Applicability of a partial duty exemption for herbicide; 19 CFR 10.8; 076499; Burstrom; Guardian; Dolliff

HQ 555740 May 28, 1991 CLA-2 CO:R:C:S 555740 DSN CATEGORY: Classification TARIFF NO.: 9802.00.50 Margaret R. Polito, Esq. Coudert Brothers 200 Park Avenue New York, New York 10166 RE: Applicability of a partial duty exemption for herbicide; 19 CFR 10.8; 076499; Burstrom; Guardian; Dolliff Dear Ms. Polito: This is in response to your letters of September 21, 1990, and April 1, 1991, on behalf of ______________________________ (hereinafter referred to as the importer) requesting a ruling on the applicability of subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS), to a herbicide imported from France for use in agriculture. We regret the delay in responding. You ask that confidential treatment be accorded under 5 U.S.C. 552(b) and 19 CFR 103.12(d) regarding your request, and this ruling letter. You state that release of this information would cause significant harm to the importer. As requested, confidential treatment will be accorded to the portions of your request that are marked "confidental" and those portions of this ruling letter that are in brackets. FACTS: The importer produces a herbicide in Puerto Rico referred to as _______. This herbicide is specifically designed for commercial agricultural use. The herbicide is intended to destroy weeds that interfere with crop growth. The herbicide is created through a chemical reaction between two intermediates _____________ which creates a new molecule with a different chemical structure. The resulting product, _______ when mixed with water is capable of being used by farmers to control weeds via aerial dusting or spraying. In an effort to make _________ more marketable, and "user friendly", your client exports the herbicide to France where it is subjected to processess of formulation and granulation. These processes eliminate the product's powdery consistency which makes the chemical difficult to measure, as well as minimize the agitation required to disperse the chemical in water. The resulting chemical is referred to as _______________ which, like __________ is registered with the Environmental Protection Agency (EPA) as an herbicide. You state that different formulations of the same product must be separately registered with the EPA. As part of the formulation process, _________ is mixed with inert ingredients, namely a dispersant _________________, two wetting agents ___________________________ and a diluent clay. The formulation process does not alter the chemical composition of ____________ although the color of the chemical is changed. The purpose of the formulation process is to enhance the product's water soluability so that less agitation is required for proper mixing. The granulation process consists of placing the [L5300] and inert ingredients into a granulator and spraying with water. Heat is then applied to remove excess water. All uneven grains are separated from the mixture leaving grains of uniform size. This process eliminates the powdery consistency thereby rendering the product easier for a farmer to measure, while not changing the chemical composition of _______. ISSUE: Whether the formulation and granulation processes performed on the U.S.-origin herbicide constitute an alteration, thereby entitling it to the partial duty exemption available under subheading 9802.00.50, HTSUS, when returned to the U.S. LAW AND ANALYSIS: Subheading 9802.00.50, HTSUS, provides a partial duty exemption for articles returned to the U.S. after having been exported to be advanced in value or improved in condition by repairs or alterations. Such articles are dutiable only upon the value of the foreign repairs or alterations when returned to the U.S., provided the documentary requirements of section 10.8, Customs Regulations (19 CFR 10.8), are satisfied. 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 CPU 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 CPU 77, C.A.D. 1225, 599 F.2d 1015 (1979). With regard to the facts that you have presented and based on the above cases, we are of the opinion that the formulation and granulation operations constitute an alteration within the meaning of subheading 9802.00.50, HTSUS. The fact that the product is referred to as ________ when exported and as _______ when returned does not compel a finding of a new and different article of commerce. As previously stated, different formulations of the same product must be separately registered with the EPA. Moreover, on the basis of your submissions, we find that the _______ in its exported condition is complete for its intended use as an herbicide, and, in fact, can be marketed within the agricultural industry in this condition. You have demonstrated to our satisfaction that a market exists for _______ prior to exportation. For example, as part of the registration statement filed with EPA, directions for use of ________ is outlined. We find that the operations performed in France do not destroy the identity of the _______ because the chemical composition has not been changed by the addition of certain inert ingredients. The foreign operations do not appear to result in any significant change in the quality or character of the herbicide. The herbicide retains its weed killing properties. The primary purpose of the operation is to render the herbicide more "user friendly" by making it easier for the farmer to dilute and measure the herbicide prior to its application. We note that this case is distinguishable from the facts in Headquarters Ruling Letter (HRL) 076499 of November 20, 1986, because the herbicide in question in that case was converted abroad by the addition of limestone which changed the product's identity from an acidic substance to one with a pH suitable for use on soil. The addition of limestone greatly affected the acidity and alkalinity of the product, thereby changing the chemical composition of the herbicide. The limestone acted as more than an inert carrier or diluent for the herbicide. In the present case, as discussed above, we find that no change in chemical composition results from the processing performed abroad. HOLDING: On the basis of the information submitted, we find that the formulation and granulation processes constitute alterations within the meaning of subheading 9802.00.50, HTSUS. Therefore, the herbicide will be entitled to classification under this tariff provision with duty only on the value of the foreign processing upon compliance with the documentary requirements of section 10.8, Customs Regulations (19 CFR 10.8). Sincerely, John Durant, Director Commercial Rulings Division