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NY G81518

September 19, 2000

CLA-2-84:RR:NC:MM:110 G81518


TARIFF NO.: 8524.39.4000; 9802.00.5060

Mr. George R. Tuttle
Law Offices of George R. Tuttle
Three Embarcadero Center, Suite 1160
San Francisco, CA 94111

RE: The tariff classification of ADP Printers manufactured in the U.S.A. or Japan returned to the U.S. after repairs and alterations in Canada.

Dear Mr. Tuttle:

In your letter dated August 15, 2000, on behalf of Epson America, Inc., you requested a tariff classification ruling.

The merchandise under consideration is the Epson Stylus Color Printers, Models 440, 640, 740, 760 and 660. The repairs performed in Canada are generally to refurbish and or restore printers that are salvageable to their original condition and repack them for shipment back to the United States. The printers are exported to Canada in original boxes with manuals and software. The software is in the form of a CD-ROM. The software must be loaded onto a host computer in order for the printers to operate with that computer.

Articles exported from and returned to the U.S., after having been advanced in value or improved in condition by repairs or alterations in Canada, may qualify for duty exemption under the Harmonized Tariff Schedule of the United States (HTSUS) subheading 9802.00.50 provided the foreign operation does not destroy the identity of the exported articles or create new or commercially different articles through a process of manufacture. The Customs regulations which implement the North American Free Trade Agreement (NAFTA) are contained in title 19 C.F.R. Part 181. Section 181.64(a) defines "repairs or alterations" for purposes of NAFTA as follows:

For purposes of this section, "repairs or alterations" means restoration, addition, renovation, redyeing, cleaning, resterilizing, or other treatment which does not destroy the essential characteristics of, or create a new or commercially different good from, the good exported form the United States.

In your submission of September 8, 2000, you provided this office with a list of the top ten typical repair/replacement operations performed during the refurbishing process for August 2000. This list indicates that two major parts of the printer, the mainboard and the printhead, may be replaced. It is also noted that the printhead on these models are designed for extended use, typically 2000 million dots/nozzle (color and monochrome) for a total print volume of 10,000 pages (letter or A4). It is our opinion that when the mainboard or both the mainboard and the printhead are replaced the printer looses its essential identity and, therefore, would not qualify for duty exemption under 9802.00.50.

Your submission, however, indicates that the printers are identified by serial numbers, and that all operations are recorded in a database. If Epson America, Inc. can identify those machines which have not lost their essential identity by the replacement of the mainboard or the mainboard and printhead, and can satisfy the documentation requirements, then 9802.00.50 would apply to those printers.

Article 307 of NAFTA and Annex 307.1 of the Agreement provide that articles exported form the U.S. to Canada for "repairs or alterations" may, upon their return, enter into the U.S. free of duty.

Articles entitled to this duty exemption are subject to the documentary requirements of section 181.64(c), Customs Regulations (19 C.F.R. 181.64(c)).

For purposes of the duty allowance under subheading 9802.00.50, HTSUS, the replacement and/or addition of parts to restore products to their original condition may constitute repair operations, provided that the particular article does not lose its identity and the replacement and/or additions are not so extensive as to create a new or different article. Accordingly, this office believes that the repair/replacement operation preformed in Canada, excluding the replacement of the mainboard or the mainboard and printhead, constitute acceptable "repairs or alterations," within the meaning of subheading 9802.00.50, HTSUS. Therefore, based on Epson's service record database as described, those Epson Stylus Color Printer Models 440, 640, 740, 760 and 660 which satisfy the above conditions will be eligible for the duty exemption available under this tariff provision provided the documentary requirements of 19 C.F.R. 181.64(c) are met.

Subchapter II of Chapter 98, U.S. Note 3(c) states:

The duty, if any, upon the value of the change in condition shall be at the rate which would apply to the article itself, as an entirety without constructive separation of its components, in its condition as imported if it were not within the purview of this subchapter.

The CD-ROM software, which is exported and reimported with these printers, is not itself exported for repair or alteration. It is noted that software is not a component of the printers. The above note in Subchapter II requires that we apply "the rate which would apply to the articlein its condition as imported if it were not within the purview of this subchapter."

Under General Rule of Interpretation (GRI) 1, Harmonized Tariff Schedule of the United States (HTSUS), goods are to be classified according to the terms of the headings and any relative section or chapter notes, and provided the headings or notes do not require otherwise, according to GRIs 2 through 6. Legal Note 6 to Chapter 85 of the HTSUS states, "Records, tapes and other media of heading 8523 or 8524 remain classified in those headings, whether or not they are entered with the apparatus for which they are intended." The software in all cases remains separately classified in heading 8524, in accordance with Chapter 85, Note 6, HTSUS. Under the Harmonized Tariff Schedule of the United States, software is always treated as a separate article. Therefore, 9802.00.50, which may apply to the printers, will not extend to the software.

The applicable subheading for the Epson Stylus Color Printer Models 440, 640, 740, 760 and 660, returned to the U.S. after "repairs or alterations," and which retain their essential identity, will be 9802.00.5060, Harmonized Tariff Schedule of the United States (HTSUS), which provides for "Articles returned to the United States after having been exported to be advanced in value or improved in condition by any process of manufacture or other means: Articles exported for repairs or alterations: Other: Other: Other." The rate of duty will be free under the terms of U.S. Note 3 to Chapter 98, Subchapter II.

The applicable subheading for the CD-ROM software will be 8524.39.4000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for "Records, tapes and other recorded media for sound or other similarly recorded phenomenaDiscs for laser reading systems: Other: For reproducing representations of instructions, data, sound, and image, recorded in a machine readable binary form." The rate of duty will be free.

This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 C.F.R. 181).

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Eileen S. Kaplan at 212-637-7019.


Robert B. Swierupski

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