HQ 555007: Applicability of subheading 9802.00.50, HTSUS, to certain automotive compressors repaired abroad

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 555007

                                     March 20, 1989

            CLA-2-CO:R:C  555007 RA

            CATEGORY: Classification

            TARIFF NO: 9802.00.50, HTSUS

            Mr. Bill McKeown
            McKeown Customs Brokers
            1809 Farragut Street
            Laredo, Texas 78040-0909

            RE:  Applicability of subheading 9802.00.50, HTSUS, to
                 certain automotive compressors repaired abroad

            Dear Sir:

                 This is in response to your letter of April 25, 1988, in
            which you inquire on behalf of Smith & Sons, Inc. regarding the
            applicability of the repair provision in subheading 9802.00.50,
            Harmonized Tariff Schedule of the United States (HTSUS), to
            automotive compressors which are subjected to certain repair
            operations in Mexico.

            FACTS:

                 Your client is sending broken-down automotive compressors
            to a repair shop in Mexico where they are disassembled into
            their constituent parts, which are then sorted, placed into
            large vats, cleaned in acid, and sometimes further cleaned with
            sandpaper and a chemical solution.  Unrepairable parts, which
            could vary from unit to unit, are discarded and replaced with
            new parts.  The cleaned components are then reassembled with any
            new parts, and the reassembled compressors are tested, painted,
            packed, and shipped to the U.S.

            ISSUE:

                 Whether the repaired automotive compressors are entitled to
            the partial duty exemption provided for in subheading
            9802.00.50, HTSUS, upon their return to the U.S.

            LAW AND ANALYSIS:

                 Effective January 1, 1989, the HTSUS superseded and
            replaced the Tariff Schedules of the United States (TSUS).  Item
            806.20, TSUS, was carried over into the HTSUS, in part, as
            subheading 9802.00.50.  Subheading 9802.00.50, HTSUS, provides













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            for the assessment of duty on the value of repairs or
            alterations performed on articles sent abroad for that purpose.
            However, an article exported for repairs may not receive the
            benefits of this tariff provision upon its return where the
            foreign processing destroys the identity of the exported article
            or creates a new and different article.  Press Wireless, Inc. v.
            United States, 6 Cust. Ct. 102, C.D. 438 (1941).  In rulings
            554568 and 554539 (both dated August 25, 1987; copies enclosed)
            we held that where certain defective articles are exported and
            disassembled into multiple parts, and these parts are stored in
            separate bins or containers, cleaned, replaced with new parts,
            where necessary, and then reassembled, the resulting articles
            are dutiable on their total cost or value.  We stated that the
            complete disassembly, separate storage of parts, and reassembly
            into new and different units constitute operations beyond
            repairs which not only destroy the identity of the exported
            units but result in new and different manufactured articles.  We
            believe that the holdings in these rulings are controlling in
            regard to repair operation described in your letter.

                 We are enclosing for your information a copy of ruling
            555117 dated December 22, 1988, in which we held that
            alternators repaired abroad qualify for subheading 9802.00.50,
            HTSUS, treatment because the essential identity of the articles
            is maintained throughout the foreign repair process.

            HOLDING:

                 Where articles are exported for repairs and the operations
            performed abroad consist of disassembly, sorting of parts into
            different bins, cleaning, and reassembly into new units which
            cannot be identified as the exported articles in a repaired
            condition, the tariff treatment provided for in subheading
            9802.00.50, HTSUS, is inapplicable.

                                  Sincerely,




                                  John Durant, Director
                                  Commercial Rulings Division


            Enclosures