HQ 555320: Applicability of partial duty exemption under HTSUS subhead- ing 9802.00.50 to water treatment equipment from 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 555320

February 21, 1990

CLA-2 CO:R:C:V 555320 GRV

CATEGORY:  CLASSIFICATION

TARIFF NO.:  9802.00.50

Ms. Deborah J. Clune
PBB USA Inc.
Customs Brokers
P.O. Box 950
Buffalo, New York 14213

RE:  Applicability of partial duty exemption under HTSUS subhead-
     ing 9802.00.50 to water treatment equipment from Canada

Dear Ms. Clune:

     This is in response to your letter of February 3, 1989, to
the District Director of Customs, Buffalo, New York, on behalf of
Anderson Water Systems Ltd., requesting a ruling on the applic-
ability of subheading 9802.00.40, Harmonized Tariff Schedule of
the United States (HTSUS), to water treatment equipment from
Canada.  Your letter, as well as correspondence from your client,
were forwarded to this office for a response.  We regret the
delay in responding to your request.

FACTS:

     Your client, located in Dundas, Ontario, Canada, rents water
treatment equipment to customers in the U.S. for use in the
softening and demineralization of their particular water systems.
The water treatment equipment consists of two sets of eight
filtering canisters (one made of steel and 7 made of fiberglass),
which contain anion exchange resin.  One set of canisters is held
in reserve until the resin in the on-line set requires cleaning,
at which time the reserve canisters are placed on-line and the
canisters containing the dirty resin are sent to Canada for a
cleaning operation.  In Canada, the dirty resin will be removed,
cleaned and reinstalled in the canisters.  Following the foreign
cleaning operation, the canisters are returned to the U.S. where
they are exchanged with the on-line set when the resin they
contain becomes dirty.  The time period between the exchange of
tanks is estimated to average once per month.

     The resin cleaning operation is not done pursuant to a
warranty.
ISSUE:

     Whether the cleaning operation constitutes an acceptable
"repair" of the resin material contained in water treatment
equipment, for purposes of HTSUS subheading 9802.00.40 or
9802.00.50, thereby rendering the returned equipment eligible for
the partial duty exemption available under the appropriate tariff
provision.

LAW AND ANALYSIS:

     Articles returned to the U.S. after having been exported to
be advanced in value or improved in condition by repairs or
alterations may qualify for the partial duty exemption under
either HTSUS subheading 9802.00.40 (repairs or alterations made
pursuant to a warranty) or subheading 9802.00.50 (other repairs
or alterations), provided the foreign operation does not destroy
the identity of the exported articles or create new or different
articles.  Articles entitled to this partial duty exemption are
dutiable only upon the cost or value of the foreign repairs or
alterations, provided the documentary requirements of section
10.8, Customs Regulations (19 CFR 10.8), are satisfied.

     Mere cleaning operations which restore exported merchandise
to its original efficiency so as to prolong its usefulness have
long been considered "repairs" for purposes of HTSUS subheading
9802.00.50 and its precursor provision, item 806.20, Tariff
Schedules of the United States (TSUS), so long as the identity of
the merchandise exported was not destroyed, nor a new or
different article created.  See, T.D. 56516(1), 100 Treas.Dec.
693 (1965) (cloth "scoured" in England by passing it through a
solvent of boiling trichloroethylene to remove waxes and fatty
material, and further processed to remove remaining trichloro-
ethylene and any water-soluble materials, was entitled to the
partial exemption from duty under TSUS item 806.20, as  the
processing abroad was considered a repair or alteration); and
Headquarters Ruling Letters 555318 (September 20, 1989) (textile
articles soiled in the U.S. and sent to Mexico for laundering,
which included washing, drying and pressing, were eligible for
HTSUS subheading 9802.00.50 treatment) and 067432 (October 6,
1981) (industrial work gloves exported to Canada for cleaning
were entitled to TSUS item 806.20 tariff treatment).

     Consistent with these precedents, we find that the resin
cleaning operation in the present case constitutes a repair of
the resin, within the meaning of HTSUS subheading 9802.00.50
(HTSUS subheading 9802.00.40 is inapplicable because no warranty
is involved), as dirty resin is merely restored to its original
condition for continued customers' use.  Accordingly, the water
treatment equipment will be eligible for the partial duty
exemption under HTSUS subheading 9802.00.50, provided the
documentary requirements of 19 CFR 10.8 are met.
CONCLUSION:

     On the basis of the described foreign operation, the water
treatment equipment, consisting of a set of 8 resin-filled
canisters, will be eligible for the partial duty exemption under
HTSUS subheading 9802.00.50 when returned to the U.S., upon
compliance with the documentary requirements of 19 CFR 10.8.

                              Sincerely,




                              John Durant, Director
                              Commercial Rulings Division