Applicability of partial duty exemption of item 806.20, TSUS, to certain greige goods exported to Italy for printing

HQ 554917 June 20, 1988 CLA-2 CO:R:C:V 554917DBI CATEGORY: Classification TARIFF NO.: 9802.00.40; 806.20 Mr. Harry Galtieri Anju/Woodridge, Inc. 295 Fifth Avenue New York, New York 10016 RE: Applicability of partial duty exemption of item 806.20, TSUS, to certain greige goods exported to Italy for printing Dear Mr. Galteiri: This is in response to your letter of February 12, 1988, in which you request a ruling concerning the dutiability of certain U.S. greige goods exported to Italy for printing. FACTS: You state that U.S. greige goods will be sent to Italy for printing. In your telephone conversation on May 26, 1988, with a member of my staff, you indicated that a design will be printed on the greige goods which will be used for home furnishings such as drapery, bedspreads and upholstery for furniture. The goods will then be returned to the U.S. for further manufacture into home furnishings. Inasmuch as you ask whether the printing process constitutes a loss of identity of American goods, we assume that you are referring to the applicability of item 806.20, Tariff Schedules of the United States (TSUS), to the greige goods. ISSUE: Whether the described greige goods, when returned to the U.S., will be eligible for the partial exemption from duty provided for in item 806.20, TSUS (9802.00.40, Harmonized Tariff Schedule of the United States (HTSUSA)). LAW AND ANALYSIS: Item 806.20, TSUS, provides for the assessment of duty on the value of repairs or alterations performed on articles returned to the U.S. after having been exported to be advanced in - 2 - value or improved in condition by any process of manufacture or other means. However, the application of this tariff provision is precluded where the foreign processing operation is a necessary step in the preparation or manufacture of finished articles. Dolliff and Company, Inc. v. United States, 66 CCPA 77, CAD 1225, 599 F.2d 1015 (1979). We have previously held in a ruling dated February 13, 1987 (HQ 554441) that the printing of U.S. laces and fabrics in Italy was a continuation of the total goods-in-process manufacture and that the goods were not considered finished until printed. Therefore, the printing exceeded the meaning of the term alteration and precluded the application of item 806.20, TSUS. We believe that the foreign printing process constitutes an operation that exceeds an alteration based on our previous ruling. The greige goods require a further step in the preparation of the finished product. HOLDING: On the basis of the information submitted, it is our opinion that the foreign printing process may not be considered an alteration as that term is used in item 806.20, TSUS, and, therefore, precludes tariff treatment of the returned goods under the provision of item 806.20, TSUS. Sincerely, John Durant, Director Commercial Rulings Division 1cc: CLA-2 CO:R:C:V:DIZZO:SDZ:5/3/88