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HQ 557876




August 2, 1994

CLA-2 CO:R:C:S 557876 MLR

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.50

District Director
U.S. Customs Service
44845 Falcon Place
Sterling, Virginia 20166

RE: Application for Further Review of Protest No. 5401-94-100009; Denial of classification under HTSUS subheading 9802.00.50 to depleted zinc oxide from Russia; centrifugation; diethylzinc; isotope; merchandise processing fee

Dear Sir:

This is in reference to a protest and application for further review filed by Nuexco Trading Corporation, contesting the denial of classification under subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS), to depleted zinc oxide from Russia. Additional information was submitted on June 7, 1994.

FACTS:

The record indicates that in July 1992, Concord Trading Corp. exported 7 cylinders containing approximately 800 kilograms of diethylzinc (purified grade) to Russia. The protestant states that diethylzinc is a dry mixture of materials which includes "depleted zinc oxide" ("DZO"). While in Russia, the "Declaration to Accompany Articles Repaired/Altered Abroad and Returned to the United States" indicates that the diethylzinc was "altered by an isotopic separation process via centrifugation" to obtain "depleted zinc oxide" ("DZO"). The additional certificates of analysis submitted by the protestant indicate that zinc oxide was imported from Russia into the U.S. having a customized ratio of zinc isotopes. A total of 68 kilograms of the DZO were imported into the U.S. in 1993.

The protestant asserts that the DZO is properly classified under subheading 9802.00.50, HTSUS, and subheading 2845.90.0000, HTSUS, as specified in Statistical Note 2(a), Subchapter II, Chapter 98, HTSUS, and is duty-free pursuant to U.S. Note 2(b)(i)(B), Subchapter II, Chapter 98, HTSUS. The initial request for subheading 9802.00.50, HTSUS, treatment was denied because the description of the processing performed in Russia was not adequate. It is also asserted that because this merchandise falls within the purview of Chapter 98, HTSUS, it is exempt from the merchandise processing fee (MPF) pursuant to 19 CFR 24.23(c)(1). Accordingly, a request for reliquidation and a refund of the merchandise processing fee, amounting to $195.51 and $400.00, respectively, is requested.

ISSUE:

Whether the centrifugation process performed on the diethylzinc in Russia, constitutes an alteration, thereby entitling the imported depleted zinc oxide to classification under subheading 9802.00.50, HTSUS, when returned to the U.S., and an exemption from the MPF.

LAW AND ANALYSIS:

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 commercially different articles through a process of manufacture. See A.F. Burstrom v. United States, 44 CCPA 27, C.A.D. 631 (1956), aff'g C.D. 1752, 36 Cust. Ct. 46 (1956); Guardian Industries Corp. v. United States, 3 CIT 9 (1982). Accordingly, entitlement to this tariff treatment is precluded where the exported articles are incomplete for their intended purpose prior to the foreign processing and the foreign processing operation is a necessary step in the preparation or manufacture of finished articles. Dolliff & Company, Inc. v. United States, 455 F. Supp. 618 (CIT 1978), aff'd, 599 F.2d 1015 (Fed. Cir. 1979). Articles entitled to this partial duty exemption are dutiable only upon the cost or value of the foreign repairs or alterations when returned to the U.S., provided the documentary requirements of section 10.8, Customs Regulations (19 CFR 10.8), are satisfied. We note that U.S. Note 2(b)(i)(B), Subchapter II, Chapter 98, HTSUS, only allows duty-free treatment for certain operations performed in a beneficiary country listed in General Note 7(a), which does not include Russia. However, section 24.23(c)(1)(i), Customs Regulations {19 CFR 24.23(c)(1)(i)}, does exempt certain articles provided for in Chapter 98, HTSUS (which includes articles classified under subheading 9802.00.50, HTSUS) from the payment of the ad valorem fee, surcharge, and specific fees provided for under 19 CFR

The protestant submitted certificates of analysis to the Office of Laboratories & Scientific Services on June 7, 1994, which show that the merchandise exported to Russia was diethylzinc, and the merchandise imported into the U.S. was zinc oxide having a customized ratio of zinc isotopes. The Office of Laboratories & Scientific Services indicates that diethylzinc (CAS No. 557-20-0), an organometallic compound (compounds containing carbon-metal bonds), is a pyrophoric (ignites spontaneously) liquid formed by the reaction of zinc with ethyl iodide. Diethylzinc is used as catalyst or initiator for many types of polymerization reactions and other types of organic syntheses. In the instant case, the certificates of analysis indicate that the exported merchandise is high purity diethylzinc.

