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December 12, 1996

HQ 559833


CLA 02 RR:TC:SM 559833 KKV

CATEGORY: CLASSIFICATION

Mr. John B. Alsup
Alsup & Alsup, Inc.
P.O. Box 1251
Del Rio, TX 78841

RE Applicability of subheading 9802.00.50, HTSUS, to plastic hard drive computer disk carriers sent to Mexico for cleaning

Dear Mr. Alsup:

This is in response to your letter dated April 29, 1996, which requests a ruling regarding the eligibility of certain plastic hard drive computer disk carriers which are sent to Mexico for cleaning for duty-free treatment under subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS), when returned.

FACTS:

The merchandise at issue is a hard plastic container designed to serve as a carrier for aluminum disk units for computer hard drives. The carriers are made in the U.S. and are used for the protection and transportation of computer disk units when the disks are shipped to computer hard disk manufacturers worldwide. Upon receipt, the manufacturers use the disk units and return the empty carriers to the U.S. The carrier consists of three detachable parts: an opaque plastic foundation into which plastic grooves or teeth have been molded, a blue plastic shell into which plastic channels have been molded and an opaque rectangular lid. Molded into the foundation are plastic grooves or teeth designed to separate the individual disks. Molded into the shell are corresponding plastic channels which isolate the disks, preventing movement. The rectangular lid snaps onto the shell, preventing the entry of debris or other contaminants. Into each piece has been molded the marking, "Made in USA."

We are informed that Fabronics proposes to export the carriers to Mexico where the carriers will undergo the following operations:

1) The top and bottom will be removed from the body.
2) Each piece will be cleaned using soapy water. All labels and contaminants will be removed. 3) The top and bottom will be re-attached to the body.
4) The cleaned units will be packed in cardboard boxes.

ISSUE:

Whether detachable plastic computer disk carriers of U.S.-origin which are sent to Mexico for disassembly, cleaning, reassembly and packing for duty-free treatment under subheading 9802.00.50, HTSUS, upon their return to the U.S.

LAW AND ANALYSIS:

Articles returned to the U.S. after having been exported to Mexico and advanced in value or improved in condition by repairs or alterations may qualify for duty-free treatment 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).

Section 181.64, Customs Regulations (19 CFR 181.64) defines "repairs or alterations" for purposes of NAFTA as follows:

For purposes of this section, "repairs or alterations" means restoration, addition, renovation, redyeing, cleaning, resterilizing, or other treatment which does not destroy the essential characteristics of, or create a new or commercially different good from, the good exported from the United States.

Customs has previously ruled that certain cleaning operations constitute acceptable alterations for purposes of the duty exemption provided by subheading 9802.00.50, HTSUS. In HQ 554731 dated February 2, 1989, Customs considered fuel injectors which were disassembled and cleaned, and certain parts were replaced. Customs determined that the fuel injectors qualified for subheading 9802.00.50, HTSUS, treatment, as long as the adapter and retainer of the fuel injector were not replaced and remained together as a matched set, as these constituted the essential identity of the fuel injector. In HQ 555180, dated December 26, 1989, carrots exported to Mexico for washing, cooling, sorting by size, grading for quality, and packaging for retail sale were entitled to the partial duty exemption provided for under subheading 9802.00.50, HTSUS. In HQ 559611, dated May 7, 1996, herbs were exported to Canada where they were cleaned of field soil, trimmed to a uniform size, packaged and labeled prior to their return to the U.S. Customs held that the Canadian processing constitutes an "alteration" entitling the imported herbs to a partial duty exemption within the meaning of subheading 9802.00.50, HTSUS. In addition, the Court of Customs and Patent Appeals concluded that certain operations performed in Canada to U.S.-origin apples, including cleaning, grading, wrapping, and packing, were deemed to be alterations. Wilbur G. Hallauer v. United States, 40 CCPA 197, C.A.D. 518 (1953).

Consistent with the foregoing, we find that the operations performed in Mexico where the carriers are disassembled, cleaned by soap and water, removed of labels and contaminates, reassembled and packaged, constitute qualifying "repairs or alterations" provided that the essential components of the carriers are retained. Accordingly, the plastic disk carriers qualify for the full duty exemption under subheading 9802.00.50, HTSUS, provided the documentary requirements of 19 CFR 181.64 are met.

With regard to your inquiry as to the appropriate country of origin marking for the carriers upon return to the U.S., we note that, based upon the information provided, the cleaning operations you propose are insufficient to alter the origin of the articles. Whether the plastic computer disk carriers products may be marked "Made in U.S.A." upon manufacture is within the jurisdiction of the Federal Trade Commission. Therefore, you should contact the FTC at the following address regarding the appropriate use of this phrase: Federal Trade Commission, Division of Enforcement, 6th and Pennsylvania Avenue, N.W., Washington, D.C. 20508.

HOLDING:

On the basis of the information submitted, it is our opinion that the Mexican operations enumerated above constitute "repairs or alterations" within the meaning of 19 CFR 181.64. Accordingly, the plastic disk carriers will qualify for the full duty exemption provided by subheading 9802.00.50, HTSUS, upon return of the carriers to the U.S. provided that the essential components of the carriers are retained and the documentary requirements of section 181.64 are met.

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.

Sincerely,

John Durant

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