Applicability of duty exemption under HTSUS subheading 9802.00.50 to Irganox 1076FF, B-225FF, B-835FF; Tinuvin 770FF; powdered/solid form; granular form; antioxidant; stabilizer; mechanical compaction.

HQ 557007 April 26, 1993 CLA-2 CO:R:C:S 557007 MLR CATEGORY: Classification TARIFF NO.: 9802.00.50 District Director 477 Michigan Ave. Detroit, Michigan 48226 Attn: Daniel Churan, Import Specialist RE: Applicability of duty exemption under HTSUS subheading 9802.00.50 to Irganox 1076FF, B-225FF, B-835FF; Tinuvin 770FF; powdered/solid form; granular form; antioxidant; stabilizer; mechanical compaction. Dear Sir: This is in reference to a ruling request we received from CIBA-GEIGY Corporation, dated November 9, 1992, concerning the eligibility of Irganox 1076FF, Irganox B-225FF, Irganox B-835FF, and Tinuvin 770FF for a partial duty exemption under subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS). FACTS: CIBA-GEIGY exports Irganox 1076, Irganox B-225, Irganox B- 835, and Tinuvin 770, all manufactured in the U.S., to CIBA- GEIGY Canada. In Canada, the products which are either in powdered form (Irganox 1076 and Tinuvin 770), or in solid form (Irganox B-225 and B-835) are processed into granular form by a mechanical compaction process. The product is fed into a roller compaction unit which consists of two cooled cylindrical rollers, where it is compressed between the rollers under high pressure into flakes. The flakes are then reduced in size by a flake breaker and then separated to achieve the final desired granular size. It is stated that there is no change in the chemical composition of the products other than physical, and their use is interchangeable. Upon completion of the processing, the products are returned to the U.S. with the suffix of "FF" (meaning "Free Flow") added to their description The products' composition and use are as follows: 1. Irganox 1076 and Irganox 1076FF are both composed of Octadecyl 3,5-di-tert-butyl-4-hydrocinnamate, Cas. Reg. #2082-79-3, and are used interchangeably as an antioxidant and thermal stabilizer in rubber and plastic applications. 2. Irganox B-225 and Irganox B-225FF, are both composed of a mixture of Tetrakis(methylene(3,5-di-tert-butyl-4- hydroxyhydrocinnamate)methane, Cas. Reg. #6683-19-8, and Tris(2,4-di-tert-butylphenyl) phosphite, Cas. Reg. #31570- 04-4, and are used as an antioxidant/stabilizer. 3. Irganox B-835 and Irganox B-835FF, are both composed of a mixture of Thiodiethylene Bis(3,5-di-tert-butyl-4- hydroxyhydrocinnamate), Cas. Reg. #41484-35-9, and Distearyl-Beta,Beta'-Thiopropionate, Cas. Reg. #693-36-7, and are used as a stabilizer. 4. Tinuvin 770 and Tinuvin 770FF, are both composed of Bis(2,2,6,6-tetramethyl-4-piperidyl)sebacate, Cas. Reg. #52829-07-9, and are used as a hindered amine light stabilizer. ISSUE: Whether the compaction process performed on the U.S.-origin products in Canada, constitutes an alteration, thereby entitling them to the partial duty exemption available under subheading 9802.00.50, HTSUS, when returned to the U.S. LAW AND ANALYSIS: Articles returned to the United States 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 subheading 9802.00.50, HTSUS, provided the foreign operation does not destroy the identity of the exported articles or create new or commercially different articles through a process of manufacture. See A.F. Burstrom v. United States, 44 CCPA 27, C.A.D. 631 (1956), aff'g C.D. 1752, 36 Cust. Ct. 46 (1956); Guardian Industries Corp. v. United States, 3 CIT 9 (1982). Accordingly, entitlement to this tariff treatment is precluded where the exported articles are incomplete for their intended purpose prior to the foreign processing and the foreign processing operation is a necessary step in the preparation or manufacture of finished articles. Dolliff & Company, Inc. v. United States, 455 F. Supp. 618 (CIT 1978), aff'd, 599 F.2d 1015 (Fed. Cir. 1979). Articles entitled to this partial duty exemption are dutiable only upon the cost or value of the foreign repairs or alterations when returned to the U.S., provided the documentary requirements of section 10.8, Customs Regulations (19 CFR 10.8), are satisfied. We have held in Headquarters Ruling Letter (HRL) 555740 dated May 28, 1991, that formulation and granulation operations performed on a herbicide in France to eliminate the product's powdery consistency which made the chemical difficult to use, constituted an acceptable alteration within the meaning of subheading 9802.00.50, HTSUS. We found that the product in its condition upon exportation was complete for its intended use as a herbicide, and, in fact, could have been marketed within the agricultural industry in that condition. Furthermore, the formulation process abroad did not alter the chemical composition or identity of the herbicide, nor did it significantly change the quality or character of the product inasmuch as the herbicide retained its weed killing properties. See also HRL 556320 dated February 3, 1992, (holding that formulation and granulation operations performed on U.S.-origin herbicide in France constituted an acceptable alteration within the meaning of subheading 9802.00.50, HTSUS), and HRL 085216 dated October 27, 1989, (where the sifting, magnetic removal of tramp iron, and repackaging of U.S. raw and refined sugar in Canada, constituted an alteration under this subheading). In HRL 556616 dated June 16, 1992, a herbicide in a water dispersible granule was exported to France for incorporation into water-soluble film which is a highly specialized plastic, designed for compatibility with agricultural chemical and applications technology. It was held that the incorporation of the U.S.-origin herbicide in water-soluble film in France, constituted an acceptable alteration within the meaning of subheading 9802.00.50, HTSUS, because this process did not change the chemical structure or use of the product, the identity and properties of the herbicide remained intact, and the U.S.- manufactured herbicide was sold and could be used in its pre- processed form. [In response to a question posed by your office, whether the products at issue in this case may qualify for the duty exemption under subheading 9801.00.10, HTSUS (which provides for the free entry of U.S. products that are exported and returned without having been advanced in value or improved in condition by any means while abroad), we note that the herbicide considered in HRL 556616, did not qualify for this duty exemption when returned from France. It was stated that as a result of the operation, the plastic pouch became an integral part of the herbicide and the dispersal process; and the incorporation of the herbicide in pre-measured, sealed, water-soluble packets enhanced the value and condition of the herbicide by facilitating its use.] With regard to the facts presented and consistent with the cases above, we are of the opinion that the compaction process which converts the products from their powdered/solid form into granular form, constitutes an acceptable alteration within the meaning of subheading 9802.00.50, HTSUS. As in HRL 555740, the processes performed in Canada do not change the chemical composition of the products, and the products, before and after compaction, are used interchangeably. HOLDING: On the basis of the information submitted, we find that the compaction process which converts the products from powdered/solid form into granular form in Canada, constitutes an alteration within the meaning of subheading 9802.00.50, HTSUS. Therefore, the products are entitled to classification under this tariff provision with duty to be assessed only on the cost or value of the operations performed in Canada, upon compliance with the documentary requirements of 19 CFR 10.8. This ruling affects only those entries for which liquidation is not final. Sincerely, John Durant, Director Commercial Rulings Division