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HQ 554949


December 28, 1989

CLA-2 CO:R:C:V 554949 KAC

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.50

John P. Donohue, Esq.
Donohue & Donohue
Fifth Floor, The Bank Building
421 Chestnut Street
Philadelphia, Pennsylvania 19106

RE: Applicability of the partial duty exemption in subheading 9802.00.50, HTSUS, to the proposed importation of rope and twine from Mexico.

Dear Mr. Donohue,

This ruling is in response to your letter dated December 18, 1987, to the Regional Commissioner of Customs, New York Region, on behalf of American Manufacturing Company, regarding the applicability of the partial duty exemption in subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS), to the proposed importation of rope and twine from Mexico. Regarding your reference to item 806.20, Tariff Schedules of the United States (TSUS), as you are aware, effective January 1, 1989, the HTSUS superseded and replaced the TSUS. TSUS item 806.20 was carried over into the HTSUS as subheading 9802.00.50. Your samples and ruling request were forwarded to this office for a direct response. We regret the delay in responding to your request.

FACTS:

Rope and twine manufactured by your client in the U.S. in varying diameters will be shipped to Mexico in bulk lengths ranging from 1,000 - 10,000 feet. In Mexico, the American-made rope is measured and cut into lengths of 25 - 100 feet. The twisted rope is taped at the end to prevent unravelling, whereas the braided rope is not. The rope is then packaged for retail sale.

Some of the rope will go through a "manual" eyesplicing process before packaging. The eyesplicing process involves taking one end of the rope and forming a loop at the end by braiding the end of the rope around itself to form an eye. This type of rope is traditionally used for boat-mooring.

The packaging process will vary depending upon the type of rope. The smaller diameter rope, 3/16 inch, is placed into a bag to which product information is added. The bag is then heat- sealed and ready for shipment. The larger diameter rope, 1/4 inch and 3/8 inch, is handled identically except that, before packaging, a thin paper-coated gauge wire is wrapped around two separate sections of the coiled rope. The largest diameter rope, 1/2 inch, is wound around a cardboard coilette and bound with a thin paper-coated gauge wire.

The 1/8 inch diameter twine is exported to Mexico in cones where it is cut to shorter lengths and rewound around smaller cones or in a coreless ball. The ball of twine is then labeled and heat-sealed in a thin plastic wrapper.

After retail packaging, the rope and twine are imported into the U.S.

ISSUE:

Whether the operations to be performed on the American rope and twine in Mexico will entitle the merchandise to the partial duty exemption in subheading 9802.00.50, HTSUS, when returned to the U.S.

LAW & ANALYSIS:

Under subheading 9802.00.50, HTSUS, articles exported for repairs or alterations and returned, will be assessed duty on the value of the repairs or alterations performed abroad. In interpreting the term "repairs or alterations" in item 806.20, TSUS, the court in Dolliff & Company, Inc. v. United States, 66 CCPA 77, 1225 (1979), enunciated the principle that repairs and alterations are made to completed articles and do not include intermediate or finishing operations performed as a matter of course on unfinished goods.

We have previously ruled that the cutting to length and packaging of products can be considered alterations within the meaning of the tariff provision. However, in situations where rolls of material-length merchandise are exported and finished goods are returned merely by cutting to length, this cutting constitutes a finishing step in the manufacture of the goods. The conversion from material lengths to finished products exceeds the meaning of the term "alterations" under this tariff provision. However, the cutting of merchandise from a long material length to a shorter material length without manufacturing a finished good does fall within the meaning of "alterations" in subheading 9802.00.50, HTSUS. See, Headquarter Ruling Letters 554736 dated February 16, 1988, 554174 dated April 25, 1989, 074389 dated July 25, 1984, 555411 dated August 11, 1989, and 071475 dated September 20, 1983. As it appears
that the rope and twine in this case are merely cut to shorter material lengths in Mexico, we believe that the cutting, taping and packaging operations performed in Mexico constitute alterations within the meaning of subheading 9802.00.50, HTSUS.

Application of subheading 9802.00.50, HTSUS, is precluded in circumstances where the operation performed abroad results in a new or commercially different article with a set of new and different characteristics and uses, or when the foreign operation constitutes a part of a manufacturing process begun in the U.S. The eyesplicing operation performed in Mexico constitutes a finishing step in the manufacture of the completed imported product. Eyesplicing is a manufacturing process which transforms the rope from a multiple use product to a product that is traditionally used for boat mooring.

HOLDING:

On the basis of the information and samples submitted, we find that the foreign cutting, taping and packaging operations performed in Mexico constitute alterations within the meaning of subheading 9802.00.50, HTSUS. However, the eyesplicing operation serves as a finishing process which disqualifies the affected rope from subheading 9802.00.50, HTSUS, consideration. Therefore, the returned rope and twine which does not undergo the eyesplicing process will be assessed duty on the value of the alterations performed in Mexico.

Sincerely,

John Durant

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