Applicability of duty exemption under HTSUS subheading 9801.00.10 to imported soybean and corn oils

HQ 555148 March 15, 1990 CLA-2 CO:R:C:V 555148 KAC CATEGORY: CLASSIFICATION TARIFF NO.: 9801.00.10 Mr. Donald J. Kennedy Norman G. Jensen, Inc. P.O. Box 146 Sweetgrass, Montana 59484 RE: Applicability of duty exemption under HTSUS subheading 9801.00.10 to imported soybean and corn oils Dear Mr. Kennedy: This is in response to your letter dated July 29, 1988, on behalf of Prairie Margarine, to the Regional Commissioner of Customs, New York, in which you request a ruling concerning the applicability of item 800.00, Tariff Schedules of the United States (TSUS) (now known as subheading 9801.00.10, Harmonized Tariff Schedule of the United States (HTSUS)), to soybean and corn oils to be imported into the U.S. Your letter has been referred to this office for review and the preparation of a ruling. We regret the delay in responding to your request. FACTS: Prairie Margarine will ship U.S. origin soybean and corn oil separately by rail car or tank truck to Canada. In Canada the oils will be transferred from the rail car or tank truck and packaged into consumer size bottles and then labelled. The oils will not undergo any further processing, such as blending or mixing, in Canada, except for the above described packaging operations. The oils will then be returned to the U.S. in cases of bottled 100% soybean oil and 100% corn oil. ISSUE: Whether the soybean and corn oils to be exported will qualify for the duty exemption available under HTSUS subheading 9801.00.10 when returned to the U.S. LAW AND ANALYSIS: As you know, the HTSUS replaced the TSUS on January 1, 1989. Item 800.00, TSUS, was carried over without change into the HTSUS as subheading 9801.00.10. HTSUS subheading 9801.00.10 provides for the free entry of U.S. products that are exported and returned without having been advanced in value or improved in condition by any means while abroad, provided the documentary requirements of section 10.1, Customs Regulations (19 CFR 10.1), are met. While some change in the condition of the product while it is abroad is permissible, operations which either advance the value or improve the condition of the exported product render it ineligible for duty free entry upon return to the U.S. See, Border Brokerage Company Inc. v. United States, 65 Cust.Ct. 50, C.D. 4052, 314 F.Supp. 788 (1970), appeal dismissed, 58 CCPA 165 (1970). We have previously held in Headquarters Ruling Letter 555072 dated October 17, 1988, that U.S. origin rapeseed and soybean oils exported in tank trucks to Canada for repackaging into five-gallon containers for institutional use have not been advanced in value or improved in condition. Therefore, we determined that the rapeseed and soybean oils were entitled to the duty exemption available under item 800.00, TSUS. In the present case, soybean and corn oils will be exported in a finished condition to Canada to be packaged in consumer size bottles, and will not be subjected to any other operations prior to their return. The oils will not be advanced in value or improved in condition while abroad. Accordingly, the oils will qualify for treatment under HTSUS subheading 9801.00.10. HOLDING: On the basis of the information submitted, and in accordance with our previous administrative ruling, we are of the opinion that the packaging performed abroad does not advance in value or improve in condition the soybean and corn oils. Therefore, the oils will qualify for the duty exemption under HTSUS subheading 9801.00.10, upon compliance with the documentation requirements of 19 CFR 10.1. Sincerely, John Durant, Director Commercial Rulings Division CC: Ass't Area Dir, NIS 831503