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HQ 557047


February 11, 1993

CLA-2 CO:R:C:S: 557047 RAH

CATEGORY: CLASSIFICATION

TARIFF NO.: 9018.90.80; 9801.00.10; 9802.00.50

Mr. Gillette Burns
Controller
Border Opportunity Saver Systems
P.O. Box 1407
Del Rio, Texas 78841-1407

RE: Applicability of vessel loops from Mexico for complete or partial duty exemption; Subheading 9018.90.80, HTSUS; Marking

Dear Mr. Burns:

This is in response to your letter of May 27, 1992, requesting a ruling concerning the classification of and marking requirements for "vesseloops" imported into the U.S. from Mexico. Your letter was referred to this office from the Chief, National Import Specialist Division, New York Seaport, for the preparation of a response.

FACTS:

Border Opportunity Saver Systems (BOSS) will export bulk rolls of U.S.-origin silicone rubber extrusion to its processing plant in Mexico. The rolls will be loaded onto an unwind machine. The extrusion is unwound onto an adjacent table and systematically cut to length. Each cut will measure approximately sixteen inches. Next, two cut strands will be wrapped around a two-inch by three-inch plastic card. Double- stick tape will be applied to the spun extrusion to remove loose particles. The card with the two spun extrusions around it will be placed in a plastic sleeve. The enclosed card will then be placed in a tyvek pouch and the open side of the pouch will be heat-sealed. The pouch will be packaged ten to a carton and the carton will be packaged in corrugated shippers and returned to BOSS in the U.S. All components involved will be of U.S.-origin.

The imported merchandise is referred to as "vesseloops." According to the manufacturer's sales literature, vesseloops are color coded and are used in surgical procedures for occlusion, retraction, or identification of arteries, veins, nerves or tendons. They are atraumatic and, unlike clamps, do not pinch the vessel flat. Instead, vesseloops are designed in an oval configuration for maximum surface-to-force ratio. They are double-looped around the vessel, with just enough traction to restrain flow without damaging the vessels.

The importer states that the primary purpose of the merchandise is vascular occlusion. The vesseloops act like a tourniquet. Stedman's Medical Dictionary, 25th edition, illustrated, defines tourniquet, on page 1612, as an instrument for temporarily arresting the flow of blood to or from a distal part by pressure applied with an encircling device.

ISSUES:

(1) What is the proper tariff classification of the vesseloops?

(2) Whether the vesseloops will be entitled to free entry under subheading 9801.00.10, Harmonized Tariff Schedule of the United States (HTSUS), or a partial duty exemption under subheading 9802.00.50, (HTSUS), upon importation into the United States.

(3) What are the country of origin marking requirements for U.S.-origin silicon rubber exported to Mexico where it is cut-to-length and wrapped around a plastic card.

LAW AND ANALYSIS:

Subheading 9801.00.10, HTSUS, provides for the free entry of U.S.-made products that are exported and returned without having been advanced in value or improved in condition by any process of manufacture or other means while abroad, provided the documentary requirements of section 10.1, Customs Regulations (19 CFR 10.1), are met.

In regard to subheading 9801.00.10, HTSUS, we have previously stated that cutting exported merchandise to length generally results in advancing it in value or improving it in condition. Headquarters Ruling Letter (HRL) 555174 dated April 25, 1989, citing HRLs 554736 dated February 16, 1988, and 554899 dated March 4, 1988. In the instant case, the exported silicon rubber will be subjected to an operation which results in the merchandise being advanced in value or improved in condition in that the silicon rubber extrusion 500 feet in length will be cut into useable 16-inch long bands. Therefore, the returned vesseloops will not be eligible for the duty exemption available under subheading 9801.00.10, HTSUS, upon importation into the United States.

The next question presented is whether the vesseloops are eligible for a partial duty exemption under subheading 9802.00.50, HTSUS, when returned to the United States. Subheading 9802.00.50, HTSUS, provides a 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. Such articles are dutiable only upon the value of the foreign repairs or alterations, provided the documentary requirements of section 10.8, Customs Regulations (19 CFR 10.8), are satisfied.

However, entitlement to this tariff treatment 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); Guardian Industries Corp. v. United States, 3 CIT 9 (1982). Tariff treatment under subheading 9802.00.50, HTSUS, is also precluded where the exported articles are incomplete for their intended use prior to the foreign processing. Guardian; 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, 82, 599 F.2d 1015, 119 (1979).

In this case, the exported silicon rubber is an incomplete product since it is unsuitable for its intended use in the continuous length in which it is exported. We have previously held in a ruling dated September 20, 1983 (HRL 071475), concerning item 806.20, Tariff Schedule of the United States (TSUS) (the predecessor to subheading 9802.00.50, HTSUS) that:

...where rolls of material are exported and finished goods are returned merely by cutting to length, this cutting constitutes a finishing step in the manufacture of the goods, converting large rolls of raw material to finished, usable sheets. The conversion from material lengths to finished products exceeds the meaning of the term "alterations" under this tariff provision.

Therefore, it is our opinion that the cutting-to-length operation in the instant case constitutes a finishing step in the manufacture of the completed vesseloops, thereby precluding application of subheading 9802.00.50, HTSUS, to the returned merchandise.

With regard to the country of origin marking requirements of the vesseloops, section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), requires, subject to certain specified exceptions, that every article of foreign origin imported into the U.S. shall be marked to indicate the country of origin to the ultimate purchaser in the U.S. Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.

Section 134.32(m), Customs Regulations (19 CFR 134.32(m)), provides an exception from marking for U.S. products exported and returned. U.S. articles sent abroad for processing fall within this exception unless they are substantially transformed prior to their return to the U.S. See HRL 729519 dated May 18, 1988. Customs has long held that cutting material to length, similar to cutting the rubber to length in the instant case, does not constitute a substantial transformation. HRL 729316 dated April 20, 1989. Accordingly, the vesseloops will not be required to be marked, pursuant to 19 CFR 134.32(m), because the operations in Mexico do not result in a substantial transformation.

Finally, the vesseloops are classifiable under subheading 9018.90.80, HTSUS, which provides for: "[i]nstruments and appliances used in medical, surgical. . .sciences. . . [o]ther instruments and appliances and parts and accessories thereof:. . .[o]ther. . .[o]ther." The general, column one rate of duty is 7.9 percent ad valorem.

HOLDING:

The vesseloops are classifiable under subheading 9018.90.80, HTSUS. They will not be entitled to a partial duty allowance under subheading 9802.00.50, HTSUS, upon importation into the U.S because they are incomplete for their intended use when exported to Mexico. Moreover, they will not eligible to receive duty- free treatment under subheading 9801.00.10, HTSUS, since the cutting-to-length operation in Mexico advances the value and/or improves the condition of the silicon rubber. Furthermore, the vesseloops will not be required to be marked, pursuant to 19 CFR 134.32(m), because the operations in Mexico do not result in a substantial transformation.

Sincerely,

John Durant, Director

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