HQ 554974: Applicability of partial duty exemption provision and country of origin marking requirements to certain hand-painted T-shirts from China

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 554974

                                    July 27, 1988


          CLA-2 CO:R:C:V  554974 CW/LW

          CATEGORY:  Classification; Marking

          TARIFF NO.:  9802.00.40, HTSUSA (806.20, TSUS)

          Ms. Nancy Fox
          Import and Small Business Consultant
          25 Mt. Tenaya Drive
          San Rafael, California 94903

          RE:  Applicability of partial duty exemption provision and
               country of origin marking requirements to certain
               hand-painted T-shirts from China

          Dear Ms. Fox:

               This is in response to your letter of March 28, 1988, in
          which you request a ruling concerning the applicability of item
          806.20, Tariff Schedules of the United States (TSUS), to U.S.-
          made T-shirts which will be sent to the People's Republic of
          China to be hand-painted, and then returned to the U.S. for sale.
          You also inquire as to the applicability of visa, quota, and
          country of origin marking requirements to the returned T-shirts.
          A sample has been submitted for examination.

          FACTS:

               You advise that the T-shirts to be purchased in the U.S. by
          your client will be made of 100 percent cotton and will cost
          approximately $2.50 each, while the cost of the hand-painting
          will be approximately $1.50 per shirt.  You request our
          confirmation that item 806.20, TSUS, will apply to the returned
          shirts, that they will not be subject to any visa or quota
          requirements, and that it is acceptable for the label in each
          shirt to read "garment made in the U.S.A., hand-painted in
          China."

          ISSUE:

               Whether the described hand-painted T-shirts will be eligible
          for the partial exemption from duty provided for in item 806.20,
          TSUS (subheading 9802.00.40, Harmonized Tariff Schedule of the
          United States (HTSUS)), and whether, for marking purposes, the
          country of origin of the returned T-shirts will be the U.S. or
          China.













                                        - 2 -

          LAW AND ANALYSIS:

               Item 806.20, TSUS, provides for the assessment of duty on
          the value of repairs or alterations performed on articles that
          are sent abroad for that purpose.  However, the application of
          this tariff provision is precluded where the operations performed
          abroad create new or different articles of commerce, or where the
          exported articles are incomplete for their intended use and the
          foreign processing operation is a necessary step in the prepara-
          tion or manufacture of finished articles.  See Guardian
          Industries Corp. v. United States, USITR, 3 CIT 9 (1982), and
          Dolliff & Company, Inc. v. United States, 66 CCPA 77, C.A.D. 1225
          (1979).

               We have previously held in a ruling dated December 10, 1986
          (554371), that certain U.S.-made sweatshirts which are design
          hand-painted abroad and returned to the U.S. are not eligible for
          item 806.20, TSUS, treatment.  We stated that the hand-painting
          operation creates a different article of commerce and constitutes
          the last step in the production of finished hand-painted
          sweatshirts.  We believe that our holding in that case is
          controlling with respect to the applicability of item 806.20,
          TSUS, to the T-shirts under consideration here.  In our opinion,
          the hand-painting of the exported T-shirts imparts substantially
          new and different characteristics to the shirts, resulting in new
          and different articles of commerce with unique, specialized
          appeal.

               Please be advised that upon return of the T-shirts to the
          U.S. from China, they will be subject to all applicable visa and
          quota requirements as products of China.

               With respect to the issue of country of origin marking,
          because the T-shirts are textiles subject to section 204 of the
          Agricultural Act of 1956, as amended (7 U.S.C. 1854), section
          12.130(c), Customs Regulations (19 CFR 12.130(c)), is applicable.
          That section provides that, pursuant to Headnote 2, Part 1,
          Schedule 8, TSUS, any U.S. textile or textile product which is
          returned after having been advanced in value or improved in
          condition abroad, or assembled abroad (whether or not it has
          undergone a substantial transformation abroad), shall be a
          foreign article for the purposes of the Tariff Act of 1930, as
          amended.

          HOLDING:

                On the basis of the information and sample submitted, it is
          our opinion that the hand-painted T-shirts are not eligible for
          item 806.20, TSUS, treatment upon return to the U.S.  













                                        - 3 -

               Although the T-shirts are woven and sewn in the U.S., the
          hand-painting in China has advanced the T-shirts in value.  Thus,
          for country of origin marking purposes, according to 19 CFR
          12.130(c), the country of origin of the returned T-shirts is
          China, and they must be marked accordingly.

                                       Sincerely,




                                       John Durant
                                       Director, Commercial
                                       Rulings Division