HQ 554834: Applicability of partial duty exemption of item 806.20, TSUS, to certain pecan pieces exported for removal of meat

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 554834

                                    May 25, 1988

          CLA-2 CO:R:C:V  554834 DBI

          CATEGORY:  Classification

          TARIFF NO: 9802.00.40, HTSUSA (806.20, TSUS)

          Jack Alsup
          Alsup and Associates
          P.O. Box 125
          Del Rio, Texas  78841

          RE: Applicability of partial duty exemption of item 806.20, TSUS,
          to certain pecan pieces exported for removal of meat

          Dear Mr. Alsup:

                This is in response to your letter of September 16, 1987,
          in which you request a ruling concerning the applicability of
          item 806.20, Tariff Schedules of the United States (TSUS), to
          certain U.S. grown pecan pieces exported to Mexico for removal of
          the meat from the shells.  The removed meat is then returned to
          the U.S. for consumption.

          FACTS:

                You advise that in the U.S., your client will place whole
          U.S. grown pecans (not shelled) in a pecan sheller. The shells
          are cracked and the empty shells and whole meat pieces are
          removed.  You indicate that following the shelling process,
          approximately 20% to 30% of the pecans remain as pecan pieces
          with pieces of the shell and meat still attached.  Your client
          will ship these remaining pieces to Mexico where the meat will be
          hand picked from the shell.  The meat will then be packaged and
          shipped to the U.S. for consumption.

          ISSUE:

                Whether the described pecan pieces, when returned to the
          U.S., will be eligible for the partial exemption from duty
          provided for in item 806.20, TSUS, (9802.00.40, Harmonized Tariff
          Schedule of the United States Annotated (HTSUSA)).

          LAW AND ANALYSIS:

                Item 806.20, TSUS, provides for the assessment of duty on
          the value of repairs or alterations performed on articles
          returned to the U.S. after having been exported to be advanced in













          value or improved in condition by any process of manufacture or
          other means.  However, the application of this tariff provision
          is precluded in circumstances where the operations performed
          abroad destroy the identity of the articles or create new or
          commercially different articles.  See A.F.
          Burstrom v. United States, 44 CCPA 27, C.A.D. 631 (1957);
          Guardian Industries Corporation v. United States, USITR, 3 CIT 9,
          Slip Op 82-4 (Jan. 5, 1982).  Item 806.20, TSUS, treatment also
          is precluded 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.
          Dolliff and Company, Inc. v. United States, 66 CCPA 77, CAD 1225,
          599 F.2d 1015 (1979).

                We have previously held in a ruling dated January 19, 1987
          (HQ 543869) that the processing of eggs by cracking the shells
          and separating various parts of the eggs consisted of operations
          which exceeded the meaning of the term alterations and therefore
          precluded tariff treatment of the returned yolks under the
          provisions of item 806.20, TSUS. In that case we found that the
          returned processed egg yolks constituted new and commercially
          different articles than the exported whole eggs and that this
          process was an intermediate step in the preparation of the
          finished product which could not be characterized as an
          alteration.

                We have also held in a ruling dated June 29, 1977 (HQ
          051909) that the extraction of crab meat from snow crab clusters
          (crab in shell) constituted an operation which created a
          commercially different article and therefore the foreign
          processing of the crab product went beyond the scope of item
          806.20, TSUS, and was not an alteration.

                We believe that the foreign shelling process constitutes an
          operation that exceeds a repair or alteration based on our
          previous rulings.  The pecan pieces that are shipped to Mexico
          are commercially different from the meat that returns.
          Additionally, the pecan pieces are incomplete for their intended
          use and require a further step in the preparation of the finished
          meat product.

          HOLDING:

                On the basis of the information submitted, it is our
          opinion that the Mexican shelling process may not be considered
          an alteration as that term is used in item 806.20, TSUS, and,


















          therefore, precludes tariff treatment of the returned pecan meat
          under the provisions of item 806.20, TSUS.

                                     Sincerely,





                                     John Durant
                                     Director, Commercial
                                     Rulings Division