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HQ 957375



April 19, 1995

CLA-2 R:C:M 957375 DWS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8479.90.95; 9802.00.40

District Director
U.S. Customs Service
P.O. Box 619050
1205 Royal Lane
DFW Airport, TX 75261-0950

RE: Protest 5501-94-100136; Wax Pattern Dies; Aluminum Molds; Chapter 39, Note 1; Explanatory Note 84.80; Section XVI,
Note 2; 8480.60.00; 8480.79.90; 7326.90.90; Repairs or Alterations; HQs 555359, 555707, 556738, 554952; 19 CFR 10.8

Dear District Director:

The following is our decision regarding Protest 5501-94-100136 concerning your action in classifying and assessing duty on wax pattern dies under the Harmonized Tariff Schedule of the United States (HTSUS). Further information provided by counsel for the protestant was taken into consideration in rendering our decision on this protest.

FACTS:

The merchandise consists of wax pattern dies, which are aluminum molds used for the production of patterns made of wax. These patterns are used for the casting of high specification components principally for the aerospace industry. Hot wax, which is made to proprietary physical and chemical specifications, is poured into the mold which forms the wax pattern. The wax is composed of natural wax, petroleum wax, resin, and a filler. To restore the molds to their original condition, they were exported to England for repair by reworking/ resharpening the edges.

The wax pattern dies were entered under subheadings 8480.79.90, HTSUS, as other molds of plastics, and 9802.00.40, for the partial duty exemption on the value of repairs or alterations to the dies. The entry was liquidated on February 18, 1994, under subheading 7326.90.90, as other articles of iron or steel, and eligibility under subheading 9802.00.40, HTSUS, was denied. The protest was timely filed on May 11, 1994.

ISSUE:

Whether the wax pattern dies are classifiable under subheading 8480.79.90, HTSUS, as other molds for plastics, under subheading 8480.60.00, HTSUS, as molds for mineral materials, under subheading 7326.90.90, HTSUS, as other articles of iron or steel, or under subheading 8479.90.95, HTSUS, as parts of machines not specified elsewhere in chapter 84, HTSUS.

Whether the wax pattern dies are eligible for the partial duty exemption under subheading 9802.00.40, HTSUS, when returned to the U.S.

LAW AND ANALYSIS:

The subheadings under consideration are as follows:

8480.60.00: [m]olds for mineral materials.

The general, column one rate of duty for goods classifiable under this provision is 3.9 percent ad valorem.

8480.79.90: [m]olds for rubber or plastics: [o]ther types: [o]ther.

The general, column one rate of duty for goods classifiable under this provision is 3.9 percent ad valorem.

7326.90.90: [o]ther articles of iron or steel: [o]ther: [o]ther: [o]ther: [o]ther.

The general, column one rate of duty for goods classifiable under this provision is 5.7 percent ad valorem.

8479.90.95: [m]achines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof: [p]arts: [o]ther.

The general, column one rate of duty for goods classifiable under this provision is 3.7 percent ad valorem.

9802.00.40: [a]rticles returned to the United States after having been exported to be advanced in value or improved in condition by any process of manufacture or other means: [a]rticles exported for repairs or alterations: [r]epairs or alterations made pursuant to a warranty.

The general, column one rate of duty for goods classifiable under this provision is the duty upon the value of the repairs or alterations.

CLASSIFICATION OF WAX PATTERN DIES

Classification of merchandise under the HTSUS is in accordance with the General Rules of Interpretation (GRI's).
GRI 1 provides that classification is determined according to the terms of the headings and any relative section or chapter notes.

First, as the dies are of aluminum, they are precluded from classification under subheading 7326.90.90, HTSUS, as other articles of iron or steel.

Chapter 39, note 1, HTSUS, states that:

[t]hroughout the tariff schedule the expression "plastics" means those materials of headings 3901 to 3914 which are or have been capable, either at the moment of polymerization or at some subsequent stage, of being formed under external influence (usually heat and pressure, if necessary with a solvent or plasticizer) by molding, casting, extruding, rolling or other process into shapes which are retained on the removal of the external influence.

To determine whether the dies are molds for plastics, we must determine whether wax is a plastic. Based upon chapter 39, note 1, HTSUS, wax is not a plastic as it is not a material of headings 3901 to 3914, HTSUS. Therefore, the subject dies, which pattern wax, are not classifiable under subheading 8480.79.90, HTSUS, as other molds for plastics.

In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes may be utilized. The Explanatory Notes, although not dispositive or legally binding, provide a commentary on the scope of each heading of the HTSUS, and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989). In part, Explanatory Note 84.80 (pp. 1319 - 1321) states that:

[t]his heading covers the moulding boxes used in metal foundry, mould bases and moulding patterns, with certain exceptions referred to later, it also covers all moulds (whether or not hinged, and whether used by hand or in presses or moulding machines) which are of a kind used for moulding the following materials into blanks or finished articles:

(I) Metals . . .

