HQ 555046: Applicability of partial duty exemption of item 806.20, TSUS, to certain copiers exported to Mexico to be cleaned and subassemblies overhauled

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 555046

                                   August 5, 1988


          CLA-2  CO:R:C:V   555046 DBI

          CATEGORY:  Classification

          TARIFF NO.:  9802.00.40; 806.20

          Mr. John P. Donohue
          Donohue and Donohue
          421 Chestnut Street, Fifth Floor
          Philadelphia, PA 19106

               RE:      Applicability of partial duty exemption of item
                        806.20, TSUS, to certain copiers exported to Mexico
                        to be cleaned and subassemblies overhauled

          Dear Mr. Donohue:

               This is in response to your letters of March 24 and June 6,
          1988, (your file 519-01), in which you request a ruling
          concerning the applicability of item 806.20, Tariff Schedules of
          the United States (TSUS), to certain copier-duplicators
          manufactured in the U.S. and exported to Mexico for cleaning and
          removal of subassemblies for overhaul.

          FACTS:

               You advise that your client will ship U.S.-made copiers to
          Mexico where they will be cleaned and all major subassemblies
          will be examined in detail to determine configuration and need
          for repairs or alteration.  If necessary, subassemblies will be
          removed from the mainframe for individual overhaul.  You indicate
          that the following specific procedures will be performed:

          I.   Cabinet

                 A.  Remove all cabinet panels

                 B.  Remove material from logic molding cover

                 C.  Repaint all cabinet panels

                 D.  Install a new top cover assembly with built-in stacker

















                                        - 2 -

          II.  Logic and Control Assembly

                 A.  Replace memory board, CPU (central processing unit)
                     board, and Operator Control Board

                 B.  Update the input and output boards by soldering in new
                     components

                 C.  Replace the EPROM (erasable programmable read only
                     memory) on the zoom board

                 D.  Replace two fans

          II.  Feeder Upgrade

                 A.  Remove and disassemble the feeder unit

                 B.  Modify copier frame to accept new feeder configuration

                 C.  Reassemble the feeder and add new document positioner
                     feature

          IV.    A.  Remove 15 volt supply from fuser board

                 B.  Update wire harnesses

                 C.  Place one additional relay on relay board

               Following the above-described procedures, copier assemblies,
          parts and cabinet panels previously removed are fitted to the
          mainframe.

               In a telephone conversation dated June 29, 1988, an employee
          of your client spoke with a member of my staff and stated that
          the software on the memory board had to be reprogrammed in order
          to accommodate the new paper feeder and shuttle tray
          capabilities.  You also indicated that the zoom board would be
          replaced in order to change physical mechanisms on the outside of
          the copier.  Previously, the machine had three buttons, each
          pressed once to control reduction capabilities.  Following
          replacement, the copier will have one button to be pressed three
          times.  You stated that only the physical structure of the
          machine would change and not the reduction capabilities.  You
          also stated that none of the new memory that resulted from the
          reprogramming would change the copier's capabilities, but rather,
          the new memory would only make the new physical structures
          possible, i.e., feeders, trays and buttons.















                                        - 3 -

          ISSUE:

               Whether the described copiers, when returned to the U.S.,
          will be eligible for the partial exemption from duty in item
          806.20, TSUS, (9802.00.40, Harmonized Tariff Schedule of the
          United States (HTSUS))?

          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).

               We have previously held that the reprogramming of EPROMs and
          the central processing unit of a video game resulted in the
          creation of a new product which had a commercial importance
          significantly different from what was exported and, therefore,
          constituted more than a repair or alteration within the meaning
          of item 806.20, TSUS.  C.S.D. 84-8, 18 Cust. Bull. 844 (1984).

               We have also held that the rationale of the Court of
          International Trade in Data General Corporation v. United States,
          4 CIT 182, Slip Op. 82-93, (October 29, 1982), applied to support
          the opinion that the reprogramming of an EPROM resulted in a new
          and different article of commerce.  C.S.D. 84-85, 18 Cust. Bull.
          1044 (1984).  In Data General, the court held that the
          programming of an imported PROM (programmable read only memory)
          in the U.S. constituted a substantial transformation so that the
          resulting programmed device became a product of the U.S. for the
          purposes of item 807.00, TSUS.  The court specifically found that
          a PROM was a recognized article of commerce which was sold for
          the purpose of being programmed and that a programmed PROM was a
          different article having as its essence the pattern of
          interconnections or stored memory which was established by
          programming.  We held in our ruling that the essence of an
          integrated circuit memory storage device was established by
          programming in both a PROM and an EPROM and, therefore, the
          reprogramming of an EPROM resulted in a new and different article
          of commerce.















                                        - 4 -

               Based on our previous rulings, we believe that the
          reprogramming of the memory board and EPROM constitute operations
          that exceed a repair or alteration.

               In support of our opinion we note that the returned copiers
          not only have such enhancements as a feeder, offset stacker and
          enhanced control panel, but these copiers also have a new model
          number, all of which contribute to the creation of a new and
          commercially different article.  For these reasons as well, the
          operations performed abroad exceed an alteration or repair.

          HOLDING:

               On the basis of the information submitted, it is our opinion
          that the reprogramming of the memory board and EPROM and the
          addition of the feeder, stacker and enhanced control panel may
          not be considered an alteration as that term in used in item
          806.20, TSUS.  Therefore, tariff treatment of the returned
          copiers under the provisions of item 806.20, TSUS, is precluded.

                                     Sincerely,




                                     John Durant, Director
                                     Commercial Rulings Division



































          1cc: CO:R:C:V:DIZZO:LDC:7/21/88































































                                 Mr. John P. Donohue
                                 Donohue and Donohue
                                 421 Chestnut Street, Fifth Floor
                                 Philadelphia, PA 19106