HQ 554942: Applicability of partial duty exemption to certain glass bulbs exported to Mexico for blue dip painting

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                                      HQ 554942

                                   August 5, 1988


          CLA-2 CO:R:C:V  554942 CW

          CATEGORY:  Classification

          TARIFF NO.:  9802.00.40, HTSUS (806.20, TSUS)

          Paul E. Linet, Esq.
          Aresty, Levin, Orenstein & Wernick
          World Trade Center, Suite 104
          Boston, Massachusetts 02210

          RE:  Applicability of partial duty exemption to certain glass
               bulbs exported to Mexico for blue dip painting

          Dear Mr. Linet:

               This is in response to your letter of February 26, 1988, and
          your follow-up letter of July 18, 1988, requesting a ruling on
          behalf of GTE Products Corp./Sylvania Lighting ("importer") that
          certain glass bulbs (also described as glass tubes) of U.S.
          origin to be subjected to a blue dip painting operation in Mexico
          are entitled to classification under item 806.20, Tariff
          Schedules of the United States (TSUS), upon their return to the
          U.S.  You also request a determination concerning the duty rate
          applicable to the imported glass bulbs.  Samples have been
          submitted for examination.

          FACTS:

               You state that your client plans to export U.S. manufactured
          glass bulbs to its related facility in Mexico where the closed
          ends of the bulbs will be mechanically dipped into a mixture of
          paint thinner and medium blue paint.  The dipped bulbs are oven
          dried, cooled, and then packed for return to the U.S.  After
          their importation, the bulbs are processed into finished
          projector lamps.  You advise that the blue coating operation
          serves a cosmetic or marketing function in that it provides a
          recognizable marketing trait that is synonymous with the
          importer's "blue dot" lamps.  Moreover, you state that the blue
          coating acts as a heat retardant and light shield and that lamps
          with blue-dipped bulbs are specifically used in projection
          equipment where the heat or light emitted from the top of the
          lamp should be shielded.
















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               Information submitted with your request indicates that
          approximately 40 percent of the bulbs used by your client to make
          finished projector lamps are purchased from unrelated U.S.
          sources, while the remainder is produced by the importer.  Of the
          70 projection lamp types manufactured and sold by your client, 50
          have painted (blue-dipped) glass bulbs and 20 have unpainted
          bulbs.  The samples provided to us consist of two different
          types of bulbs, one painted and one unpainted, and the finished
          lamps made from each type of bulb.  Concerning the interchange-
          ability of painted and unpainted lamps, you advise that the blue
          coated lamp may "be substituted for an uncoated lamp, as long as
          a sufficient amount of light is available."

               In support of your position that the blue coating of the
          bulbs' tips in Mexico constitutes an alteration within the
          meaning of item 806.20, TSUS, you refer us to the decisions in
          Amity Fabrics, Inc. v. U.S., 43 Cust. Ct. 64, C.D. 21204 (1959),
          and Royal Bead Novelty Co., Inc. v. U.S., 68 Cust. Ct. 154, C.D.
          4353 (1972).

               It is your opinion that the imported glass bulbs are
          provided for in the TSUS under item 547.31, TSUS, and in the
          proposed Harmonized Tariff Schedule of the United States (HTSUS)
          under subheading 7011.10.10, with duty at the rate of 3.7 percent
          ad valorem under both provisions.

          ISSUE:

               Whether the blue-dipped bulbs are eligible for the partial
          exemption from duty provided for in item 806.20, TSUS (subheading
          9802.00.40, HTSUS), and whether, for duty purposes, the bulbs are
          properly classifiable in item 547.31, TSUS, and subheading
          7011.10.10, HTSUS.

          LAW AND ANALYSIS:

               Item 806.20, TSUS, provides for the assessment of duty on
          the value of repairs or alterations performed on articles that
          are sent abroad for that purpose.  However, the application of
          this tariff provision is precluded where the operations performed
          abroad create new or different articles of commerce, or where the
          exported articles are incomplete for their intended use and the
          foreign processing operation is a necessary step in the
          preparation or manufacture of finished articles.  See Guardian
          Industries Corp. v. United States, USITR, 3 CIT 9 (1982), and
          Dolliff & Company, Inc. v. United States, 66 CCPA 77, C.A.D. 1225
          (1979).

