Applicability of partial duty exemption of item 806.20, TSUS, to certain fabric exported to Switzerland to be redyed

HQ 555024 June 10, 1988 CLA-2 CO:R:C:V 555024DBI CATEGORY: Classification TARIFF NO.: 9802.00.40; 806.20 Melanie S. Barlow Roffe, Inc. 808 Howell Street Seattle, Washington 98101 RE: Applicability of partial duty exemption of item 806.20, TSUS, to certain fabric exported to Switzerland to be redyed Dear Ms. Barlow: This is in response to your letter of May 13, 1988, in which you request a ruling concerning the applicability of item 806.20, Tariff Schedules of the United States (TSUS), to certain foreign fabric that will be shipped to Switzerland to be redyed. FACTS: You advise that your company imports stretch pant fabrics for skiwear from Switzerland. The color fabric that is "in fashion" in the skiwear industry changes on an annual basis which results in an obsolete inventory of colors that are unusable. Your company is planning to ship the fabric back to Switzerland to be redyed either navy or black by the supplier who sold the fabric. You indicate that navy and black are two colors that have been in your company's line for many years and that you will be able to manufacture and sell pants in these color fabrics. ISSUE: Whether the described fabric, 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 value or improved in condition by any process of manufacture or other means. In Amity Fabrics, Inc. v. United States, 43 Cust. Ct. 64, C.D. 2104 (1959), fabrics colored "pumpkin" were imported into the U.S. from Italy and exported back to Italy to be redyed black since the "pumpkin" color had gone out of fashion and black was a consistently good seller. It was held that the identity of the goods was not lost or destroyed by the dyeing process, that no new article was created and that there was no change in the character, quality, texture, or use of the merchandise since it was merely changed in color. The court found that such change constituted an alteration and therefore the merchandise was subject to duty only on the value of the alteration. In the present case, the redyeing process is similar to that in the Amity case. The fabric is no longer marketable in the original colors as imported and the company will export the fabric back to the supplier to be redyed to a color that is marketable. The fabric at issue would not lose its identity by the dyeing process, no new article would be created and only the color would be changed, not the character, quality, texture or use of the fabric. Therefore, we believe that the redyeing process constitutes an alteration under item 806.20, TSUS. HOLDING: On the basis of the information submitted, it is our opinion that the redyeing process may be considered an alteration as that term is used in item 806.20, TSUS, and therefore the exported fabric is entitled to tariff treatment under item 806.20, TSUS, upon compliance with the regulations. Accordingly, the redyed fabric may be entered under item 806.20, TSUS, with duty assessed only on the cost or value of the foreign processing. Sincerely, John Durant Director, Commercial Rulings Division