Internal Advice No. 41/28 concerning the applicability of subheading 9802.00.50, HTSUS, to certain glass mugs etched and tempered abroad

HQ W555250 March 13, 1989 CLA-2-CO: R:C W555250 RA CATEGORY: Classification TARIFF NO: 9802.0C.50 (formerly 806.20, TSUS) District Director of Customs Thomas P. O'Neill, Jr. P Federal Building 10 Causeway Street Easton, Massachusetts 02222-1059 RE: Internal Advice No. 41/28 concerning the applicability of subheading 9802.00.50, HTSUS, to certain glass mugs etched and tempered abroad Dear Sir: This ruling is in re response to your memorandum of August 1, 1988, requesting internal a vice as to whether the etching and special tempering of glass mugs abroad constitute alterations, within the meaning of item 806.20, Tariff Schedules of the United States (TSUS) (now subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS)). FACTS: Glass mugs made in the United States are exported to France where they are etched or cut and also specially tempered. The cost of producing the annealed mug in the United States is 34 cents, while the costs of etching and tempering are 45 and 5 cents, respectively, for a total foreign processing cost of 50 cents per mug. ISSUE: Does the etching and tempering of the mugs abroad exceed an alteration under subheading 9802.00.50, HTSUS? LAW AND ANALYSIS: Under subheading 98C2.00.SO, HTSUS, articles exported for repairs or alterations may be returned to the U.S. with duty only on the value of the repairs or alteration. However, the application of this tariff provision is precluded in circumstances here the operations performed abroad destroy the identity of the articles or create new or commercially different - 2 - articles. See, A.P. Burstrom v. United States, 44 CCPA 27, C.A.D. 631 (1957); Guardian Industries Corporation v. United States, 3 CIT 9 (1982). In the instant case, the foreign processing represents the bulk of the value of the finished articles and is sufficient to effect a fundamental change in their nature with substantial commercial significance and increased marketability. The etchings and special tempering constitute complicated manufacturing processes which create commercially different products with distinct new characteristics and enhanced appearance and durability features. The significant changes as a result of the foreign processing clearly exceed alterations under subheading 9802.00.50, HTSUS. HOLDING: The processing in France by etching and special tempering amounts to such substantial changes in the imported merchandise as to preclude tariff treatment as merely altered articles under subheading 9802.00.50, HTSUS. Sincerely, John Durant, Director Commercial Rulings Division