Applicability of partial duty exemption under HTSUS subhead- ing 9802.00.50 to freeze-dried cooked diced chicken from Canada

HQ 555325 September 6, 1989 CLA-2 CO:R:C:V 555325 GRV CATEGORY: CLASSIFICATION TARIFF NO.: 9802.00.50 Mr. Alan Litwin Assistant Manager F.W. Meyers & Co., Inc. 69 Delaware Avenue Buffalo, New York 14202 RE: Applicability of partial duty exemption under HTSUS subhead- ing 9802.00.50 to freeze-dried cooked diced chicken from Canada Dear Mr. Litwin: This is in response to your letter of February 8, 1989, to the District Director of Customs, Buffalo, New York, requesting a ruling on behalf of Cobi Foods, Inc., concerning the tariff status of cooked diced U.S. chicken to be freeze-dried in Canada and returned to the U.S. Your letter, as well as correspondence from your client, were forwarded to this office for the prepara- tion of a response. We are treating your letter as a prospec- tive ruling request. FACTS: Your client purchases cooked diced frozen chicken in the U.S. and ships it to Canada for freeze-drying. The freeze-dry- ing operation merely removes the water from the chicken, and the chicken is then returned to the U.S. for use in dried soups. ISSUE: Whether freeze-drying constitutes an acceptable "altera- tion," for purposes of subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS), thereby rendering the returned chicken eligible for the partial duty exemption under this tariff provision. LAW & ANALYSIS: Articles returned to the U.S. after having been exported to be advanced in value or improved in condition by repairs or alterations may qualify for the partial duty exemption under HTSUS subheading 9802.00.50, provided the foreign operation does not destroy the identity of the exported articles or create new or different articles. Further, entitlement to this tariff treatment is 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, 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, 1019 (1979). Articles entitled to this partial duty exemption are dutiable only upon the cost or value of the foreign repairs or alterations, provided the docu- mentary requirements of section 10.8, Customs Regulations (19 CFR 10.8), are satisfied. Freeze-drying is a process whereby ice in frozen products is transformed or sublimated into vapor without passing through the liquid state. Customs has stated that freeze-dried food items retain their value and quality as food, and that their identity as food is not lost or destroyed by the freeze-drying process. See, Headquarters Ruling Letter 553936/814513 (December 18, 1985), holding that freeze-dried sliced frozen mushrooms and diced chicken meat were eligible for treatment under item 806.20, Tariff Schedules of the United States (TSUS) (the precursor provision to HTSUS subheading 9802.00.50); Headquarters Ruling Letter 071187 (March 1, 1983), holding the same for shelled peas; and Headquarters Ruling Letter 067964 (September 21, 1982), holding the same for cut chives. In the instant case, the description of diced chicken meat as cooked shows that the food product is a finished product when exported. This condition of the product, coupled with our prior determinations on the freeze-drying process, renders the freeze- dried diced cooked chicken to be returned eligible for the par- tial duty exemption under HTSUS subheading 9802.00.50. The freeze-dried chicken meat will be classified under HTSUS subheading 0210.90.20, dutiable at 4.5% ad valorem, pursuant to the United States-Canada Free-Trade Agreement. You mentioned in your letter that HTSUS subheading 9813.00.05 could be applicable to the articles in question. Be advised that that tariff provision applies to articles imported into the U.S. for repairs, alterations or processing; not to articles exported for repairs or alterations. CONCLUSION: On the basis of the described foreign operation, the freeze- dried cooked diced chicken will be eligible for the partial duty exemption under HTSUS subheading 9802.00.50 when returned to the U.S., upon compliance with the documentary requirements of 19 CFR 10.24. Sincerely, John Durant, Director Commercial Rulings Division