Applicability of partial duty exemption of subheading 9802.00.50, HTSUS, to hockey jerseys exported to Canada for silk screening

HQ 555516 January 30, 1990 CLA-2 CO:R:C:V 555516 KAC CATEGORY: Classification TARIFF NO.: 9802.00.50 Mr. Mark McEwen A.N. Deringer Inc. P.O. Box 284 Highgate Springs, Vermont 05460 RE: Applicability of partial duty exemption of subheading 9802.00.50, HTSUS, to hockey jerseys exported to Canada for silk screening Dear Mr. McEwen: This is in response to your letter of September 22, 1989, on behalf of Maska U.S., requesting a ruling on the applicability of subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS), to hockey jerseys exported to Canada for silk screening, and then returned to the U.S. Samples were submitted for examination. FACTS: You state that U.S. made 100% polyester knitted hockey jerseys are shipped to Maska's parent company, Sport Maska Inc., in St. Hyacinthe, Canada. The plain hockey jerseys with alternating strips located at the bottom and mid-sleeve will be placed on a machine which silk screens a crest onto the front of the hockey jersey. The jerseys are then returned to the U.S. ISSUE: Whether hockey jerseys which are exported to Canada for silk screening will be entitled to the partial duty exemption in subheading 9802.00.50, HTSUS, when returned to the U.S. LAW & ANALYSIS: Subheading 9802.00.50, HTSUS, provides for the assessment of duty on the value of repairs or alterations 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 (1956), aff'g, C.D. 1752, 36 Cust.Ct. 46 (1956); Guardian Industries Corporation v. United States, 3 CIT 9 (1982), Slip Op. 82-4 (Jan. 5, 1982). Subheading 9802.00.50, HTSUS, treatment is also 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 & 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 (1979). We have previously held in Headquarters Ruling Letter 555021 dated July 1, 1988 that certain U.S. socks, silk screened abroad and returned to the U.S., were not eligible for item 806.20, Tariff Schedules of the United States (TSUS) (now subheading 9802.00.50, HTSUS), treatment because the silk screening was more than a mere alteration. We stated that the silk screening created a different article of commerce and constituted a finishing step in the manufacture of the socks. See also, Headquarters Ruling Letter 555249 dated June 16, 1989 (silk screening and chenilling designs on sweatshirts abroad exceeds an alteration). With regard to the facts you have provided and based on our previous rulings, we are of the opinion that the foreign silk screening process constitutes an operation that exceeds an alteration. Although garments may be worn whether a design is imprinted by silk screening or not, silk screening, like printing and hand-painting, is considered neither a repair nor an alteration under the provisions of subheading 9802.00.50, HTSUS. Hockey jerseys which have a crest, as a result of a silk screening process, are different from hockey jerseys without such a design, and, as such, the foreign silk screening process has created a different article with unique, specialized appeal. Furthermore, the silk screening process constitutes a finishing step in the manufacture of the hockey jerseys. HOLDING: On the basis of the information and samples submitted, it is our opinion that the foreign silk screening process may not be considered an alteration, and, therefore, tariff treatment of the returned goods under subheading 9802.00.50, HTSUS, is precluded. Sincerely, John Durant, Director Commercial Rulings Division