(II) Glass . . . or mineral materials such as ceramic pastes, cement, plaster or concrete.

(III) Rubber or plastics.

In general, the essential function of a mould is to retain the material in a predetermined shape while it sets; some moulds also exert a certain pressure on the material. . .

(F) MOULDS FOR MINERAL MATERIALS

This group includes:

(1) Moulds for ceramic pastes . . .

(2) Moulds for moulding concrete, cement or asbestos-cement goods . . .

(3) Moulds for agglomerating abrasives into grinding wheels.

(4) Moulds for plaster, staff or stucco articles . . .

The heading also excludes:

(g) Subject to the above exclusions, moulds used on presses and other machines, for the moulding of materials other than those cited in the text of this heading (classified as parts of the machines for which they are designed).

It is our position that the dies are not molds for mineral materials, as they are not similar to any of the exemplars listed under Explanatory Note 84.80(F). None of the exemplars mention wax or a similar substance. Also, exclusion (g) to Explanatory Note 84.80 limits the class of molds classifiable under heading 8480, HTSUS, to those which mold the materials listed in the exemplars under Explanatory Note 84.80. As wax is not one of those materials listed, the subject dies are precluded from classification under subheading 8480.60.00, HTSUS, as molds for mineral materials.

With regard to the machines to which the dies are part, we find that, because they are not described elsewhere under the HTSUS, they are classifiable under subheading 8479.89.90, HTSUS, which provides for: "[m]achines . . . having individual functions, not specified or included elsewhere in this chapter; parts thereof: [o]ther machines . . . : [o]ther: [o]ther."

Section XVI, note 2, HTSUS, states that:

[s]ubject to note 1 to this section, note 1 to chapter 84 and to note 1 to chapter 85, parts of machines (not being parts of the articles of heading 8484, 8544, 8545, 8546 or 8547) are to be classified according to the following rules:

(a) Parts which are goods included in any of the headings of chapters 84 and 85 (other than headings 8485 and 8548) are in all cases to be classified in their respective headings;

(b) Other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind. However, parts which are equally suitable for use principally with the goods of headings 8517 and 8525 to 8528 are to be classified in heading 8517;

(c) All other parts are to be classified in heading 8485 or 8548.

As subject dies are not goods included in any of the headings of chapters 84 or 85, HTSUS, section XVI, note 2(a), HTSUS, is inapplicable. However, under section XVI, note 2(b), HTSUS, as the dies are parts of machines of heading 8479, HTSUS, they are to be classifiable with those machines. Therefore, it is our position that the wax pattern dies are classifiable under subheading 8479.90.95, HTSUS, as parts of machines not specified elsewhere in chapter 84, HTSUS.

ELIGIBILITY UNDER SUBHEADING 9802.00.40, HTSUS

Subheading 9802.00.40, HTSUS, provides for the assessment of duty on the value of repairs or alterations performed pursuant to a warranty on articles returned to the U.S. after having been exported for that purpose. However, the application of this tariff provision 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), aff'd, C.D. 1752, 36 Cust.Ct. 46 (1956); and Guardian Industries Corporation v. United States, 3 CIT 9 (1982), Slip Op. 82-4 (Jan. 5, 1982). Subheading 9802.00.50, HTSUS, treatment is also precluded where the exported articles are incomplete for their intended use and the foreign processing operation is a necessary step in the preparation or manufacture of finished articles. See, 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, 599 F.2d 1015 (1979). Articles entitled to this partial duty exemption are dutiable only upon the cost or value of the foreign repairs or alterations, provided the documentary requirements of section 10.8, Customs Regulations (19 CFR 10.8), are satisfied.

In Headquarters Ruling Letter (HRL) 555359, dated May 14, 1990, drill bits manufactured in the U.S. which were rejected in-house by the manufacturer after microscopic inspection, were shipped to Mexico for reworking (resharpening) to bring them into tolerance in a precision grinding machine, and in order to attach a plastic depth gauge ring (plastic collar) onto the drill bit. We held that the foreign sharpening operations in HRL 555359 constituted a continuation of the manufacturing process begun in the U.S. and was a necessary step, performed as a matter of course, in producing drill bits which meet industry tolerance standards. In addition, we held that the fact that the plastic collars were not assembled onto the drill bits until after they were resharpened also indicated that the drill bits were incomplete or unfinished articles as exported. Thus, we determined that the drill bits were not eligible for the partial duty exemption under subheading 9802.00.50, HTSUS.

