HQ 555021: Applicability of partial duty exemption of item 806.20, TSUS, to socks exported to Taiwan for silk screening

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 555021

                                    July 1, 1988

          CLA-2  CO:R:C:V  555021 DBI

          CATEGORY:  Classification

          TARIFF NO.:  9802.00.40; 806.20

          Mr. William Brady
          Salamander
          220-C Benito Avenue
          Santa Cruz, CA  95062

          RE:   Applicability of partial duty exemption of item 806.20,
                TSUS, to socks exported to Taiwan for silk screening

          Dear Mr. Brady:

                This is in response to your letter of May 10, 1988, in
          which you request a ruling concerning the applicability of item
          806.20, Tariff Schedules of the United States (TSUS), to socks
          made in the U.S., exported to Taiwan for silk screening, and then
          returned to the U.S. for sale.  You also inquire as to the
          applicability of quota and visa requirements of the returned
          socks.  A sample has been submitted for examination.

          FACTS:

                You state that the socks are made in the U.S. of 80% cotton
          and 20% nylon fibers and that your company plans to ship them to
          Taiwan to silk screen a design onto the socks. The socks are
          valued at 80 cents per pair and the silk screening that will be
          done in Taiwan will be valued at 15 cents per pair.

          ISSUE:

                Whether U.S.-made socks which are exported to Taiwan for
          silk screening will be eligible for the partial exemption from
          duty provided for in item 806.20, TSUS, and whether these socks
          will be subject to any quota or visa requirements upon their
          return to the U.S.

          LAW AND ANALYSIS:

                Generally, all merchandise imported into the United States
          is subject to duty on full value and total quantity unless
          specifically exempted.  The provisions of law affording American
          goods returned a full or partial exemption from duty are found in
          items 800.00 through 807.00, Tariff Schedules of the United
          States (TSUS).












                                        - 2 -

                Item 806.20, TSUS, provides for the assessment of duty on
          the value of repairs or alterations 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 is also 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 December 10, 1986
          (554371) that certain U.S. sweatshirts, hand-painted abroad and
          returned to the U.S., were not eligible for item 806.20, TSUS,
          treatment because the hand-painting was more than a mere
          alteration.  We stated that the foreign hand-painting created a
          different article of commerce and constituted a finishing step in
          the total process of producing the hand-painted sweatshirts.

                With regard to the facts you have provided, based on our
          previous ruling, we believe that the foreign silk screening
          process constitutes an operation that exceeds an alteration.
          Although garments may be worn whether a design is imprinted by
          silk screening or not, silk screening, like printing and hand-
          painting, is considered neither a repair nor an alteration under
          the provisions of item 806.20, TSUS.  Socks which have a design
          as a result of a silk screening process are different from socks
          without such a design, and, as such, the foreign silk screening
          process has created a different article of commerce.
          Furthermore, the silk screening process constitutes a finishing
          step in the manufacture of the socks.

                In response to your inquiry about the applicability of
          quota and visa requirements to the socks, we refer you to section
          12.130(c), Customs Regulations (19 CFR 12.130(c)), which states
          the following:

                "Headnote 2, Part 1, Schedule 8, TSUS, provides that any
                product of the U.S. which is returned after having been
                advanced in value or improved in condition abroad, or
                assembled abroad, shall be a foreign article for the
                purposes of the Tariff Act of 1930, as amended.  In order
                to have a single definition of the term 'product of' and,
                therefore, a single country of origin for a textile or
                textile product, notwithstanding paragraph (b), merchandise
                which falls within the purview of Headnote 2, Part 1,
                Schedule 8, TSUS, may not, upon its return to the U.S., be
                considered a product of the U.S."








                                        - 3 -

                Therefore, under section 12.130(c), the socks will not be
          considered a product of the U.S. and will be subject to all
          applicable quota and visa requirements.

          HOLDING:

                On the basis of information and sample submitted, it is our
          opinion that the foreign silk screening 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
          goods under the provision of item 806.20, TSUS.

                                     Sincerely,




                                     John Durant
                                     Director, Commercial
                                     Ruling Division










































          1cc: CO:R:C:V:DIZZO:LDC:6/27/88































































                                  Mr. William Brady
                                  Slamander
                                  220-C Benito Avenue
                                  Santa Cruz, CA 95062