanding from the information you have
provided in this case that the safe and efficient utilization of
certain projection equipment requires the use of lamps with
painted tips so as to shield the equipment and/or film from the
heat or light emitted from the top of the lamp. Other projection
equipment is specifically designed to use uncoated lamps. Thus,
while in some cases painted lamps may be substituted for
unpainted lamps in projection equipment designed for the latter,
the reverse does not appear to be true for equipment designed for
painted lamps. Under these circumstances, it is clear that the
blue coating of the glass bulbs is a necessary step in the
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production of finished blue-dipped bulbs, thereby enabling them
to be used (as part of projection lamps) in projection equipment
specifically requiring painted lamps.
Therefore, applying the Dolliff criteria to this case, we
believe that the exported bulbs are not finished articles since
they are incomplete and unsuitable for their intended use prior
to the foreign painting operation. This is in contrast to the
fabric in Amity Fabrics and the beads in Royal Bead which were
entirely capable of being used for their intended purposes at the
time of exportation.
With respect to the tariff classification of the imported
blue-dipped glass bulbs, it is our opinion that the bulbs are
classifiable in item 547.31, TSUS, as "Glass envelopes (including
bulbs and tubes), without fittings, designed for electric lamps,
vacuum tubes, or other electrical devices: Bulbs for
incandescent lamps," with duty at the rate of 3.7 percent ad
valorem.
Under the proposed HTSUS, the projector bulbs are
classifiable in subheading 7011.10.10, as "Glass envelopes
(including bulbs and tubes), open, and glass parts thereof,
without fittings, for electric lamps, ...or the like: For
Electric lighting: Bulbs for incandescent lamps," at a duty of
3.7 percent ad valorem.
This classification represents the present position of the
Customs Service regarding the dutiable status of the merchandise
under the proposed HTSUS. If there are changes before enactment,
this advice may not continue to be applicable.
HOLDING:
On the basis of the information presented, it is our opinion
that the subject glass bulbs are not finished articles at the
time of exportation and, therefore, the imported blue-dipped
bulbs are not eligible for item 806.20, TSUS, treatment.
The imported glass bulbs are classifiable in item 547.31,
TSUS, and in subheading 7011.10.10, HTSUS.
Sincerely,
John Durant
Director, Commercial
Rulings Division