HQ 555124: Applicability of partial duty exemption under TSUS item 806.20 to certain fabric processed in Canada

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 555124

                                  November 1, 1988

          CLA-2  CO:R:C:V  555124 GRV

          CATEGORY:  CLASSIFICATION

          TARIFF NO:  9802.00.40; 806.20

          Mr. Douglas A. Brook
          Northern Textile Association
          1620 I St., N.W., Suite 716
          Washington, D.C.  20006

          RE:  Applicability of partial duty exemption under TSUS item
               806.20 to certain fabric processed in Canada

          Dear Mr. Brook:

              This is in response to your letter of September 15, 1988, on
          behalf of Eastland Woolen Mills, Inc. (importer), requesting a
          ruling on the applicability of item 806.20, Tariff Schedules of
          the United States (TSUS), to certain fabric to be imported from
          Canada after a brushing process.  Samples of both the fabric to
          be exported to Canada and the brushed fabric to be returned to
          the U.S. were submitted for examination.

          FACTS:

              You state that the fabric to be exported to Canada is a fin-
          ished product and that it is currently sold in the U.S. market
          for use in making women's raincoats (specifically the outside
          cover).  You further state that the importer is proposing to send
          the fabric to Canada for "an additional process" which consists
          of running the fabric through a wire brush to impart a slightly
          different appearance to the fabric, but that this process "other-
          wise does not change the material."  You advise in this regard
          that, as a result of this process, the ultimate consumer will be
          offered a choice between a "shiny" or "more nappy-in-appearance"
          raincoat.

          ISSUE:

              Whether the brushed fabric qualifies for the partial duty ex-
          emption under TSUS item 806.20 (subheading 9802.00.40, Harmonized
          Tariff Schedule of the United States (HTSUS)) when imported into
          the U.S.

          LAW & ANALYSIS:

              Articles, returned to the U.S. after having been exported for
          repairs or alterations, may be classified under TSUS item 806.20
          (19 U.S.C. 1202), with duty only on the value of the repairs or










          alterations, upon compliance with the requirements of section































































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          10.8, Customs Regulations (19 CFR 10.8).  However, the applica-
          tion of this tariff provision is precluded where the foreign
          operation destroys the identity of the exported article or cre-
          ates a new or different commercial article.  LeGran Manufacturing
          Co. v. U.S., 59 Cust. Ct. 58, C.D. 3070 (1967).

              Moreover, as the court stated in Dolliff & Company, Inc., v.
          United States, 66 CCPA 77, C.A.D. 1225, 599 F. 2d 1015 (1979), at
          page 1019:

              ... repairs and alterations are made to completed
              articles and do not include intermediate processing
              operations which are performed as a matter of course
              in the preparation or the manufacture of finished
              articles.  (Court's emphasis).

          Thus, "the focus is upon whether the exported article is 'incom-
          plete' or 'unsuitable for its intended use' prior to the foreign
          processing.  Guardian Industries Corp. v. United States, 3 CIT 9
          (1982), at page 13.

              In ruling letter 554945 CW (June 14, 1988), certain fabric
          was exported to France to undergo a "crushing" operation to im-
          part a permanent "crushed" or wrinkled look to fabric used in
          swimsuits.  Finding that the fabric in its exported condition was
          complete for its intended use as material for swimsuits, that the
          identity of the fabric was not lost or destroyed by the
          "crushing" operation and that no new or different commercial
          article was created, we held that the "crushing" process consti-
          tuted an "alteration," as the term is used in TSUS item 806.20.

              In regard to this case, the fact that the fabric in its
          exported condition is currently marketed as material for women's
          raincoats, and will be marketed for the same use after the
          brushing process, attests to the fabric's suitability for its
          intended use and, therefore, its completeness prior to the
          foreign processing.  Moreover, although the brushing process
          imparts a slightly different appearance to the fabric, it does
          not appear that this process results in any significant change in
          the quality, texture or character of the fabric.

              Given the facts in this case, it is clear that the fabric to
          be exported is a "completed article," that its identity will not
          be lost or destroyed by the foreign brushing operation, and that
          no new or different commercial article will be created thereby.
          Further, an examination of the samples submitted indicates that
          the fabric to be exported is in a finished state or condition.













                                        - 3 -


          CONCLUSION:

              On the basis of the information and samples presented, it is
          our opinion that the process of brushing the fabric in Canada
          constitutes an "alteration," as that term is used in TSUS item
          806.20. Therefore, upon its return to the U.S. and compliance
          with the requirements of 19 CFR 10.8, the fabric will be entitled
          to classification under TSUS 806.20, with duty only on the value
          of the processing performed abroad.



                                          Sincerely,





                                          John Durant, Director
                                          Commercial Rulings Division







































          CO:R:CR:V:VILDERS:GRV:9/29/88:10/12/88