Applicability of the alterations or repairs provision in subheading 9802.00.50, HTSUS, to potato starch exported to Canada for cleaning and return.

HQ W555424 October 3, 1989 CLA-2-CO:R:C W555424 RA CATEGORY: Classification TARIFF NO.: 9802.00.50, HTSUS Mr. Peter Pirie Pirie Potato Co. Ltd. Grand Falls, N.B. Canada RE: Applicability of the alterations or repairs provision in subheading 9802.00.50, HTSUS, to potato starch exported to Canada for cleaning and return. Dear Mr. Pirie: This is in response to your letter of May 9, 1989, addressed to our Portland, Maine office and referred to us for reply on the dutiable status of potato starch made in the United States and sent to Canada for refining or cleaning and returned. FACTS: Potato starch in powder form which contains about 1 percent of impurities, consisting of potato peel and hard starch clumps, is shipped to Canada where it is refined by mechanical means such as screening in order to remove the impurities. This cleaning operation does not destroy the identity of the exported starch or make it into a new and different article. ISSUE: Does the processing in Canada amount to an alteration which will entitle the returned starch to a duty allowance under the provisions of subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS)? LAW AND ANALYSIS: Subheading 9802.00.50, HTSUS, provides for a partial duty exemption for articles returned to the U.S. after having been exported for alterations. The articles must be completely finished when export from the U.S. and not undergo any  - 2 - intermediate processing operations to finish them while abroad. This provision allows the duty to be assessed only on the cost of foreign processing. However, its application is precluded where the processing results in commercially different articles. Dolliff & Company, Inc. v. U.S., 66 CCPA 77, C.A.D. 1225, 599 F 2nd 1015 (1979). The potato starch returned from Canada is the same article exported from the U.S. except for the impurities mechanically removed by the Canadian refining. The starch is exported as a powder and returned in the same form without any changed properties, uses, or characteristics. The removal of unwanted substances by a mechanical process which does not physically or chemically change the exported product is an operation within the scope of an alteration. Wilbur G. Hallauer v. U.S., 40 CCPA 197, C.A.D. 518 (1953). Accordingly, the described processing of the potato starch in Canada constitutes an alteration under the provisions of subheading 9802.00.50, HTSUS, upon compliance with section 10.8, Customs Regulations (19 CFR 10.8, copy enclosed). HOLDING: he foreign operation of removing a small amount of unwanted substances contained in exported potato starch, which operation was performed by mechanical means without changing the nature of the starch, qualifies as an alteration under subheading 9802.00.50, HTSUS. Sincerely, John Durant, Director Commercial Rulings Division