Applicability of partial duty exemption of subheading 9802.00.50, HTSUS, to stainless steel trim for simulated automotive convertible tops imported from Mexico

HQ 555566 May 1, 1990 CLA-2 CO:R:C:V 555566 KAC CATEGORY: CLASSIFICATION TARIFF NO.: 9802.00.50 Mr. John W. Cain Cain Customs Brokers Incorporated 421 Texano P.O. Box 150 Hidalgo, Texas 78557 RE: Applicability of partial duty exemption of subheading 9802.00.50, HTSUS, to stainless steel trim for simulated automotive convertible tops imported from Mexico Dear Mr. Cain: This is in response to your letter of January 6, 1990, on behalf of Earl Pilling, dba Pilling's F.R.P., requesting a ruling on the applicability of subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS), to stainless steel trim to be imported from Mexico for use with simulated automotive convertible tops. FACTS: Pilling will send U.S.-origin 8 or 10 foot length stainless steel bars to Mexico for foreign operations. The bars will be sanded to remove pitting, cut to various lengths, buffed, bent to conform to the shape of a convertible top, and then holes will be punched in the bar. The bar is buffed once again before it is returned to the U.S., where it will be attached to convertible tops as decorative trim. ISSUE: Whether the operations performed on the U.S.-origin stainless steel bars in Mexico will entitle the trim to the partial duty exemption in subheading 9802.00.50, HTSUS, when returned to the U.S. LAW AND ANALYSIS: Subheading 9802.00.50, HTSUS, 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 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 CPU 27, C.A.D. 631 (1956), aff'g, C.D. 1752, 36 Cust.Ct. 46 (1956); Guardian Industries Corporation v. United States, 3 CIT 9 (1982), Slip Op. 82-4 (Jan. 5, 1982). Subheading 9802.00.50, HTSUS, treatment 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, 81 Cust.Ct. 1, C.D. 4755, 455 F.Supp. 618 (1978), aff'd, 66 CPU 77, C.A.D. 1225, 599 F.2d 1015 (1979). We have previously held in Headquarters Ruling Letter 555417 dated January 22, 1990, that bending operations performed on rebars exceeded an alteration and constituted a manufacturing process, as the bending of metal is generally regarded as a forming operation, intended to cause permanent deformation of the material. With regard to the facts you have provided and based on our previous ruling, we are of the opinion that the foreign operations exceed alterations under HTSUS subheading 9802.00.50. The exported stainless steel bars are not complete for their intended use as trim for automobile convertible tops. They must undergo various foreign operations, including a bending process, to manufacture them into finished automotive convertible trim. HOLDING: On the basis of the information submitted, it is our opinion that the foreign operations constitute a process of manufacture and not an alteration, within the meaning of subheading 9802.00.50, HTSUS. Accordingly, the stainless steel trim will not be eligible for the partial duty exemption available under this tariff provision when returned to the U.S. Sincerely, Jerry Laderberg Acting Director Commercial Rulings Division