Applicability of subheading 9802.00.50, HTSUS, to soiledshop towels: 19 CFR 181.64; Article 509

HQ 559654 May 1, 1996 CLA-2 RR:TC:SM 558654 BLS CATEGORY: Classification TARIFF NO.: 9802.00.50 Mr. Robert Noell Cain Customs Brokers 415 Industrial Hildago, TX 78557 RE: Applicability of subheading 9802.00.50, HTSUS, to soiled shop towels: 19 CFR 181.64; Article 509 Dear Mr. Noell: This is in reference to your letter dated January 10, 1996, requesting a ruling regarding the applicability of subheading 9802.00.50, Harmonized Tariff Schedules of the United States(HTSUS), to certain shop towels and other items that will be exported from the U.S. soiled and returned after having been cleaned. FACTS: Ricanna, Inc., plans to export from the U.S. certain shop towels that are dirty with oil, grease and printing fluids which were collected in the U.S. The cleaning process consists of dry-cleaning the items with a solvent. Some towels, according to their end use, also are washed in soap and water and dried before their return to the U.S. It is possible that this process will also be performed on uniforms, dust mats, mop heads and gloves. ISSUE: Whether the returned items will be eligible for duty-free treatment under subheading 9802.00.50, HTSUS, upon return from Mexico. LAW AND ANALYSIS: Articles exported from and returned to the U.S., after having been advanced in value or improved in condition by repairs or alterations in Mexico, may qualify for a duty exemption under HTSUS subheading 9802.00.50, provided the foreign - 2 - 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). Tariff treatment under subheading 9802.00.50, HTSUS, is also precluded where the exported articles are incomplete for their intended use prior to the foreign processing. Articles are entitled to this duty exemption provided the documentary requirements of section 181.64(c), Customs Regulations (19 CFR 181.64(c)), are met. We have previously held that the cleaning and sanitizing of soiled U.S. linens in a Mexican laundry facility qualified as an alteration under subheading 9802.00.50, HTSUS. (Headquarters Ruling Letter (HRL) 221046 dated May 11, 1989.) We reached the same result in HRL 559072 dated June 21, 1995, which involved the laundering or cleaning of wearing apparel in Canada. In that case, we also noted that as the returned items of apparel were advanced in value or improved in condition abroad, they were considered foreign articles pursuant to section 12.130(c), Customs Regulations (19 CFR 12.130(c)), and U.S. Note 2, Subchapter II, Chapter 98, HTSUS. Therefore, upon return from abroad, the items would be subject to all applicable visa requirements and quota restrictions as products of Canada. Under the circumstances, we find that the cleaning process in the present case is an alteration, thereby entitling the textile products to the duty exemption under subheading 9802.00.50, HTSUS. However, as the returned articles are advanced in value or improved in condition in Mexico, they will be subject to all applicable visa and quota restrictions as products of Mexico. (In this regard, we are assuming that the returned articles are all textile items and/or items of apparel.) HOLDING: Soiled shop towels, uniforms, dust mats, mop heads and gloves sent to Mexico to be cleaned will be eligible for the duty exemption under subheading 9802.00.50, HTSUS, upon return to the U.S., upon compliance with the documentary requirements of 19 CFR 181.64(c). The textile items and/or items of apparel will also be subject to applicable visa requirements and quota restrictions as products of Mexico. A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, - 3 - this ruling should be brought to the attention of the Customs officer handling the transaction. Sincerely, John Durant, Director Tariff Classification Appeals Division