Applicability of partial duty exemption under HTSUS subheading 9802.00.50 to diced and quick- frozen apples from Mexico. Dolliff & Company, Inc., (1979); 554654

HQ 555462 September 11, 1989 (abstracted at C.S.D. 89-134(2)) CLA-2 CO:R:C:V 555462 GRV CATEGORY: CLASSIFICATION TARIFF NO.: 9802.00.50, HTSUS Ms. Lori Lamp Segura ConAgra, Inc. Suite 300 888 17th Street, N.W. Washington, D.C. 20006 RE: Applicability of partial duty exemption under HTSUS subheading 9802.00.50 to diced and quick- frozen apples from Mexico. Dolliff & Company, Inc., (1979); 554654 Dear Ms. Segura: This is in response to your letters of July 17, and August 4, 1989, requesting a ruling on the applicability of subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS), to diced and quick-frozen apples to be imported from Mexico. FACTS: You state that you are considering purchasing apples in the U.S. and exporting them to Mexico, where they will be diced and individually quick-frozen, after which they will be returned to the U.S. ISSUE: Whether the foreign dicing and quick-freezing operations constitute acceptable "alterations," for purposes of HTSUS subheading 9802.00.50, thereby rendering the returned apples eligible for the partial duty exemption under this 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 HTSUS subheading 9802.00.50 provided the foreign operation does not destroy the identity of the exported articles or create new or different articles. Further, entitlement to this tariff treatment is precluded were 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 & Company, Inc., v. United States, 81 Cust.Ct. 1, C.D. 4755, 455 F.Supp. 618 (1978), aff'd, 66 CCPA 77, C.A.D. 1225, 599 F.2d 1015, 1019 (1979). 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. In Headquarters Ruling Letter (HRL) 554654 (July 28, 1987), whole peaches were exported to be sliced abroad. Customs found that the slicing operation not only destroyed the identity of the exported peaches, but resulted in new and different articles of commerce with many uses different from those for whole peaches. Accordingly, we denied the partial duty exemption available under item 806.20, Tariff Schedules of the United States (TSUS) (the precursor provision to HTSUS subheading 9802.00.50), as the slicing process was deemed to exceed the scope of the term "alteration." We believe that the above-referenced ruling is dispositive of the dicing aspect of the foreign operation presented in this case, and accordingly hold that the dicing of the apples would result in new and different commercial articles having uses different from those for whole apples. HOLDING: On the basis of the described foreign operation, the dicing and freezing of the apples exceed the scope of the term "alteration," thereby precluding the classification of the returned apples under HTSUS subheading 9802.00.50. Sincerely, John Durant, Director