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HQ 555296

June 16, 1989

CLA-2 CO:R:C:V 555296 DBI


TARIFF NO.: 9801.00.10, HTSUS; 9802.00.50, HTSUS

Mr. William J. LeClair
Trans-Border Customs Services
One Trans-Border Drive
P.O. Box 800
Champlain, New York 12919

RE: Applicability of subheadings 9801.00.10 and 9802.00.50, HTSUS, to certain twine dispensers imported from Canada

Dear Mr. LeClair:

This is in response to your letter dated January 24, 1989, to the Customs office in Champlain, New York, in which you request a ruling concerning the applicability of item 800.00, Tariff Schedules of the United States (TSUS), to certain twine shipped to Canada to be rewound, inserted into plastic dispensers and returned. Your letter has been referred to this office for a response.


You advise that your client, Stanbel Limited, will ship U.S.-origin twine in bulk on large cones to Canada where it will be cut to shorter lengths, rewound onto small cardboard tubes, and inserted into Canadian-made plastic dispensers. The dispenser comes with a built-in knife blade to cut the twine. The dispenser with twine is then placed into a cardboard box. The instructions on the box do not describe the dispenser as being reusable and it does not appear to be reusable since it would be difficult to pry open, rewind with twine and reclose.


Whether the described twine, when returned to the U.S., will be eligible for the exemption from duty in subheading 9801.00.00, Harmonized Tariff Schedule of the United States (HTSUS) (formerly item 800.00, TSUS), or the partial exemption from duty in subheading 9802.00.50, HTSUS (formerly 806.20, TSUS).


As you know, the HTSUS replaced the TSUS, on January 1, 1989. Item 800.00, TSUS, was carried over into the HTSUS as subheading 9801.00.10, and item 806.20, TSUS, was carried over as subheading 9802.00.50.

Subheading 9801.00.10, HTSUS, provides for the free entry of articles of U.S. origin which are exported and returned without having been advanced in value or improved in condition while abroad.

Subheading 9802.00.50, HTSUS, provides for the assessment of duty on the value of repairs or alterations performed on articles returned to the U.S. after having 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 (1982).

We have previously held in a ruling dated September 10, 1986 (HQ 554179), that U.S.-origin ribbon that was exported to Mexico to be cut to length, rewound onto spools and wrapped in plastic packaging was not eligible for item 800.00, TSUS, treatment as the cutting to shorter lengths improved the condition of the ribbon by making it ready for sale upon return to the U.S. However, we held that since ribbon was exported and ribbon returned, the foreign processing may be considered an alteration under item 806.20, TSUS. The imported ribbon was classified under item 806.20, TSUS, rather than 800.00, TSUS.

The facts in the present case are similar to those in ruling 554179. The twine is wound onto tubes and packaged in a dispenser. The foreign processing operations performed abroad do not destroy the identity of the twine or create new or commercially different articles. The twine that is returned is the same as that which is exported to Canada.


On the basis of the information submitted, it is our opinion that the foreign processing may be considered an alteration as that term is used in subheading 9802.00.50, HTSUS. Therefore, the returned twine packaged in dispensers is eligible for the partial duty exemption provided for in that tariff provision, upon compliance with section 10.8, Customs Regulations (19 CFR 10.8). The cost or value of the alteration would include the value of the Canadian-made plastic dispensers pursuant to 19 CFR 10.8(l).


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