Applicability of partial duty exemption of item 806.20, TSUS, to certain abrasive grinding elements exported to Japan for refurbishment

HQ 555084 November 29, 1988 CLA-2 CO:R:C:V 555084 DBI CATEGORY: Classification TARIFF NO.: 9802.00.40; 806.20 Robert E. Burke, Esq. Barnes, Richardson and Colburn 200 East Randolph Drive Chicago, Illinois 60601 RE: Applicability of partial duty exemption of item 806.20, TSUS, to certain abrasive grinding elements exported to Japan for refurbishment Dear Mr. Burke: This is in response to your letter of March 28, 1988, to the Regional Commissioner of Customs, New York Region, in which you request a ruling concerning the applicability of item 806.20, Tariff Schedules of the United States (TSUS), to certain abrasive grinding elements to be exported to Japan for cleaning, grinding and the attachment of a new abrasive. Your letter has been forwarded to this office for a response. FACTS: You advise that the imported merchandise consists of triangular grinding pieces used in grinding machinery. Each piece consists of an aluminum base onto which abrasive material has been affixed. The aluminum base is approximately 10 mm thick while the abrasive surface is 48 mm thick. Twenty of these pieces are mounted to a grinding machine forming a circular grinding surface. When the abrasive surface has worn down to a thickness of approximately 10 to 15 mm, the required degree of precision can no longer be maintained, although such worn parts could be used when maintaining precision tolerances are not necessary. At that point, the worn pieces would be sent to Japan for refurbishment. In Japan, the worn down abrasive will be removed, and the aluminum base will be cleaned and ground to attain a uniformly level surface. A completely new abrasive manufactured in Japan will then be attached to the base with epoxy resins. The merchandise will then be shipped back to the U.S. -2- The value of the worn out article exported from the U.S. is approximately $15 to $20, including $12 to $15 for the aluminum base and $3 to $5 for the worn down abrasive material. The value of the new article imported from Japan is approximately $50 to $75, including $12 to $15 for the aluminum base plus $38 to $60 for the newly manufactured material. ISSUE: Whether the described abrasive grinding elements, when returned to the U.S., will be eligible for the partial exemption from duty in subheading 9802.00.40, Harmonized Tariff Schedule of the United States (HTSUS) (806.20, TSUS). LAW AND ANALYSIS: As you are probably aware, the HTSUS will replace the TSUS, effective January 1, 1989. Item 806.20, TSUS, will be carried over into the HTSUS without change as subheading 9802.00.40. Subheading 9802.00.40, HTSUS, provides for the assessment of duty on the value of repairs or alterations performed on articles that have 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 (1957); Guardian Industries Corporation v. United States, 3 CIT 9, Slip Op. 82-4 (Jan. 5, 1982). Treatment under subheading 9802.00.40, HTSUS, 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. Dolliff & Company, Inc. v. United States, 66 CCPA 77, C.A.D 1225, 599 F.2d 1015 (1979). In Press Wireless, Inc. v. United States, C.D. 438 (1941), worn-out radio tubes were sent abroad for the replacement of filaments damaged through use and for other necessary repairs designed to restore the tubes to a condition which prolonged the use for which they were originally designed. The court held that the tubes returned to the U.S. were identical to the tubes exported for repairs. The fact that they had been restored to their original efficiency so as to prolong their usefulness was of no consequence. -3- In the present case, the product that will be returned is the same as the product that will be exported for repairs. Although a new abrasive will be attached, the identity of the article will not be destroyed and the addition will not create a new or different commercial article. According to the reasoning in Press Wireless, the fact that the worn-out abrasive elements will be restored to their original efficiency will not preclude the article from receiving partial duty-free treatment under subheading 9802.00.40, HTSUS. HOLDING: On the basis of the information submitted, it is our opinion that the foreign cleaning, grinding and attachment of a new abrasive constitute repairs as that term is used in subheading 9802.00.40, HTSUS, and, therefore, the abrasive grinding elements would be entitled to the partial duty exemption provided for in that tariff provision, upon compliance with section 10.8, Customs Regulations (19 CFR 10.8). Sincerely, John Durant Director, Commercial Rulings Division