Applicability of HTSUS subheading 9802.00.50 to alpine skis; Canada; NAFTA; Article 307; Article 509; remove top sheet; apply epoxy; sand; grind; urethane coat; screen print; clean

HQ 559088 July 19, 1995 CLA-2 R:C:S 559088 MLR CATEGORY: Classification TARIFF NO.: 9802.00.50 Ms. Judy Campbell W.Y. Moberly, Inc. Box 164 Sweetgrass, Montana 59484 RE: Applicability of HTSUS subheading 9802.00.50 to alpine skis; Canada; NAFTA; Article 307; Article 509; remove top sheet; apply epoxy; sand; grind; urethane coat; screen print; clean Dear Ms. Campbell: This is in reference to your letter of February 21, 1995, to the New York Area Seaport, requesting a ruling on behalf of Canada Ski Corp., regarding the applicability of subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS), to alpine skis. FACTS: A U.S. company obtains used alpine skies from various U.S. ski areas and rental shops. These skis are exported to Canada Ski Corp. where they are evaluated for repairable damage. As necessary, depending on the damage of the skis, the skis are sanded to remove the existing plastic top sheet; ultra violet reactive epoxy is applied to replace the eliminated top sheet; gouges to the top surface and sidewall are filled with epoxy; the ski bases are shaped and patched; the ski tops and bases are ground, hand sanded, and washed and dried; a coat or two of pigmented urethane is applied to provide a basic color on top of which a graphic is screen printed; and lastly, a final ultra violet reactive clear coat is applied to protect the art. The skis are then returned to the ski areas and rental shops in the U.S. The New York Area Seaport informs us that the alpine skis are classifiable under subheading 9506.11.40, HTSUS. ISSUE: Whether the operations performed to the used alpine skies constitute repairs within the meaning of subheading 9802.00.50, HTSUS. LAW AND ANALYSIS: Subheading 9802.00.50, HTSUS, provides a partial or complete duty exemption for articles exported from and returned to the U.S. after having been advanced in value or improved in condition by repairs or alterations, provided the documentary requirements of section 181.64, Customs Regulations (19 CFR 181.64), are satisfied. However, entitlement to this tariff treatment is precluded in circumstances where the operations performed abroad destroy the identity of the exported articles or create new or commercially different articles through a process of manufacture. 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 Corp. v. United States, 3 CIT 9 (1982). Section 181.64, Customs Regulations (19 CFR 181.64), which implements Article 307 of the North American Free Trade Agreement (NAFTA), provides that goods returned after having been repaired or altered in Canada pursuant to a warranty, are eligible for duty-free treatment, provided that the requirements of this section are met. However, goods returned after having been repaired or altered in Canada other than pursuant to a warranty are subject to duty upon the value of the repairs or alterations using the applicable duty rate under the United States-Canada Free Trade Agreement, provided that the documentation and other requirements of this section are met. "Repairs or alterations" for purposes of 19 CFR 181.64 are defined as follows: ... restoration, addition, renovation, redyeing, cleaning, resterilizing, or other treatment which does not destroy the essential characteristics of, or create a new or commercially different good from, the good exported from the United States. In Headquarters Ruling Letter (HRL) 956746 dated January 3, 1995, Customs determined that used or scrap automobile and light truck bumpers were eligible for subheading 9802.00.50, HTSUS, treatment when they were returned from Mexico to the U.S. In Mexico, the plastic bumpers were straightened, an epoxy mixture was applied, and they were sanded, primed, and painted. The steel bumpers were straightened through pounding and the use of hydraulic presses, sanded, and polished. It was determined that the articles returned were the same articles that were exported for repairs, namely automobile and light truck bumpers. Furthermore, the various foreign operations did not destroy the identity of the articles, nor did they create a new or different commercial article. Similarly, in this case, we find that the operations performed in Canada, consisting of removing the existing top sheet, applying epoxy, sanding, grinding, urethane coatings, screen printing, and cleaning constitute repairs, since the used alpine skis are restored to their original condition. Therefore, consistent with definition of repairs in 19 CFR 181.64 and the ruling cited above, the alpine skis will qualify for the preferential tariff treatment provided by subheading 9802.00.50, HTSUS, when returned to the U.S., provided the documentary requirements of 19 CFR 181.64 are satisfied. HOLDING: On the basis of the information submitted, it is our opinion that the Canadian operations consisting of removing the existing top sheet, applying epoxy, sanding, grinding, urethane coatings, screen printing, and cleaning constitute "repairs" since these operations return the used alpine skies to their original condition. Therefore, the alpine skies qualify for the for the preferential tariff treatment provided by subheading 9802.00.50, HTSUS, when returned to the U.S., provided the documentary requirements of 19 CFR 181.64 are satisfied. A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction. Sincerely, John Durant, Director Commercial Rulings Division