CLA-2 CO:R:C:V 555021 DBI
Mr. William Brady
Salamander
220-C Benito Avenue
Santa Cruz, CA 95062
RE: Applicability of partial duty exemption of item 806.20,
TSUS, to socks exported to Taiwan for silk screening
Dear Mr. Brady:
This is in response to your letter of May 10, 1988, in
which you request a ruling concerning the applicability of item
806.20, Tariff Schedules of the United States (TSUS), to socks
made in the U.S., exported to Taiwan for silk screening, and then
returned to the U.S. for sale. You also inquire as to the
applicability of quota and visa requirements of the returned
socks. A sample has been submitted for examination.
FACTS:
You state that the socks are made in the U.S. of 80% cotton
and 20% nylon fibers and that your company plans to ship them to
Taiwan to silk screen a design onto the socks. The socks are
valued at 80 cents per pair and the silk screening that will be
done in Taiwan will be valued at 15 cents per pair.
ISSUE:
Whether U.S.-made socks which are exported to Taiwan for
silk screening will be eligible for the partial exemption from
duty provided for in item 806.20, TSUS, and whether these socks
will be subject to any quota or visa requirements upon their
return to the U.S.
LAW AND ANALYSIS:
Generally, all merchandise imported into the United States
is subject to duty on full value and total quantity unless
specifically exempted. The provisions of law affording American
goods returned a full or partial exemption from duty are found in
items 800.00 through 807.00, Tariff Schedules of the United
States (TSUS).
- 2 -
Item 806.20, TSUS, provides for the assessment of duty on
the value of repairs or alterations on articles returned to the
U.S. after having been exported to be advanced in value or
improved in condition by any process of manufacture or other
means. However, the application of this tariff provision is
precluded in circumstances where the operations performed abroad
destroy the identity of the articles or create new or
commercially different articles. See A.F. Burstrom v. United
States, 44 CCPA 27, C.A.D. 631 (1957); Guardian Industries
Corporation v. United States, USITR, 3 CIT 9, Slip Op 82-4 (Jan.
5, 1982). Item 806.20, TSUS, treatment is also precluded 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. Dolliff and
Company, Inc. v. United States, 66 CCPA 77, CAD 1225, 599 F.2d
1015 (1979).
We have previously held in a ruling dated December 10, 1986
(554371) that certain U.S. sweatshirts, hand-painted abroad and
returned to the U.S., were not eligible for item 806.20, TSUS,
treatment because the hand-painting was more than a mere
alteration. We stated that the foreign hand-painting created a
different article of commerce and constituted a finishing step in
the total process of producing the hand-painted sweatshirts.
With regard to the facts you have provided, based on our
previous ruling, we believe that the foreign silk screening
process constitutes an operation that exceeds an alteration.
Although garments may be worn whether a design is imprinted by
silk screening or not, silk screening, like printing and hand-
painting, is considered neither a repair nor an alteration under
the provisions of item 806.20, TSUS. Socks which have a design
as a result of a silk screening process are different from socks
without such a design, and, as such, the foreign silk screening
process has created a different article of commerce.
Furthermore, the silk screening process constitutes a finishing
step in the manufacture of the socks.
In response to your inquiry about the applicability of
quota and visa requirements to the socks, we refer you to section
12.130(c), Customs Regulations (19 CFR 12.130(c)), which states
the following:
"Headnote 2, Part 1, Schedule 8, TSUS, provides that any
product of the U.S. which is returned after having been
advanced in value or improved in condition abroad, or
assembled abroad, shall be a foreign article for the
purposes of the Tariff Act of 1930, as amended. In order
to have a single definition of the term 'product of' and,
therefore, a single country of origin for a textile or
textile product, notwithstanding paragraph (b), merchandise
which falls within the purview of Headnote 2, Part 1,
Schedule 8, TSUS, may not, upon its return to the U.S., be
considered a product of the U.S."
- 3 -
Therefore, under section 12.130(c), the socks will not be
considered a product of the U.S. and will be subject to all
applicable quota and visa requirements.
HOLDING:
On the basis of information and sample submitted, it is our
opinion that the foreign silk screening process may not be
considered an alteration as that term is used in item 806.20,
TSUS, and, therefore, precludes tariff treatment of the returned
goods under the provision of item 806.20, TSUS.
Sincerely,
John Durant
Director, Commercial
Ruling Division
1cc: CO:R:C:V:DIZZO:LDC:6/27/88
Mr. William Brady
Slamander
220-C Benito Avenue
Santa Cruz, CA 95062