United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 1995 HQ Rulings > HQ 557841 - HQ 558673 > HQ 558010

Previous Ruling Next Ruling
HQ 558010




March 6, 1995

CLA-2 CO:R:C:S 558010 AT

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.50

Mr. Gordon Jamieson
Gordon C.D. Jamieson Ltd.
226 King George Rd.
Brantford, Ontario N3R 5L4

RE: Applicability of partial duty exemption under HTSUS subheading 9802.00.50 to recycled anion and cation resin imported from Canada; recycling; resin; Article 509 NAFTA

Dear Mr. Jamieson:

This is in response to your letter dated May 27, 1994, forwarded by the Area Director (New York Seaport) and received by our office on July 13, 1995, requesting a ruling concerning the eligibility of recycled anion and cation products from Canada for a partial duty exemption under subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS).

FACTS:

According to your submission, your company intends to export scrap plastic resins, in 45 gallon drums, into Canada for recycling. The scrap plastic resins are sent to you by the customers of Fuji, U.S.A., in used film processing cartridges, to your shop in Niagara Falls, New York. There, you place the scrap plastic resins into the drums for export to Canada. The scrap resin is comprised of a mixture of anion and cation resins, which if not recycled, are dumped into a landfill. In Canada, the scrap plastic resins will be recycled in the following manner:

1. Fill tank to 12" from top with scrap resin mix.

2. Pass 1.5" of acid from 50 Gal. drum per cubic foot through tank (5% test solution). 3. Rinse out acid using cation water (soft) for « hour (1 gal. per minute per cubic foot).

4. Back wash using cation soft water to separate anion from cation.

5. Start second tank: Same steps 1-4.

6. Drain anion resin into 3rd empty tank.

7. Place each 1 & 2 tanks under funnel; Insert pipe to backwash all remaining anion and cation resins out of each tank into funnel.

8. Drain the cation resin into one of the tanks down to a point just before the anion reaches the opening.

9. Drain remaining resin in funnel which will be anion and cation in 3rd tank.

10. Fill 3rd tank with more; There should be 1 tank full of anion that has been treated for calcium fouling and 1 tank of cation that is partially recharged.

11. Place anion tank on to funnel and backwash with cation soft water until clean.

12. Return resin into tank. Inject 6 pounds of castic, or = (1 gal) 100 degrees F: 6 pounds of powder per 1 gal of soft water.

13. Rinse 30 minutes after injection completed.

14. Place caustic pick up tube in salt tank. Inject 15 lbs. salt = 7 gallons of brine.

15. Observe color of waste water coming out of anion tank. If waste water is tea color 10 minutes after brining is completed, repeat steps 11, 12, 13, 14, and 15 until waste water is clear (tea color indicates organics).

After the recycling operation is completed, the recycled anion and cation resins are sent back to your shop in the U.S., where they are repackaged and delivered to the customers of Fuji, U.S.A. who use the recycled resins in their water treatment one hour film processing system. You state that the recycled anion and cation cost approximately 60 % less than new resins.

ISSUE:

Whether the recycling of scrap plastic resins in Canada into recycled anion and cation resins constitutes an alteration, thereby entitling the returned products to the partial duty exemption under subheading 9802.00.50, HTSUS.

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'd, C.D. 1752, 36 Cust. Ct. 46 (1956); Guardian Industries Corp. v. United States, 3 CIT 9 (1982). Accordingly, entitlement of 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. Dollif & Company, Inc. v. United States, 455 F. Supp. 618 (CIT 1978), aff'd, 559 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 181.64, Customs Regulations (19 CFR 181.64), are satisfied.

Section 181.64(b), Customs Regulations (19 CFR 181.64(b)) provides that

The duty free or reduced-duty treatment referred to in paragraph (a) of this section shall not apply to goods which, in their imported condition as exported from the United States to Canada or Mexico, are incomplete for their intended use and for which the processing operation performed in Canada or Mexico constitutes an operation that is performed as a matter of course in the preparation or manufacture of finished goods. You state that the scrap plastic resins have no commercial use until they are recycled into the respective anion and cation resins. However, after the recycling process is completed, the recycled anion and cation resins can be commercially used by Fuji, USA in their film processing system.

In HQ 557835 (April 28, 1994), Customs considered copolyamide products (nylon resins) exported to Switzerland in solid, granular form. In Switzerland, caprolactam was extracted from the resins so that the resins could be used for food packaging applications. Because the nylon resins in their exported condition could not be used for food packaging, unless they underwent the caprolactum extraction process, Customs ruled that the exported resins were not complete for their intended purpose and that the processing performed in Switzerland was an intermediate operation constituting part of an ongoing manufacturing process beyond the scope of subheading 9802.00.50, HTSUS.

In HQ 556955 (May 12, 1993), Customs considered pentostatin exported to Europe in a frozen concentrate form. In Europe, a crystallization operation removed impurities and fermentation by- products, which did not alter the chemical composition of the product, but changed the product into a powdered state. Because the pentotstatin could not be used in patients without the processing abroad, it was held that the processing abroad was considered an intermediate operation and beyond the scope of subheading 9802.00.50, HTSUS.

In this case, as in HQ 557835 and HQ 556955, we find that the scrap plastic resins, in their condition as exported from the U.S., are not considered complete for their intended use as anion and cation resins for film processing systems, until they undergo the recycling operation in Canada. Therefore, it is our opinion that the recycling operation in Canada is a necessary step in the preparation of a finished product and is beyond the scope of subheading 9802.00.50, HTSUS.

Please note that the returned resins may be entitled to preferential duty treatment if they qualify as "originating goods" under the North American Free Trade Agreement ("NAFTA") (Pub. L. 103-182, 107 Stat 2057)(December 8, 1993). See, General Note 12, HTSUS.

HOLDING:

On the basis of the information submitted, we find that the recycling of the scrap plastic resins into anion and cation resins completes these resins for their intended purpose. Therefore, the recycling operation performed in Canada exceeds an alteration within the meaning of subheading 9802.00.50, HTSUS.

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

Sincerely,

John Durant, Director

Previous Ruling Next Ruling

See also: