CLA-2 CO:R:C:V 555084 DBI
Robert E. Burke, Esq.
Barnes, Richardson and Colburn
200 East Randolph Drive
Chicago, Illinois 60601
RE: Applicability of partial duty exemption of
item 806.20, TSUS, to certain abrasive grinding
elements exported to Japan for refurbishment
Dear Mr. Burke:
This is in response to your letter of March 28, 1988, to
the Regional Commissioner of Customs, New York Region, in which
you request a ruling concerning the applicability of item
806.20, Tariff Schedules of the United States (TSUS), to
certain abrasive grinding elements to be exported to Japan for
cleaning, grinding and the attachment of a new abrasive. Your
letter has been forwarded to this office for a response.
FACTS:
You advise that the imported merchandise consists of
triangular grinding pieces used in grinding machinery. Each
piece consists of an aluminum base onto which abrasive material
has been affixed. The aluminum base is approximately 10 mm
thick while the abrasive surface is 48 mm thick. Twenty of
these pieces are mounted to a grinding machine forming a
circular grinding surface.
When the abrasive surface has worn down to a thickness of
approximately 10 to 15 mm, the required degree of precision can
no longer be maintained, although such worn parts could be used
when maintaining precision tolerances are not necessary. At
that point, the worn pieces would be sent to Japan for
refurbishment.
In Japan, the worn down abrasive will be removed, and the
aluminum base will be cleaned and ground to attain a uniformly
level surface. A completely new abrasive manufactured in Japan
will then be attached to the base with epoxy resins. The
merchandise will then be shipped back to the U.S.
-2-
The value of the worn out article exported from the U.S. is
approximately $15 to $20, including $12 to $15 for the aluminum
base and $3 to $5 for the worn down abrasive material. The
value of the new article imported from Japan is approximately
$50 to $75, including $12 to $15 for the aluminum base plus $38
to $60 for the newly manufactured material.
ISSUE:
Whether the described abrasive grinding elements, when
returned to the U.S., will be eligible for the partial
exemption from duty in subheading 9802.00.40, Harmonized Tariff
Schedule of the United States (HTSUS) (806.20, TSUS).
LAW AND ANALYSIS:
As you are probably aware, the HTSUS will replace the TSUS,
effective January 1, 1989. Item 806.20, TSUS, will be carried
over into the HTSUS without change as subheading 9802.00.40.
Subheading 9802.00.40, HTSUS, provides for the assessment of
duty on the value of repairs or alterations performed on
articles that have been exported for that purpose. 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, 3 CIT 9, Slip Op. 82-4 (Jan. 5, 1982).
Treatment under subheading 9802.00.40, HTSUS, 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 &
Company, Inc. v. United States, 66 CCPA 77, C.A.D 1225, 599
F.2d 1015 (1979).
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 fact that they had been
restored to their original efficiency so as to prolong their
usefulness was of no consequence.
-3-
In the present case, the product that will be returned is
the same as the product that will be exported for repairs.
Although a new abrasive will be attached, the identity of the
article will not be destroyed and the addition will not create
a new or different commercial article. According to the
reasoning in Press Wireless, the fact that the worn-out
abrasive elements will be restored to their original efficiency
will not preclude the article from receiving partial duty-free
treatment under subheading 9802.00.40, HTSUS.
HOLDING:
On the basis of the information submitted, it is our
opinion that the foreign cleaning, grinding and attachment of a
new abrasive constitute repairs as that term is used in
subheading 9802.00.40, HTSUS, and, therefore, the abrasive
grinding elements would be entitled to the partial duty
exemption provided for in that tariff provision, upon
compliance with section 10.8, Customs Regulations (19 CFR
10.8).
Sincerely,
John Durant
Director, Commercial
Rulings Division