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HQ 555576

September 7, 1990

CLA-2 CO:R:C:V 555576 KAC


TARIFF NO.: 9802.00.50

Kenneth H. Keefe, Esq.
Sandler, Travis & Rosenberg, P.A.
5200 Blue Lagoon Drive
Suite 600
Miami, Florida 33126-2022

RE: Applicability of subheading 9802.00.50, HTSUS, to gem-set rings created by polishing, cleaning, and application of platinum irradium solution and a satin fine line.Alteration; Royal Bead; 071523; 555640

Dear Mr. Keefe:

This is in response to your letter of January 27, 1990, on behalf of William Schneider, Inc., requesting a ruling on the applicability of subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS), to gem-set rings. Samples were submitted for examination.


William Schneider Inc. manufactures 14-karat gold castings which are processed in the U.S. by grinding, tumbling, stripping, burnishing, prepare polishing, and gem-setting. The gem-set rings will then be exported to Mexico for further operations. The rings will be subjected to various polishing operations which create a lustered and highlighted effect on the gold settings. The rings are then cleaned and a solution of irradium platinum is applied to accent the area surrounding the settings' prongs. Finally, a satin fine line is applied to produce a contrasting effect on the gold settings.

Upon completion of the Mexican operations, the gem-set rings will be returned to the U.S.


Whether the gem-set rings will be entitled to the partial duty exemption under subheading 9802.00.50, HTSUS, when imported into the U.S.


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 preformed 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 Os. 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).

In Royal Bead Novelty Co. v. United States, 68 Cust.Ct. 154, C.D.4353 (1972), it was held that glass beads which were exported for the application of a half coating of "Aurora Borealis" to impart a luster effect were entitled to item 806.20, Tariff Schedules of the United States (TSUS) (the precursor to HTSUS subheading 9802.00.50), treatment. The Court stated that "the identity of the articles in question was not lost or destroyed by the coating process and no new articles were created; beads went out and beads came back." The Court further stated that the application of the coating did not change the "quality, texture, or character" of the beads.

We have previously held that the polishing and cleaning of finished articles qualify as alterations under item 806.20, TSUS. See, Headquarters Ruling Letter (HRL) 071523 dated December 1, 1983 (drilling, polishing and cleaning pearls qualify as alterations), and HRL 555640 dated August 13, 1990 (gold jewelry exported for polishing will qualify for the duty exemption available under subheading 9802.00.50, HTSUS).

With regard to the facts that you have presented and based on previous cases and rulings, we are of the opinion that the Mexican operations constitute alterations within the meaning of subheading 9802.00.50, HTSUS. The gem-set rings in their exported condition are complete for their intended use as rings, and, in fact, are marketed within the jewelry industry in this condition. The Mexican operations do not destroy the identity of the gem-set rings or create a new or commercially different article. Gem-set rings are exported to Mexico and gem-set rings are imported into the U.S. The Mexican operations do not appear to result in any significant change in the quality, texture, or character of the gem-set rings.


On the basis of the information and samples submitted, we find that the polishing, cleaning and application of irradium platinum and the satin fine line constitute alterations within the meaning of subheading 9802.00.50, HTSUS. Therefore, the gem- set rings will be entitled to the partial duty exemption available under this tariff provision, upon compliance with the documentary requirements of section 10.8, Customs Regulations (19 CFR 10.8).


John Durant, Director
Commercial Rulings Division

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