CLA-2 OT:RR:CTF:VS H070864 KSG
Leonard L. Rosenberg, Esq.
Sandler,Travis & Rosenberg, P.A.
5200 Blue Lagoon Drive
Miami, Florida 33126
Re: Eligibility of lenses for partial duty exemption pursuant to subheading 9802.00.50; coating of photochromic dye
Dear Mr. Rosenberg:
This is in reply to your letter dated June 24, 2009, on behalf of your client, Transitions Optical, Inc., concerning the eligibility of certain polycarbonate lenses for a partial duty exemption pursuant to subheading 9802.00.50, of the Harmonized Tariff Schedule of the United States (“HTSUS”).
FACTS:
This case involves polycarbonate progressive prescription lens with a specific corrective prescription that are sent to Thailand for the application of a photochromic dye and a scratch resistant coating. It is stated that before export to Thailand, the lens is ready to be ground by a processing laboratory for a custom fit into a consumer’s eyeglass frames. After being coated with the photochromic dye, the lens will react to changing ultraviolet light conditions.
ISSUE:
Whether the imported lens would be eligible for a partial duty exemption pursuant to subheading 9802.00.50, HTSUS.
LAW AND ANALYSIS:
Subheading 9802.00.50, HTSUS, provides a partial duty exemption for articles that are returned after having been exported to be advanced in value or improved in condition by means of repairs or alterations, provided that the documentary requirements of 19 CFR 10.8 are met. For qualifying articles, duty is assessed only on the cost or value of the foreign processing.
In circumstances where the operations abroad destroy the identity of the exported article or create a new or commercially different article, entitlement to subheading 9802.00.50, HTSUS, is precluded. 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). Additionally, entitlement to this tariff treatment is not available where the exported articles are incomplete for their intended purposes prior to their foreign processing and the foreign processing is a necessary step in the preparation or manufacture of the finished articles. Dolliff & Company, Inc. v. United States, 455 F. Supp. 618 (CIT 1978), aff’d, 599 F.2d 1015 (Fed. Cir. 1979).
At issue in Guardian Industries was the question of whether U.S.-produced annealed glass subjected to a tempering process in Canada to create sliding glass patio doors qualified as an “alteration” under item 806.20, TSUS (the precursor to subheading 9802.00.50). The court noted that glass must be tempered (i.e. strengthened) for practical safety use reasons and to conform to U.S. federal regulations before it could be marketed for use in sliding glass patio doors. The court concluded that the tempering process was not an alteration because the exported raw annealed glass was not a completed article and “completely unsuitable for their intended use.”
In Dolliff & Company, Inc. v. United States, 81 Cust. Ct. 1, 455 F. Supp. 618 (1978), aff’d 66 CCPA 77, 599 F.2d 1015 (1979), the issue presented was whether certain U.S.-origin Dacron polyester fabrics exported to Canada as greige goods for heat setting, chemical scouring, dyeing and treating with chemicals, were eligible for the partial duty exemption under item 806.20, TSUS, when returned to the U.S. The court found that the processing steps performed on the exported greige goods were undertaken to produce finished fabric and could not be considered as alterations. The court stated that:
…repairs or alterations are made to completed articles and do not include intermediate processing operations, which are performed as a matter of course in the preparation or manufacture of finished articles.
In Royal Bead Novelty Co. v. United States, 342 F. Supp. 1394 (Cust. Ct. 1972), uncoated glass beads were exported so that they could be half-coated with an Aurora Borealis finish to impart a rainbow-like luster to the half-coated beads. The court found that the identity of the beads was not lost or destroyed in the coating process and no new article was created. Moreover, there was no change in the beads’ size, shape, or manner of use in making articles of jewelry (evidence was presented which indicated that both uncoated and half-coated beads were used interchangeably). Accordingly, the court held that the application of the finish constituted an alteration.
We concur with counsel that in this case, the lens is a finished article when it is sent to Thailand for processing. We note that the lens is ready for use as eyeglasses. The processing in Thailand does not destroy the identity of the exported lens, but it imparts a new feature to a finished product.
We find that this case is similar to Royal Bead in that the ultimate use is prescription eyeglasses and the coating is merely a choice that a consumer may or may not wish to add. Therefore, we find that the processing in Thailand constitutes an “alteration” within the meaning of subheading 9802.00.50, HTSUS
HOLDING:
We find that the imported lenses, processed as described above in Thailand, are eligible for a partial duty exemption pursuant to subheading 9802.00.50, HTSUS, provided that the documentation requirements of 19 CFR 10.8 are met.
A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is 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,
Monika R. Brenner
Chief, Valuation & Special Programs Branch