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HQ H019720

February 26, 2008

CLA-02 OT:RR:CTF:VS H019720 NL


Matthew T. McGrath, Esq.
Cortney O'Toole Morgan, Esq.
Barnes, Richardson & Colburn
1420 New York Avenue, NW, 7th Floor
Washington, DC 20005

RE: Applicability of subheading 9802.00.50, HTSUS, Pigment; Milling to Powder Form; Alteration

Dear Mr. McGrath and Ms. Morgan:

This is in reply to your letter dated November 7, 2007 requesting a prospective ruling on behalf of your client, Clariant Corporation. The requested ruling concerns eligibility for the duty exemption under subheading 9802.00.50 for a pigment product that is to be returned to the United States after having been milled into powder form in Mexico.


Clariant Corporation manufactures a pigment designated as PV Fast Red 3B-US at one of its plants in Rhode Island. The article is sold in a moist presscake form. However, to meet customer preference, Clariant plans to export PV Fast Red presscake to a facility in Mexico where it will be dried, milled, and blended into a fine powder. This powder will then be shipped to the U.S. under subheading 9802.00.50, HTSUS, as 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.

Samples of the presscake and powder versions of PV Fast Red were submitted. The submission represents that the two forms are both equally suitable for use by customers, and both versions are sold. The fact that some customers prefer the powdered form is a matter of choice. Also, the submission advises that the presscake and powdered forms have the same chemical composition and the same Chemical Abstracts Service (C.A.S.) number.


Is the milled PV Fast Red eligible for subheading 9802.00.50, HTSUS treatment?


Subheading 9802.00.50, HTSUS, provides a full or partial duty exemption for articles returned to the United States after having been exported to be advanced in value or improved in condition by means of repairs or alterations. Articles returned to the United States after having been repaired or altered in Mexico may be eligible for duty-free treatment, provided the documentary requirements of §181.64, CBP Regulations (19 C.F.R. § 181.64), are satisfied. Pursuant to §181.64, the importer must submit a declaration executed by the person who performed the repairs or alterations, and a declaration of his own containing various attestations.

Classification under subheading 9802.00.50, HTSUS, is precluded where: (1) the exported articles are not complete for their intended use and the foreign processing operation is a necessary step in the preparation or manufacture of finished articles; or (2) the operations performed abroad destroy the identity of the exported articles or create new or commercially different articles through a process of manufacture. See Guardian Indus. Corp. v. United States, 3 Ct. Int'l Trade 9 (1982), and Dolliff & Co., Inc., v. United States, 81 Cust. Ct. 1, C.D. 4755, 455 F. Supp. 618 (1978), aff'd, 66 C.C.P.A. 77, C.A.D. 1225, 599 F.2d 1015 (1979).

Counsel's submission refers to several CBP rulings in support of a finding in this instance that drying, milling and blending in Mexico of the presscake PV Fast Red would satisfy the essential requirements for full duty exemption under subheading 9802.00.50, HTSUS. In HQ 560274 (March 16, 1993) Customs determined the treatment of herbicide pellets by grinding, heading and bagging was an acceptable alteration for the purposes of subheading 9802.00.50. In HQ 561918 (July 30, 2001), Customs found that the alteration of acrylic coatings from liquid to aerosol form by the addition solvents and propellants also was an acceptable alteration. To the same effect was HQ H007355 (March 2, 2007), in which it was ruled that the microencapsulation of an oil into powdered form did not change the chemical composition of the product which in its oil form was complete for use, and thus the microencapsulation was an acceptable alteration.

We find these rulings to be applicable with regard to the proposed processing of the PV Fast Red presscake in Mexico. The drying, milling and blending would neither finish an incomplete article nor destroy the commercial identity of the PV Fast Red. Provided the documentary requirements of 19 C.F.R. §181.64 are satisfied, the PV Fast Red powder will be eligible for subheading 9802.00.50 treatment upon re-importation into the United States.


Exportation of PV Fast Red Powder to Mexico for drying, milling and blending is an acceptable alteration for the purposes of re-importation under subheading 9802.00.50, HTSUS, provided the documentary requirements of 19 C.F.R. § 181.64 are satisfied.

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction


Monika R. Brenner, Chief
Valuation & Special Programs Branch

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