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HQ 555478

July 23, 1990

CLA-2 CO:R:C:V 555478 GRV


TARIFF NO.: 9802.00.50

Area Director of Customs
Newark, New Jersey 07114

RE: Internal Advice Request No. 40/89; applicability of HTSUS subheading 9802.00.50 to greige linen woven fabric from Czechoslovakia imported into the U.S., exported to Belgium for dyeing, and then returned to the U.S.;Textile product; alterations;incomplete goods;intermediate processing

Dear Sir:

This is in response to your memorandum of July 11, 1989, forwarding the above-referenced internal advice request from Amerpol International, Inc., on behalf of Hamilton Adams Imports, concerning the applicability of HTSUS subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS), to greige linen woven fabric from Czechoslovakia returned to the U.S. from Belgium after dyeing operations. There appears to be no dispute that the applicable HTSUS column 2 rate of duty applies to the returned fabric.

A memorandum dated August 31, 1989, from the Chief, National Import Specialist, Branch 3, New York Seaport, was also considered in connection with this ruling.


No sample of the merchandise was submitted for examination. However, based on the information contained in an Entry Summary (Customs Form 7501) submitted by the broker in this matter, it appears that linen woven fabric in a greige state is imported from Czechoslovakia. The fabric is then exported to Belgium for dyeing and returned to the U.S. The broker claims that this dyeing operation constitutes an alteration, as it advances the value of the merchandise, thus, rendering the returned merchan- dise eligible for the duty exemption under HTSUS subheading 9802.00.50. In your opinion, the duty exemption does not apply to this transaction because the dyeing of the subject fabric constitutes an intermediate operation in order to achieve a finished fabric. You state that alterations are made only to completed articles and do not include intermediate operations performed in the manufacture of finished articles. In support of your position, you cite Dolliff & Company, Inc. v. United States, C.D. 4755, 81 Cust.Ct. 1, 455 F.Supp. 618 (1978), aff'd, C.A.D. 1225, 66 CCPA 77, 599 F.2d 1015 (1979). The National Import Specialist supports your determination in this matter and references numerous Headquarters Ruling Letters (HRLs) which have held that the duty exemption under this tariff provision is inapplicable to incomplete goods exported for finishing operations. The HRLs cited include 016733 (January 14, 1972), 049002 (February 23, 1977), 058055 (April 4, 1978), 067745 (April 21, 1982), 071501 (November 2, 1983), and 077529 (February 12, 1986).

Upon return of the linen fabric, your office assessed the applicable column 2 rate of duty against the full value of the merchandise, since, for country of origin purposes, it was not substantially transformed by the dyeing operation in Belgium, but remained a product of Czechoslovakia.


Whether the greige fabric is a completed product when exported from the U.S., and, therefore, eligible for the partial duty exemption under HTSUS subheading 9802.00.50 when returned to the U.S.


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 HTSUS subheading 9802.00.50, provided the foreign operation does not destroy the identity of the exported articles or create new or different articles. Press Wireless, Inc. v. United States, C.D. 438, 6 Cust.Ct. 102 (1941). However, entitlement to this tariff treatment is precluded where the exported articles are incomplete for their intended use prior to the foreign process- ing, Guardian Industries Corp. v. United States, 3 CIT 9 (1982), or where the foreign operation constitutes an intermediate processing operation, which is performed as a matter of course in the preparation or the 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, 1019 (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.
We have consistently held that the initial dyeing of greige goods constitutes a finishing operation--a step in the manufac- ture of finished textile goods--which exceeds the meaning of the term "alteration" under this tariff provision. (In addition to the HRLs already cited as authority for this position, see also HRLs 058175 (April 21, 1978) and 554035/816196 (April 14, 1986), and T.D. 56462(2), abstracted at 100 Treas.Dec. 356, 357 (1965)). Accordingly, we find in this case that the greige linen woven fabric from Czechoslovakia is an incomplete article when exported from the U.S. to Belgium, and, therefore, is ineligible for the partial duty exemption under HTSUS subheading 9802.00.50.


On the basis of the information presented and our consistent position that the initial dyeing of greige fabric constitutes a step in the manufacture of finished textile goods, it is our opinion that the greige linen woven fabric exported to Belgium for dyeing operations is not a finished product. Therefore, the greige fabric is ineligible for the duty exemption under HTSUS subheading 9802.00.50.


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