United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 1991 HQ Rulings > HQ 0555716 - HQ 0555869 > HQ 0555844

Previous Ruling Next Ruling


HQ 555844


April 7, 1991

CLA-2 CO:R:C:S 555844 DSN

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.50, 9802.00.80

Ms. Deborah Mayville
A.N. Deringer, Inc.
P.O. Box 827
Fort Covington, New York 12937-0827

RE: Eligibility of glucose syrup and cellulase enzyme from Canada for a partial duty exemption

Dear Ms. Mayville:

This is in response to your letter dated January 9, 1991, on behalf of Iogen Corporation, requesting a ruling concerning whether glucose syrup and cellulase enzyme will be eligible for a duty exemption under the Harmonized Tariff Schedule of the United States (HTSUS) when imported to the U.S. from Canada.

You request confidential treatment under 5 U.S.C. 552(b) and 19 C.F.R. 103.12(d) regarding your request and this ruling letter. You state that release of this information would cause significant harm to Iogen Corporation. As requested, confidential treatment will be accorded to your request and this ruling letter.

FACTS:

According to your submissions, crystalline glucose of U.S. origin is shipped to Canada where it is processed into glucose syrup by mixing with water and small amounts of phosphoric acid and sodium hydroxide. The glucose syrup is then imported into the U.S. where it is combined with trichoderma reesei (a fungus) to create crude cellulase enzyme. The cellulase enzyme is then exported to Canada for finishing and packaging.

The finishing operation consists of concentrating the enzyme from approximately 40 grams per liter to 140 grams per liter and removing water and any suspended solids. After the finishing operation, the cellulase enzyme is packaged in drums and imported
into the U.S. You assert that when the glucose syrup and the finished enzyme are imported into the U.S., an allowance in duty should be granted for the cost of the U.S.-origin crystalline glucose and U.S. manufacturing costs.

ISSUE:

Whether the glucose syrup and cellulase enzyme will be entitled to the partial duty exemption under subheading 9802.00.80 or 9802.00.50, HTSUS, when imported into the U.S.

LAW AND ANALYSIS:

Subheading 9802.00.80, HTSUS, provides a partial duty exemption for:

(A)rticles assembled abroad in whole or in part of fabricated components, the product of the United States which (a) were exported in condition ready for assembly without further fabrication, (b) have not lost their physical identity in such articles by change in form, shape, or otherwise, and (c) have not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process, such as cleaning, lubricating, and painting.

All three requirements of subheading 9802.00.80, HTSUS, must be satisfied before a component may receive a duty allowance. An article entered under this tariff provision is subject to duty upon the full cost or value of the imported assembled article, less the cost or value of the U.S. components assembled therein, upon compliance with the documentary requirements of section 10.24, Customs Regulations (19 CFR 10.24).

Section 10.16(a), Customs Regulations (19 CFR 10.16(a)), provides that the assembly operations performed abroad may consist of any method used to join or fit together solid components, such as welding, soldering, riveting, force fitting, gluing, laminating, sewing, or the use of fasteners. The mixing or combining of liquids, gases, chemicals, food ingredients, and amorphous solids with each other or with solid components is not regarded as an assembly.

Therefore, because 19 CFR 10.16(a) expressly provides that the combining of chemicals is an unacceptable assembly operation, the further processing of the U.S.-origin crystalline glucose in Canada by mixing with phosphoric acid and sodium hydroxide would render the glucose syrup ineligible for subheading 9802.00.80, HTSUS, treatment. In addition, the finishing operation performed on the cellulase enzyme in Canada, consisting of concentrating the enzyme and removing water and suspended solids is also an
unacceptable assembly pursuant to that regulation. Thus, subheading 9802.00.80, HTSUS, in inapplicable to either the glucose syrup or the cellulase enzyme.

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. 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 (1956), aff'g, C.D. 1752, 36 Cust. Ct. 46 (1956); Guardian Industries Corporation v. United States, 3 CIT 9 (1982), Slip Op. 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 the present case, we find that the operations performed in Canada on the crystalline glucose and crude cellulase enzyme exceed an alteration and constitute manufacturing processes. The mixing of the crystalline glucose with water and chemicals and the finishing of the cellulase enzyme are necessary steps in the manufacture of glucose syrup and cellulase enzyme. Moreover, in their condition as exported to Canada, the products clearly are unsuitable for their intended use.

HOLDING:

Based on the information submitted, we are of the opinion that the processing of the crystalline glucose and the finishing operation performed on the crude cellulase enzyme are unacceptable assembly operations. Therefore, the glucose syrup and cellulase enzyme are not entitled to allowances in duty under subheading 9802.00.80, HTSUS.

It is our opinion that the foreign operations constitute a process of manufacture and not an alteration, within the meaning of subheading 9802.00.50, HTSUS. Accordingly, the glucose syrup and the cellulase enzyme will not be eligible for the partial duty exemption available under this tariff provision. Therefore, these products will be dutiable on their full value under the appropriate tariff provision when imported into the U.S.

Sincerely,

John Durant, Director
Commercial Rulings Division


Previous Ruling Next Ruling

See also: