Applicability of partial duty exemption of subheading 9802.00.50, HTSUS, to t-shirts and tank tops exported to Canada for silk screening or heat transfer

HQ 555561 February 7, 1990 CLA-2 CO:R:C:V 555516 KAC CATEGORY: CLASSIFICATION TARIFF NO.: 9802.00.50 Mr. Joseph L. Giumentaro Ameri-Can Customhouse Brokers Peace Bridge Plaza Warehouse Buffalo, New York 14213 RE: Applicability of partial duty exemption of subheading 9802.00.50, HTSUS, to t-shirts and tank tops exported to Canada for silk screening or heat transfer Dear Mr. Giumentaro: This is in response to your letter of December 6, 1989, on behalf of Delta Vanguard Industries, Inc., requesting a ruling on the applicability of subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS), to t-shirts and tank tops exported to Canada for silk screening or heat transfer, and then returned to the U.S. Samples of both the t-shirts and tank tops were submitted for examination. FACTS: You state that U.S.-made 100% cotton and 50% cotton and 50% polyester, t-shirts and tank tops will be shipped to Delta Vanguard in Canada. The plain t-shirts and tank tops will be placed on machines which silk screen or heat transfer printing or designs made of plastisol ink onto the front of the t-shirt or tank top. The plastisol ink is manufactured in the U.S. and is exported to Canada in its liquid form. For the heat transfer process, the ink is cured on teflon paper in the desired printing or design. The teflon paper allows the ink to be transferred from the paper to the t-shirt or tank top when the 400 degree heat is applied. The t-shirts and tank tops with new printing or designs are then returned to the U.S. ISSUE: Whether t-shirts and tank tops which are exported to Canada for silk screening or heat transfer 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 performed on articles sent abroad for that purpose. 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'd, 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 and heat transfer processes constitute operations that exceed alterations. Although garments may be worn whether a design is imprinted by silk screening/heat transfer or not, silk screening and heat transfer, like printing and hand-painting, are considered neither a repair nor an alteration under the provisions of subheading 9802.00.50, HTSUS. T-shirts and tank tops which have a design, as a result of a silk screening or heat transfer process, are different from t-shirts and tank tops without such a design and, as such, the foreign silk screening or heat transfer process has created a different article with unique, specialized appeal. Furthermore, the silk screening and heat transfer processes constitute a finishing step in the manufacture of the t-shirt and tank top. The returned t-shirt is classifiable in subheading 6109.10.0012, HTSUS, while the returned tank top is classifiable in subheading 6109.10.0018, HTSUS. The duty rate for both is 21% ad valorem. HOLDING: On the basis of the information and samples submitted, it is our opinion that the foreign silk screening and heat transfer processes may not be considered alterations and, therefore, tariff treatment of the returned goods under subheading 9802.00.50, HTSUS, is precluded. Accordingly, the t-shirts and tank tops are dutiable on their full value at the rate of 21% ad valorem under subheadings 6109.10.0012 and 6109.10.0018, HTSUS, respectively. Sincerely, John Durant, Director Commercial Rulings Division cc: Ass't Area Dir, NIS 847849