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.

- 2 -

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

- 3 -

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

- 4 -

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