CLA-2 CO:R:C:V 555516 KAC
Mr. Joseph L. Giumentaro
Ameri-Can Customhouse Brokers
Peace Bridge Plaza Warehouse
Buffalo, New York 14213
RE: Applicability of partial duty exemption of subheading
9802.00.50, HTSUS, to t-shirts and tank tops exported to
Canada for silk screening or heat transfer
Dear Mr. Giumentaro:
This is in response to your letter of December 6, 1989, on
behalf of Delta Vanguard Industries, Inc., requesting a ruling on
the applicability of subheading 9802.00.50, Harmonized Tariff
Schedule of the United States (HTSUS), to t-shirts and tank tops
exported to Canada for silk screening or heat transfer, and then
returned to the U.S. Samples of both the t-shirts and tank tops
were submitted for examination.
FACTS:
You state that U.S.-made 100% cotton and 50% cotton and 50%
polyester, t-shirts and tank tops will be shipped to Delta
Vanguard in Canada. The plain t-shirts and tank tops will be
placed on machines which silk screen or heat transfer printing or
designs made of plastisol ink onto the front of the t-shirt or
tank top. The plastisol ink is manufactured in the U.S. and is
exported to Canada in its liquid form. For the heat transfer
process, the ink is cured on teflon paper in the desired printing
or design. The teflon paper allows the ink to be transferred
from the paper to the t-shirt or tank top when the 400 degree
heat is applied. The t-shirts and tank tops with new printing or
designs are then returned to the U.S.
ISSUE:
Whether t-shirts and tank tops which are exported to Canada
for silk screening or heat transfer will be entitled to the
partial duty exemption in subheading 9802.00.50, HTSUS, when
returned to the U.S.
LAW & ANALYSIS:
Subheading 9802.00.50, HTSUS, provides for the assessment of
duty on the value of repairs or alterations performed on articles
sent abroad 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 (1956), aff'd,
C.D. 1752, 36 Cust. Ct. 46 (1956); Guardian Industries
Corporation v. United States, 3 CIT 9 (1982), Slip Op. 82-4 (Jan.
5, 1982). Subheading 9802.00.50, HTSUS, 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 & Company, Inc. v United States, 81 Cust.Ct. 1, C.D.
4755, 455 F.Supp. 618 (1978), aff'd, 66 CCPA 77, C.A.D. 1225, 599
F.2d 1015 (1979).
We have previously held in Headquarters Ruling Letter
555021 dated July 1, 1988, that certain U.S. socks, silk screened
abroad and returned to the U.S., were not eligible for item
806.20, Tariff Schedules of the United States (TSUS) (now
subheading 9802.00.50, HTSUS), treatment because the silk
screening was more than a mere alteration. We stated that the
silk screening created a different article of commerce and
constituted a finishing step in the manufacture of the socks.
See also, Headquarters Ruling Letter 555249 dated June 16, 1989,
(silk screening and chenilling designs on sweatshirts abroad
exceeds an alteration).
With regard to the facts you have provided and based on our
previous rulings, we are of the opinion that the foreign silk
screening and heat transfer processes constitute operations that
exceed alterations. Although garments may be worn whether a
design is imprinted by silk screening/heat transfer or not, silk
screening and heat transfer, like printing and hand-painting,
are considered neither a repair nor an alteration under the
provisions of subheading 9802.00.50, HTSUS. T-shirts and tank
tops which have a design, as a result of a silk screening or heat
transfer process, are different from t-shirts and tank tops
without such a design and, as such, the foreign silk screening
or heat transfer process has created a different article with
unique, specialized appeal. Furthermore, the silk screening and
heat transfer processes constitute a finishing step in the
manufacture of the t-shirt and tank top.
The returned t-shirt is classifiable in subheading
6109.10.0012, HTSUS, while the returned tank top is classifiable
in subheading 6109.10.0018, HTSUS. The duty rate for both is 21%
ad valorem.
HOLDING:
On the basis of the information and samples submitted, it is
our opinion that the foreign silk screening and heat transfer
processes may not be considered alterations and, therefore,
tariff treatment of the returned goods under subheading
9802.00.50, HTSUS, is precluded. Accordingly, the t-shirts and
tank tops are dutiable on their full value at the rate of 21% ad
valorem under subheadings 6109.10.0012 and 6109.10.0018, HTSUS,
respectively.
Sincerely,
John Durant, Director
Commercial Rulings Division
cc: Ass't Area Dir, NIS
847849