               In the Amity Fabrics case, which you cite in your ruling
          request, the Customs Court held that fabric which was exported to












                                        - 3 -

          be redyed a different color qualified for item 806.20, TSUS,
          treatment upon its return to the U.S.  The court stated that:

               ...the identity of the goods was not lost or
               destroyed by the dyeing process; no new article
               was created; there was no change in the character,
               quality, texture, or use of the merchandise; it
               was merely changed in color.

          Using essentially the same reasoning, the court in the Royal Bead
          case, which you also cite, held that glass beads which were
          exported for the application of a half coating of "Aurora
          Borealis" to impart a luster effect were entitled to
          classification under item 806.20, TSUS.  In concluding that
          "beads went out and beads came back," the court noted that the
          "sole change was in the finish in that the imported beads now
          possessed a rainbow-like luster."

               In the Dolliff case, certain greige goods were exported to
          Canada where they were subjected to various operations consisting
          of heat-setting, chemical scouring, dyeing, and a second heat-
          setting.  The fabric was returned to the U.S. as finished fabric
          suitable for manufacture into curtains.  The court concluded that
          item 806.20, TSUS, was inapplicable to the returned fabric for
          the reason that:

               ...repairs and alterations are made to completed
               articles and do not include intermediate pro-
               cessing operations which are performed as a
               matter of course in the preparation or the
               manufacture of finished articles.  In the
               instant situation, the operations performed in
               Canada comprise further processing steps which
               are performed on unfinished goods which lead to
               completed articles, i.e., the finished fabrics,
               and, therefore, the processing cannot be consid-
               ered alterations.

               It is our understanding from the information you have
          provided in this case that the safe and efficient utilization of
          certain projection equipment requires the use of lamps with
          painted tips so as to shield the equipment and/or film from the
          heat or light emitted from the top of the lamp.  Other projection
          equipment is specifically designed to use uncoated lamps.  Thus,
          while in some cases painted lamps may be substituted for
          unpainted lamps in projection equipment designed for the latter,
          the reverse does not appear to be true for equipment designed for
          painted lamps.  Under these circumstances, it is clear that the
          blue coating of the glass bulbs is a necessary step in the













                                        - 4 -

          production of finished blue-dipped bulbs, thereby enabling them
          to be used (as part of projection lamps) in projection equipment
          specifically requiring painted lamps.

               Therefore, applying the Dolliff criteria to this case, we
          believe that the exported bulbs are not finished articles since
          they are incomplete and unsuitable for their intended use prior
          to the foreign painting operation.  This is in contrast to the
          fabric in Amity Fabrics and the beads in Royal Bead which were
          entirely capable of being used for their intended purposes at the
          time of exportation.

               With respect to the tariff classification of the imported
          blue-dipped glass bulbs, it is our opinion that the bulbs are
          classifiable in item 547.31, TSUS, as "Glass envelopes (including
          bulbs and tubes), without fittings, designed for electric lamps,
          vacuum tubes, or other electrical devices:  Bulbs for
          incandescent lamps," with duty at the rate of 3.7 percent ad
          valorem.

               Under the proposed HTSUS, the projector bulbs are
          classifiable in subheading 7011.10.10, as "Glass envelopes
          (including bulbs and tubes), open, and glass parts thereof,
          without fittings, for electric lamps, ...or the like:  For
          Electric lighting:  Bulbs for incandescent lamps," at a duty of
          3.7 percent ad valorem.

               This classification represents the present position of the
          Customs Service regarding the dutiable status of the merchandise
          under the proposed HTSUS.  If there are changes before enactment,
          this advice may not continue to be applicable.

          HOLDING:

               On the basis of the information presented, it is our opinion
          that the subject glass bulbs are not finished articles at the
          time of exportation and, therefore, the imported blue-dipped
          bulbs are not eligible for item 806.20, TSUS, treatment.

               The imported glass bulbs are classifiable in item 547.31,
          TSUS, and in subheading 7011.10.10, HTSUS.

                                     Sincerely,




                                     John Durant
                                     Director, Commercial
                                     Rulings Division