In HRL 555707, dated February 20, 1991, we reconsidered the portion of HRL 555359 pertaining to the reworking/resharpening of the drill bits in Mexico. In HRL 555707, we affirmed our earlier holding that the out-of-tolerance drill bits exported to Mexico for reworking/ resharpening were not completed articles, and thus not eligible for the partial duty exemption under subheading 9802.00.50, HTSUS. We stated that the fact that drill bits which meet industry standards and those that do not are necessarily sold in different commercial markets and at different prices was another indication that they were recognized in the trade as different articles of commerce. Even without the addition of the plastic collars to the drill bits in HRL 555359, we found that the sharpening of the drill bits in Mexico exceeded a repair or alteration within the meaning of subheading 9802.00.50, HTSUS. Therefore, under these circumstances, we affirmed HRL 555359 on the basis that the foreign "resharpening" operation constituted a continuation of the manufacturing process begun in the U.S. and was a necessary step in the production of the drill bits.

However, the above-cited rulings were distinguished from the facts in HRL 556738 dated September 18, 1992, in which tools which had become dull from use were shipped to Mexico for resharpening. The tools in HRL 555359 and 555707 were found by Customs to be incomplete articles at the time of their exportation from the U.S., in part, because the foreign "resharpening" process was a necessary step in the initial manufacture of drill bits which meet exacting industry tolerance standards. In addition, the fact that in HRL 555359 and 555707 plastic collars had to be attached to the drill bits after they were "resharpened," so that they could be used for their intended purpose, also supported Customs' conclusion that the bits were unfinished when exported. In HRL 556738, however, Customs found that resharpening the tools in Mexico constituted an acceptable repair or alteration within the meaning of subheading 9802.00.50, HTSUS. Customs stated that the tools were previously- manufactured articles which had become dull from repeated use. We further found that the tools were completed articles when they were exported to Mexico to undergo resharpening, and did not need the addition of any other item in order to function properly. Moreover, we found that the foreign process did not have the effect of creating a new or different article of commerce; the resharpening operation merely rendered used tools sharp again, and did not change the character or use of the article.

In another case, HRL 554952 dated March 14, 1989, involving casting molds, we held that the foreign explosive reforming operation constituted an acceptable repair within the meaning of item 806.20, Tariff Schedules of the United States (TSUS) (the precursor to subheading 9802.00.40 and 9802.00.50, HTSUS). In HRL 554952, the foreign repair operation consisted of a unique reforming process which returned out-of-dimension continuous casting molds to their original precise dimensions. During the repair operation, plastic explosive was wrapped around the casting, a mandrel of the required shape and accuracy was inserted into the used mold, the unit was immersed in a tank of water, and the explosive was detonated. In finding that the foreign explosive reforming operation constituted an acceptable repair operation for purposes of item 806.20, TSUS, we stated that this operation merely restored the exported used casting molds to their original condition.

We are of the opinion that in the instant case, the repair operations performed to the wax pattern dies in England are similar to those operations performed to the used tools in HRL 556738 and to the casting molds in HRL 554952. As in HRLs 556738 and 554952, the wax pattern dies are previously manufactured articles which have become worn out from repeated use. The dies are completed articles in their condition as exported to England prior to undergoing resharpening, and they do not require the addition of any other component or attachment in order to function properly. Moreover, the foreign resharpening operation does not create a new or commercially different article, nor does it change the character or use of the wax pattern die. Accordingly, we find that the resharpening operations performed in England constitute acceptable repair operations within the meaning of subheading 9802.00.40, HTSUS.

At the time the merchandise subject to this protest was entered, section 10.8, Customs Regulations (19 CFR 10.8), provided that there shall be filed, prior to exportation of the article to be repaired or altered, a Certificate of Registration (Customs Form 4455), and, at the time of entry, a declaration from the person who performed the repairs or alteration as well as a declaration from the owner or importer. The record includes a Certificate of Registration (4455) for the merchandise in this case which reflects that it was presented to Customs (on July 24, 1992) prior to the exportation of the merchandise from the U.S., and indicates that the articles were exported for repairs or alterations. Moreover, the record includes the Foreign Shipper's Repair Declaration for the subject merchandise dated August 24, 1992, which shows that the merchandise was received by the foreign repair facility on July 27, 1992, and that various repair operations were performed. Therefore, it appears that protestant has complied with the documentary requirements of 19 CFR 10.8.

HOLDING:

The wax pattern dies are classifiable under subheading 8479.90.95, HTSUS, as parts of machines not specified elsewhere in chapter 84, HTSUS. With regard to this issue, because reclassification of the merchandise as indicated above will result in a lower rate of duty than claimed, you are instructed to GRANT the protest.

On the basis of the described foreign operations, the resharpening operations performed in England on the exported wax pattern dies constitute an acceptable "repair" or "alteration," within the meaning of subheading 9802.00.40, HTSUS. Therefore, the dies are entitled to the partial duty exemption available under this tariff provision. With regard to this issue, you should GRANT the protest.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision, together with the Customs Form 19, should 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, Freedom of Information Act, and other public access channels.

Sincerely,

John Durant, Director
Commercial Rulings Division

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