Subheading 9802.00.50, HTSUS; Article 509; clothing;repair or alteration

HQ 561053 October 16, 1998 CLA-2 RR:TC:SM 561053 KSG CATEGORY: Classification TARIFF NO.: 9802.00.50 Beth C. Ring, Esq. Sandler, Travis & Rosenberg, P.A. 551 Fifth Avenue New York, NY 10176 RE: Subheading 9802.00.50, HTSUS; Article 509; clothing; repair or alteration Dear Ms. Ring: This is in response to your letters of June 19, 1998, and July 30, 1998, asking for a binding ruling on behalf of Unifirst Corporation, concerning the eligibility of imported used uniforms for a duty exemption under subheading 9802.00.50 of the Harmonized Tariff Schedule of the United States ("HTSUS"). At your request, a conference was held at Headquarters on July 27, 1998, on this matter. FACTS: This case involves used rental uniforms that Unifirst Corporation would send from the U.S. to Mexico for processing. Prior to their exportation to Mexico, the uniforms would be washed and placed in large hampers. In Mexico, the garments will be sorted and inspected. If the garments have significant damage, they will be discarded. The remaining garments will undergo one or more of the following operations, as necessary: removal of emblems and labels; minor repairs, such as replacing buttons or fixing ripped seams; redyeing; and if there is significant damage to the sleeves or pant legs, the long sleeve shirts will be made into short sleeve shirts and the pants will be made into shorts. ISSUE: Whether the used uniforms subjected in Mexico to one or more of the operations described above are eligible for a duty exemption under subheading 9802.00.50, HTSUS, upon importation into the U.S. LAW AND ANALYSIS: Articles exported from and returned to the U.S., after having been advanced in value or improved in condition by repairs or alterations, may qualify for a duty exemption under subheading 9802.00.50, HTSUS, provided the foreign operation does not destroy the identity of the articles or create new or commercially different articles. See A.F. Burstrom v. United States, 44 CCPA 27 (1956) and Guardian Industries Corporation v. United States, 3 CIT 9 (CIT 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. See Dolliff & Company, Inc. v. United States, 455 F. Supp. 618 (1978). Goods repaired or altered in Mexico are eligible for duty-free treatment under this tariff provision provision, provided the documentary requirements set forth in section 181.64(c), Customs Regulations (19 CFR 181.64(c)), are met. Section 181.64(a), Customs Regulations (19 CFR 181.64(a)), provides that: For purposes of this section, "repairs or alterations" means 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 U.S. For purposes of the duty exemption under subheading 9802.00.50, HTSUS, the replacement and/or addition of parts to restore products to their original condition may constitute repair operations, provided that the particular article does not lose its identity and the replacement and/or additions are not so extensive as to create a new or different article. See Press Wireless, Inc. v. United States, 6 Cust. Ct. 102 (1941). In Press Wireless , radio tubes were sent abroad for repairs which involved the use of heavier filament than that used in the original manufacture of the tubes. Also, the markings on the articles were erased, and new numbers were substituted. The court noted that the radio tubes were "restored to a condition which prolonged the use for which they were originally designed...as far as the plaintiff's use thereof was concerned there was no difference between the tubes as originally imported and the repaired articles." In Amity Fabrics, Inc. v. United States, 43 Cust. Ct. 64, C.D. 2104(1959), pumpkin colored velveteen fabric was exported to be redyed black which was a more marketable color. The court found that the change in color was an acceptable alteration under paragraph 1615(g) of the Tariff Act of 1930 (a precursor to item 806.20, TSUS), because the redyeing did not change the use of the merchandise; it was offered to the same trade, and the redyeing in no way changed the quality, texture or character of the material . Also see Royal Bead Novelty Co. v. United States, 68 Cust. Ct. 154, 3342 F. Supp. 1394 (1972), HRL 557161, dated June 28, 1993 and HRL 560325, dated January 27, 1998. Further, Customs held in HRL 557327, dated July 26, 1993, that the replacement of rivets or buttons, the restitching of seams or the replacing or restitching of belt loops on jeans constitute repairs or alterations within the meaning of subheading 9802.00.50, HTSUS. In HRL 556030, dated August 29, 1991, Customs ruled that new blue denim pants shipped to Guatemala where holes are cut into the legs and patches are sewn over the holes are ineligible for subheading 9802.00.50, HTSUS, treatment when returned to the U.S. Counsel cited several rulings in which Customs ruled that the reconditioning of articles with upgrades or improved features are considered "alterations" within the meaning of subheading 9802.00.50, HTSUS. For instance, in HRL 559648, dated May 20, 1996, Customs held that the coating of baking pans abroad constitutes an alteration within the meaning of subheading 9802.00.50, HTSUS, because the baking pans were complete for their intended use in their exported condition; they merely underwent an operation to equip them with the ability to function more effectively. Counsel argues that the processing of long sleeve shirts into short sleeve shirts and pants into shorts constitutes a "restoration," "renovation," or treatment that does not destroy the essential characteristics of the garments; old uniforms are simply processed into new uniforms. In the instant case, we find that the short sleeve shirts and the shorts are new or different commercial goods, rather than products that are merely restored to their original condition. The processing performed abroad in this case to create shorts and short sleeve shirts does not merely result in a difference in the appearance of the article (e.g., the color) as was the case in Amity Fabrics or merely enable an article that has the same use to function more effectively as was the case in HRL 559648. The shorts and short sleeve shirts are distinctly different articles of commerce from long pants and long sleeve shirts, respectively, inasmuch as the former garments typically are worn during warmer seasons or in warmer environments where long sleeve shirts and pants may not be as comfortable or appropriate. Accordingly, we find that the used uniforms that are made into shorts and short sleeve shirts in Mexico are not eligible for a duty exemption under subheading 9802.00.50, HTSUS, upon importation into the U.S. Consistent with our previous rulings, the used uniforms that are subjected to repairs abroad, including replacing buttons, removing emblems and labels, fixing ripped seams, and redyeing are eligible for a duty exemption under subheading 9802.00.50, HTSUS, when returned to the U.S. if the documentary requirements of 19 CFR 181.64(c) are satisfied. HOLDING: The used uniforms exported to Mexico for processing, including making them into shorts and short sleeve shirts are not eligible for a duty exemption under subheading 9802.00.50, HTSUS, when returned to the U.S. The remaining used uniforms exported to Mexico for processing that includes: replacing buttons, removing emblems and labels, fixing ripped seams and redyeing are eligible for a duty exemption under subheading 9802.00.50, HTSUS, when returned to the U.S., provided the documentary requirements of 19 CFR 181.64(c) 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