The "Declaration to Accompany Articles Repaired/Altered Abroad and Returned to the United States" indicates an isotopic separation process via centrifugation was performed to obtain the DZO. The Office of Laboratories & Scientific Services states that the term "isotope" is used to define any of two or more nuclides (species of atom characterized by the constituents of its nucleus) that have the same atomic number but different atomic mass numbers. The differences in physical and chemical properties of individual isotopes are the basis for many practical applications. Isotopes of certain elements possess unique or peculiar properties making their separation or enhancement desirable. Zinc has five stable, non-radioactive, isotopes, which are Zinc 64, 66, 67, 68 and 70. Also, six radioactive isotopes have been identified. Isotopes can be isolated using several available techniques including centrifugation. Isotopic separation by gas centrifugation is commonly used to separate isotopes of radioactive material. The Office of Laboratories & Scientific Services notes that isotopic separation by gas centrifugation is a very complex process which is only available in a limited number of countries, such as Russia.

In the instant case, the Office of Laboratories & Scientific Services analysis indicates that the isotopic separation by gas centrifugation requires the use of a zinc compound in liquid form, such as diethylzinc, which is introduced at the bottom of the rotor (centrifuge). Heat is then applied to evaporate the liquid and the vapors are removed from the rotor. The vapors are mainly composed of ethane gas produced from the decomposition of diethylzinc which also produces zinc. Separation of the zinc isotopes takes place under the influence of the centrifugal field. Zinc 64 (the more abundant non-radioactive zinc isotope) is mostly removed from the isotopic mixture, and the isotopic zinc mixture is transformed into zinc oxide. The resultant product is a customized mixture of non-radioactive zinc isotopes in the form of zinc oxide. This finished product, "DZO", is depleted of Zinc 64, i.e., contains a low level of Zinc 64.

The Office of Laboratories & Scientific Services also indicates that zinc oxide is a white or yellowish-white powder which is made directly from zinc concentrates or by the vaporization of molten metal. It is chiefly used as a vulcanization activator (55 percent of total consumption) and as an additive in latex or oil-based paints. In the instant case, the certificates of analysis indicate that the imported DZO is an enriched non-radioactive isotopic mixture of zinc in the form of zinc oxide in which the Zinc 66, 67, 68, and 70 content has been increased, and Zinc 64 has been decreased from 49 percent by weight to less than 1 percent.

Based on the Office of Laboratories & Scientific Services analysis, the operations performed in Russia resulted in a chemical change of the exported diethylzinc, and the produced "DZO" is a new substance having entirely different properties than diethylzinc. While the diethylzinc is complete for its intended use as a high purity raw material prior to the processing in Russia, the DZO is a mixture of non-radioactive isotopes of zinc oxide in which the natural isotopic composition has been artificially modified via centrifugation. The Russian processing operations are, therefore, necessary steps in the preparation or manufacture of the finished "DZO", and destroy the identity of the exported diethylzinc. Consequently, with regard to the facts presented, we are of the opinion that the centrifugation process which converts the diethylzinc into DZO does not constitute an acceptable alteration within the meaning of subheading 9802.00.50, HTSUS, because the processes performed in Russia destroy the identity of the exported diethylzinc and create a chemically different article, namely DZO. Consequently, the DZO is classified under subheading 2845.90.0000, HTSUS, and there is no exemption from the payment of the MPF.

HOLDING:

On the basis of the information submitted, we find that the centrifugation process performed in Russia which converts the diethylzinc into "DZO" does not constitute an alteration within the meaning of subheading 9802.00.50, HTSUS. Accordingly, there is no exemption from the payment of the MPF, and this protest should be denied.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065 dated August 4, 1993, Subject: Revised Protest Directive, this decision should be attached to Customs Form 19, Notice of Action, and be mailed by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make the decision available to customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, Lexis, Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director

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