Applicability of partial duty exemption of item 806.20, TSUS, to glass rectangles exported to Japan to be cut, ground and polished

HQ 555085 September 27, 1988 CLA-2 CO:R:C:V 555085 DBI CATEGORY: Classification TARIFF NO.: 9802.00.40; 806.20 Mr. Norbert T. Rogers Corporate Transportation and Distribution Corning Glass Works Corning, New York 14831 RE: Applicability of partial duty exemption of item 806.20, TSUS, to glass rectangles exported to Japan to be cut, ground and polished Dear Mr. Rogers: This is in response to your letter of April 18, 1988, to the Customs Area Director of the New York Seaport, in which you requested a ruling concerning the applicability of item 806.20, Tariff Schedules of the United States (TSUS), to glass rectangles exported to Japan to be cut, ground and polished and imported by your company. Your letter was referred to this office for review and a ruling. FACTS: You advise that glass drawn at a U.S. plant will be sent to Japan in sheets measuring 36" x 31.2". In Japan, the glass will be cut to size and shape to form rectangles measuring 6" x 6". The edges of the rectangles will be ground, the corners will be cut (edged or beveled) and the surface of each rectangle will be lightly polished. In meetings and telephone conversations with Import Specialists in New York, you explained that these products ultimately will be used in small computers, calculators and similar machines to form the window portions of these machines. When imported into the U.S., the glass will not be ready to be installed in a machine. The glass rectangles will be further cut and shaped in the U.S. before being used. However, the processing performed in Japan brings the merchandise very close to its final functional state and are crucial operations in the manufacture of the glass products. Samples are submitted for examination. - 2 - ISSUE: Whether the described glass rectangles, when returned to the U.S., will be eligible for the partial duty exemption 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, 3 CIT 9, Slip Op. 82-4 (Jan. 5, 1982). Item 806.20, TSUS, treatment also is precluded where the exported articles are incomplete for their intended use and the foreign processing operation is a necessary step in the preparation or manufacture of finished articles. Dolliff and Company, Inc. v. United States, 66 CCPA 77, C.A.D. 1225, 599 F.2d 1015 (1979). In the present case, we believe that the foreign cutting to size and shape constitutes an operation that exceeds a repair or alteration. The glass sheets that are shipped to Japan for processing are commercially different from the glass rectangles that return. The imported glass rectangles have been specially prepared to be specifically cut to fit into windows for small computers and calculators and similar machines. Additionally, the glass rectangles are not finished articles completed for their intended use and sent to Japan merely for alterations or repairs. On the contrary, the glass is cut to size and shape, ground and polished, which are all necessary steps in the preparation of the finished window portions of small machines. - 3 - The glass rectangles are classifiable under subheading 7006.00.4050, HTSUS, as glass of heading 7005 (which provides for ground or polished glass), bent, edgeworked or otherwise worked, other: other. This is the classification under the HTSUS, which is effective January 1, 1989, and is subject to changes made to the statute before the effective date. HOLDING: On the basis of the information and samples submitted, it is our opinion that the foreign cutting to size and shape and the other operations may not be considered an alteration as that term is used in item 806.20, TSUS. Consequently, it does not appear that item 806.20, TSUS, or any other Schedule 8 provision providing for a reduction in duty would be applicable to the returned glass rectangles. Sincerely, John Durant Director, Commercial Rulings Division cc: Chief, National Import Specialist Branch 3 New York Seaport (CLA-2-70:S:N:N3G:226830454) 1cc: CLA-2 CO:R:C:V:DBI:MM:9/7/88