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HQ 558021




November 15, 1994

CLA-2 CO:R:C:S 558021 WAS

CATEGORY: CLASSIFICATION

TARIFF NO: 9802.00.50; 9801.00.10

Mr. Keith Welch
Unger Fabrikker A.S
P.O. Box 254
N-1601 Fredrikstad
Norway

RE: Linear alkylbenzene sulfonic acid (LABSA); 9802.00.50; 9801.00.10; repair; alteration; advance in value; improve in condition

Dear Mr. Welch:

This is in reference to your letter dated August 17, 1993, concerning the applicability of subheadings 9801.00.10 and 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS), to linear alkylbenzene sulfonic acid made in Norway from U.S. alkylbenzene. Your question regarding the classification of the product was previously addressed in Headquarters Ruling Letter (HRL) 954920 dated July 19, 1994.

FACTS:

Linear alkylbenzene of U.S. origin is shipped to Norway, where it is reacted with sulfur trioxide to produce linear alkylbenzene sulfonic acid (LABSA), which is sold in the U.S., under the brand names of "UFACID K" and "UFACID KA."

ISSUE:

Whether the LABSA is eligible for duty-free treatment under subheading 9801.00.10, HTSUS, or in the alternative, a partial duty exemption under subheading 9802.00.50, HTSUS, upon return to the U.S.

LAW AND ANALYSIS:

I. Subheading 9801.00.10, HTSUS

Subheading 9801.00.10, HTSUS, provides for the free entry of products of the United States that have been 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. Some change in the condition of the product while it is abroad is permissible. However, operations which either advance the value or improve the condition of the exported product render it ineligible for duty-free treatment upon return to the U.S. In the instant case, it is clear that the production of LABSA results in a new and different article of commerce from the alkylbenzene which is shipped to Norway, and therefore, results in an advancement in value or improvement in condition of the exported product. Accordingly, the LABSA is not entitled to duty-free treatment under subheading 9801.00.10, HTSUS, when returned to the U.S.

II. Subheading 9802.00.50, HTSUS

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 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.

In regard to the production of LABSA, the Customs Office of Laboratories and Scientific Services informs us that linear alkylbenzenes is in a class of compounds commonly referred to as hydrocarbons and are usually classifiable in either heading 2902, HTSUS, or 2707, HTSUS. Only two elements are found in its chemical structure: hydrogen and carbon. We note that the term "linear alkylbenzene" is a generic term for compounds containing alkyl (straight chain hydrocarbon) groups attached to a benzene ring. The compounds are frequently used in motor fuel blendstocks to increase the octane rating of the motor fuel. Individual alkylbenzenes are frequently used as intermediates in the production of other compounds. We further note that the linear alkylbenzenes used to produce LABSA is a mixture of different types of alkylbenzenes.
LABSA is a mixture of linear alkylbenzene sulfonic acids in which the chain length of the alkyl groups vary. Four different elements are found in the chemical structure of linear alkylbenzene sulfonic acids: carbon, hydrogen, sulfur and oxygen. LABSA is a surface active agent classifiable in heading 3402, HTSUS.

According to the Customs Office of Laboratories and Scientific Services, due to their different chemical structures, linear alkylbenzenes and LABSA have significantly different chemical and physical properties. The presence of a strongly charged functional group, the sulfonyl group in the LABSA accounts for a good amount of the physical and chemical differences. Linear alkylbenzenes have no strongly charged groups and are not soluble in water. However, the strongly charged sulfonyl group of the LABSA allows it to be soluble in water. In addition, linear alkylbenzenes may be added to gasoline in significant amounts and used as fuel as opposed to LABSA, which strongly attracts water and, in addition to gasoline, would neither mix with the gasoline in significant amounts, nor support proper combustion. In other words, although the LABSA is produced from linear alkylbenzenes, their chemical structures are significantly different.

Based on the above analysis, we are of the opinion that the sulfonylation of the linear alkylbenzene in Norway may be considered a step in the production of the LABSA. We note that LABSA and linear alkylbenzenes are each separate articles of commerce. Moreover, linear alkylbenzene is not only a pure intermediate which can be used solely in the production of LABSA - it may be used for other purposes. The LABSA and linear alkylbenzenes have different chemical structures and each structure has very different electrical properties (charges on the atoms). Because of these differences, the two compounds have completely different chemical properties and are used in separate applications in totally different industries. Therefore, we find that the production of LABSA creates a new or commercially different article of commerce when compared to the exported linear alkylbenzenes which is the result of processing that exceeds the scope of an alteration, thereby precluding tariff treatment under subheading 9802.00.50, HTSUS.

HOLDING:

On the basis of the information presented, it is our opinion that the production of LABSA in Norway results in a new and different commercial article when compared to the exported linear alkylbenzenes and is, therefore, beyond the scope of an alteration. Therefore, the duty exemption under subheading 9801.00.10, HTSUS, and the partial duty exemption under subheading 9802.00.50, HTSUS, are inapplicable.

Sincerely,

John Durant, Director

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