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NY 873889

May 26, 1992

CLA-2-98:S:N:N1:230 873889


TARIFF NO.: 9802.00.50, 4421.90.4000

Ms. Loretta Kruse
Anthony Villanueva & Co., Inc.
9375 Customhouse Plaza, Suite J
Otay Mesa, CA 92173

RE: Applicability of subheading 9802.00.50, HTSUS, to wooden shuttersshipped to Mexico to be painted. Subheading 4421.90.4000, HTSUSA. Slip Op. 82-4 (1982) and C.A.D. 1225 (1979). 806.20, TSUS.

Dear Ms. Kruse:

In your letter dated April 6, 1992, you requested a tariff classification ruling on the applicability of subheading 9802.00.50, HTSUS, to wooden shutters shipped to Mexico to be painted. Your request is being made on behalf of Ohline Corporation.

In your letter, you state that the shutters in question are manufactured in Gardena, California using wood of U.S. origin. After manufacture, the shutters are exported to Mexico for the sole purpose finishing them by painting.

You explain that in Mexico the shutters are processed as follows: inspected, a barrier and a primer coat applied, lightly sanded and repaired, inspected, top coat applied, inspected, final top coat applied, final inspection and packed for shipping.

After processing in Mexico, the shutters are imported into the United States where hardware is attached, and they are packaged for retail sale.

You believe that Ohline's shutters should be eligible for the partial duty exemption under subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS) when returned to the U.S. In addition, it is your opinion that the tariff does not limit but rather subheading 9802.00.50, HTSUS, provides for "any process of manufacture".

It is your belief that the shutters are complete articles upon exportation from the U.S., and they can be purchased in "this unfinished condition at your local hardware store." You also state that the process of painting does not change the article, it simply enhances it by "further process". You cite General Motors Corp. v. United States, Slip Op. 91-62 in support of you position.

As you are aware, the issue before the court in Slip Op. 91- 62 was the application of item 807.00, TSUS, (subheading 9802.00.80, HTSUS) which provides for a tariff allowance for American articles assembled abroad. This is a distinct and separate provision from the subheading in question, that is, subheading 9802.00.50, HTSUS; therefore, the General Motors Corp. (supra) decision is not applicable to the subject issue.

Subheading 9802.00.50, HTSUS, specifically provides as follows:

Articles exported for repairs or alterations: other.

This provision, as you are aware, was carried over into the HTSUS from item 806.20, TSUS.

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 subheading 9802.00.50, HTSUS, provided the foreign operation does not destroy the identity of the exported articles or create new or different articles. See Press Wireless, Inc. v. United States, C.D. 438, 6 Cust. Ct. 102 (1941). However, this allowance is precluded where the exported articles are incomplete for their intended use prior to the foreign processing 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. See Guardian Industries Corp. v. United States, 3 CIT 9 (1982) and Dolliff & Company, Inc., v. United States, 81 Cust. Ct. 1, C.D. 4755 (1978), aff'd, 66 CCPA 77, C.A.D. 1225 (1979).

Customs has held that where the exported article is incomplete for its intended use and requires a further manufacturing process to make it complete, that process is not an alteration. Operations performed on the articles must not constitute a part of the total manufacturing process began in the United States. This is consistent with prior court decisions.

In the present case, the wood shutters will not be completed articles when they are sent to Mexico for finishing operations, namely the painting. The fact that the same retailers purchase unfinished shutters as well as finished (painted) shutters does not change the fact that the processing operations performed in Mexico are necessary to the preparation of the finished article. The shutters have to be finished for their intended use.

On the basis of the information submitted, it is our opinion that the subject shutters exported to Mexico are not finished products and that the painting performed in Mexico may not be considered an alteration as that term is used in subheading 9802.00.50, HTSUS. Therefore, the subject shutters are ineligible for the duty exemption under subheading 9802.00.50, HTSUS.

This ruling is being issued under the provisions of Section 177 of the Customs Regulations (19 C.F.R. 177).

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is imported. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.


Jean F. Maguire

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