CLA-2 CO:R:C:S 558833 MLR
Mr. Joel Kroin
Hortus USA Corp.
P.O. Box 1956 Old Chelsea Sta.
New York, NY 10113-1956
RE: Applicability of partial duty exemption under HTSUS
subheading 9802.00.50 to chemical plant growth regulator
indole butyric acid;
Dear Mr. Kroin:
This is in reference to your letter of October 4, 1994,
requesting a ruling concerning the eligibility of the chemical
plant growth regulator, indole butyric acid (IBA), for a partial
duty exemption under subheading 9802.00.50, Harmonized Tariff
Schedule of the United States (HTSUS).
FACTS:
You state that IBA is used in agriculture and horticulture
by plant growers to propagate new plants from cuttings taken from
mother plants. Many users use IBA in the technical grade form,
as it is produced and before exportation to Holland. In Holland,
the IBA will be finely ground, blended with talc, and tested to
assure uniform blending. You state that this makes the product
easier for the user to apply to the plant cuttings.
ISSUE:
Whether the grinding and blending processes performed on the
IBA in Holland, constitutes an alteration, thereby entitling it
to the partial duty exemption available under subheading
9802.00.50, HTSUS, when returned to the U.S.
LAW AND ANALYSIS:
Articles returned to the U.S. after having been exported to
be advanced in value or improved in condition by repairs or
alterations may qualify for the partial duty exemption under
subheading 9802.00.50, HTSUS, provided the foreign operation does
not destroy the identity of the exported articles or create new
or commercially different articles through a process of
manufacture. See A.F. Burstrom v. United States, 44 CCPA 27,
C.A.D. 631 (1956), aff'g C.D. 1752, 36 Cust. Ct. 46 (1956);
Guardian Industries Corp. v. United States, 3 CIT 9 (1982).
Accordingly, entitlement to this tariff treatment is precluded
where the exported articles are incomplete for their intended
purpose prior to the foreign processing and the foreign
processing operation is a necessary step in the preparation or
manufacture of finished articles. Dolliff & Company, Inc. v.
United States, 455 F. Supp. 618 (CIT 1978), aff'd, 599 F.2d 1015
(Fed. Cir. 1979). Articles entitled to this partial duty
exemption are dutiable only upon the cost or value of the foreign
repairs or alterations when returned to the U.S., provided the
documentary requirements of section 10.8, Customs Regulations (19
CFR 10.8), are satisfied. See 59 Fed. Reg. 25563 (May 17, 1994)
for recent amendments to 19 CFR 10.8.
We have held in Headquarters Ruling Letter (HRL) 555740
dated May 28, 1991, that formulation and granulation operations
performed on a herbicide in France to eliminate the product's
powdery consistency which made the chemical difficult to use,
constituted an acceptable alteration within the meaning of
subheading 9802.00.50, HTSUS. We found that the product in its
condition upon exportation was complete for its intended use as a
herbicide, and, in fact, could have been marketed within the
agricultural industry in that condition. Furthermore, the
formulation process abroad did not alter the chemical composition
or identity of the herbicide, nor did it significantly change the
quality or character of the product inasmuch as the herbicide
retained its weed killing properties. See also HRL 556320 dated
February 3, 1992, (holding that formulation and granulation
operations performed on U.S.-origin herbicide in France
constituted an acceptable alteration within the meaning of
subheading 9802.00.50, HTSUS), and HRL 085216 dated October 27,
1989, (where the sifting, magnetic removal of tramp iron, and
repackaging of U.S. raw and refined sugar in Canada, constituted
an alteration under this subheading).
In HRL 556616 dated June 16, 1992, a herbicide in a water
dispersible granule was exported to France for incorporation into
water-soluble film which is a highly specialized plastic,
designed for compatibility with agricultural chemical and
applications technology. It was held that the incorporation of
the U.S.-origin herbicide in water-soluble film in France,
constituted an acceptable alteration within the meaning of
subheading 9802.0050, HTSUS, because this process did not change
the chemical structure or use of the product, the identity and
properties of the herbicide remained intact, and the U.S.-manufactured herbicide was sold and could be used in its pre-processed form.
With regard to the facts presented and consistent with the
cases above, we are of the opinion that the grinding and blending
processes which make the IBA easier to use constitute an
acceptable alteration within the meaning of subheading
9802.00.50, HTSUS. As in HRL 555740, before and after the
grinding and blending operations, the IBA is used
interchangeably.
HOLDING:
On the basis of the information submitted, we find that the
grinding and blending processes which make the IBA easier to use
constitute an alteration within the meaning of subheading
9802.00.50, HTSUS. Therefore, the IBA is entitled to
classification under this tariff provision with duty to be
assessed only on the cost or value of the operations performed in
Holland, upon compliance with the documentary requirements of 19
CFR 10.8.
A copy of this ruling letter should be attached to the entry
documents filed at the time the goods are entered. If the
documents have been filed without a copy, this ruling should be
brought to the attention of the Customs officer handling the
transaction.
Sincerely,
John Durant, Director
Commercial Rulings Division