xported from the U.S. to Japan in bulk and injected into engines, transmissions and other assemblies in foreign-made vehicles. When the vehicles are subsequently imported into the U.S., you claim that the U.S.-origin fluids should be entitled to classification under subheading 9801.00.10, HTSUS, because they have not been advanced in value or improved in condition while abroad.

~<eL~,~> D E PART Mu .s. w~s .,. GtocuE N s TOT 0 Fm sTNHs E, E~ .c.RVIC ET R EAS U RY HQ 555661 9 JAN 1991 CLA-2 CO:R:C 555661 RA CATEGORY: Classification TARIFF NO.: 9801.00.10 Mr. Frank M. Murphy Corporate Technical Advisor John V. Carr & Son Inc. P.O. Box 33479 Detroit, Michigan 48232-5479 Applicability of subheading 9801.00.10, HTSUS, to engine fluids contained in imported foreign-made vehicles Dear Mr. Murphy: This is in response to your letter dated April 13, 1990, to the Regional Commissioner of Customs, New York Region, requesting a ruling on the eligibility for duty-free treatment under subheading 9801.00.10, Harmonized Tariff Schedule of the United States (HTSUS), of engine fluids returned to the U.S. in foreign-built vehicles. Your letter was forwarded to this office for the preparation of a response. We regret the delay in responding. FACTS: Engine fluids of U.S. origin, such as automatic transmission fluid, manual transmission fluid, and gasoline, are exported from the U.S. to Japan in bulk and injected into engines, transmissions and other assemblies in foreign-made vehicles. When the vehicles are subsequently imported into the U.S., you claim that the U.S.-origin fluids should be entitled to classification under subheading 9801.00.10, HTSUS, because they have not been advanced in value or improved in condition while abroad. ISSUE: Can the returned engine fluids be treated as American goods returned and entered free of duty under subheading 9801.00.10, HTSUS? LAW AND ANALYSIS: Subheading 9801.00.10, HTSUS, provides for the free entry of U.S. products exported and returned without having been advanced in value or improved in condition by any process of - 2 - manufacture or other means while abroad. The courts have held that the repackaging of U.S.-made articles abroad will not preclude classification of the articles under this tariff provision when there is no advancement in value or improvement in condition of the articles themselves (apart from their containers). See U.S.v. John V. Carr & Son, Inc., 69 Cust. Ct. 78, C.D. 4377 (1972), aff'd 61 CCPA 52, C.A.D. 1118 (1974) . In Superscope, Inc. v. United States, 13 CIT __, 727 F. Supp. 629 (CIT 1989), the court held that certain glass panels of U.S. origin that were exported, repacked abroad with certain foreign components, and returned to the U.S. as part of unassembled audio cabinets, were entitled to duty-free entry under item 800.00, Tariff Schedules of the United States (TSUS) (now subheading 9801.00.10, HTSUS). The court reasoned that the U.S. panel portion of the imported merchandise was "not 'advanced in value or improved in condition...while abroad' but [was] merely repacked." The court emphasized that the U.S.-origin panels were not "assembled into" the imported merchandise but were only wrapped in cardboard and placed into a package with other components. In the cases cited above, the courts held that U.S.-made products were being returned after merely being repacked in different cartons or containers without any change in the products' value or condition. In the case of gasoline or other fluids injected into foreign-made vehicles, no packaging into usual containers is involved. The fluids are incorporated into engines, transmissions or other vehicle assemblies where they function as a lubricant and an energy source. The fluids undergo chemical and physical changes and will ultimately be consumed. Moreover, it is our opinion that there is no authority for treating the fluids as separate tariff entities from the vehicles into which they are incorporated. In determining whether merchandise is entitled to classification as American goods returned, "[t]he first question to be determined is whether the imported merchandise is the merchandise that was exported." Upjohn Company v. United States, 9 CIT 600, 605, 623 F.Supp. 1281, 1285 (1985). In the instant case, U.S.origin engine fluids are exported and foreign-made vehicles containing the fluids are subsequently imported. Therefore, for tariff purposes, the fluids are considered part of the vehicles into which they are incorporated. - 3 - HOLDING: U.S.-origin engine fluids injected into foreign-made vehicles abroad are not entitled to separate tariff treatment as American goods returned under subheading 9801.00.10, HTSUS, when returned to the U.S. as part of the vehicles. Sincerely,/"l //I ! '~~ Dhhnt7~'Direct(r /C mmercial Rulings Division