HQ 555343: Classification under subheading 9802.00.50, HTSUS, of multistrike film slit abroad into ribbon material

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 555343

                                    May 30, 1989

          CLA-2-CO:R:C  555343 RA

          CATEGORY: Classification

          TARIFF NO.: 9802.00.50, HTSUS

          Mr. Brian C. Hoyle
          President
          MSR Ribbon Technology
          5805 Bessette
          Ville St-Laurent
          Quebec, Canada H4S 1P1

          RE: Classification under subheading 9802.00.50, HTSUS, of
              multistrike film slit abroad into ribbon material

          Dear Mr. Hoyle:

               This is in response to your letter of March 20, 1989,
          regarding the applicability of subheading 9802.00.50, Harmonized
          Tariff Schedule of the U.S. (HTSUS), to data processing ribbon
          material which is produced in Canada by slitting jumbo rolls of
          U.S.-made film.

          FACTS:

               Jumbo rolls of multistrike coated film 34 inches in width
          and 20,000 feet long of U.S. manufacture are processed in Canada
          by slitting the 34-inch material into ribbon material for data
          processing machines which will be returned to the U.S. for
          finishing into computer ribbons in plastic cartridges.

               You state that your sole task is to slit the wide U.S.-made
          film to ribbon width according to specification from the U.S.
          tape manufacturers who supply you with plastic core material,
          leader material in 18-inch width and various size rolls of
          adhesive tape.  These components are placed in a micro processed
          slitter and slit to the customer's required size for finishing
          into ribbons used in data processing tape cartridges.

          ISSUE:

               Does the Canadian processing qualify as an alteration under
          the provisions of subheading 9802.00.50, HTSUS, with duty only on
          the cost of processing?






















                                        - 2 -


          LAW AND ANALYSIS:

               Subheading 9802.00.50, HTSUS, provides for a duty based only
          on the cost of the processing abroad when articles are exported
          for alterations and returned after processing which qualifies as
          an alteration.  However, the duty allowance is applicable only
          when the exported articles are in a finished condition.  As
          stated by the appellate court in Dolliff & Company Inc. v. U.S.,
          66 CCPA 77, C.A.D. 1225 (1979), alterations are made only to
          completed articles and do not include intermediate operations
          which are performed in the manufacture of finished articles.  If
          the foreign processing is a step in the work needed to finish the
          article for its intended use, the statutory provisions for
          alterations will not be applicable.  Guardian Industries
          Corporation v. U.S., 3 CIT 9 (1982) and U.S. v. J.D. Richardson
          Co., 36 CCPA 15, C.A.D. 390 (1948).

               The slitting of the wide film in issue here constitutes an
          intermediate step in the manufacture of the computer tape which
          is essential to render it suitable for its intended use.  The
          cutting of material to width or pattern to achieve a narrower or
          differently shaped product has consistently been held to amount
          to more than a mere alteration.  In our ruling of October 24,
          1988 (554830), we held that the slitting of polyester fabric into
          smaller product widths exceeded an alteration.  Also, in a ruling
          dated November 10, 1980 (065398), we stated that the slitting of
          laminated paper into narrower sheets constituted more than an
          alteration.  In a ruling dated November 22, 1977 (053914), the
          cutting of adhesive tape 45 inches wide into tape 1 1/2 inches
          wide was held to be a finishing process and beyond a mere
          alteration.

          HOLDING:

               The slitting of wide rolls of coated film into narrow widths
          of ribbon material for use in computer tape manufacture amounts
          to a step in the work necessary to finish the final product and
          constitutes a processing which exceeds an alteration within the
          scope of subheading 9802.00.50, HTSUS.

                                        Sincerely,




                                        John Durant, Director
                                        Commercial Rulings Division