Partial duty exemption under subheading 9802.00.50; alteration

HQ 561455 March 9, 2000 CLA-2 RR:CR:SM 561455 KSG CATEGORY: Classification TARIFF NO.: 9802.00.50 L.L. Barnhart Purchasing & Distribution Department Hercules Incorporated Hercules Plaza 1313 North Market Street Wilmington, DE 19894-0001 RE: Partial duty exemption under subheading 9802.00.50; alteration Dear Mr. Barnhart: This is in response to your letter of April 28, 1999, to the National Commodity Specialist Division of the Customs Service. They have referred your letter to us for the preparation of a response. You requested a binding ruling regarding the eligibility of imported Di-Cup R, an organic peroxide, for a partial duty exemption under subheading 9802.00.50 of the Harmonized Tariff Schedule of the United States (“HTSUS”). FACTS: You state that Hercules exports CHP (cumene hydro peroxide) in liquid form to Belgium. In Belgium, the CHP is processed into a new product known as Di-Cup R (dicumyl hydroperoxide). The processing consists of the following: The CHP is reduced with caustic soda and sulfuric acid to produce dimenthyl benzl alcohol (DMBA). The DMBA is then coupled with more CHP in the presence of a catalyst. This produces a crude DCP which is washed several times and crystallized to yield a pure product (Di-Cup R) in solid form. There is 1 pound of Di-Cup R produced for every 1.56 pounds of CHP. You state that the Di-Cup R is classified in subheading 2909.60.2000, HTSUS. ISSUE: Whether the Di- Cup R is eligible for a partial duty exemption under subheading 9802.00.50, HTSUS, when imported into the U.S. LAW AND ANALYSIS: Subheading 9802.00.50, HTSUS, provides a partial duty exemption for articles that are returned after having been exported to be advanced in value or improved in condition by means of repairs or alterations, provided that the documentary requirements of 19 CFR 10.8 are met. For qualifying articles, duty is assessed only on the cost or value of the foreign processing. However, in circumstances where the operations abroad destroy the identity of the exported article or create a new or commercially different article, entitlement to subheading 9802.00.50, HTSUS, is precluded. 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). Additionally, entitlement to this tariff treatment is not available where the exported articles are incomplete for their intended purposes prior to their foreign processing and the foreign processing is a necessary step in the preparation or manufacture of the finished articles. Dolliff & Company, Inc. v. United States, 455 F. Supp. 618 (CIT 1978), aff’d, 599 F.2d 1015 (Fed. Cir. 1979). In Burstrom, U.S.-origin steel ingots were processed abroad into steel slabs which were imported into the U.S. The court held that the imported slabs were a commercially different product than the U.S. origin ingots, and that the foreign processing therefore was not an alteration. In Guardian Industries, U.S. glass sheets in annealed form were sent to Canada for a heat treatment known as tempering and then imported into the U.S. The court held that the tempered glass is a separate and different commercial article from the annealed glass from which it was processed, noting that the tempered glass has different characteristics, different uses and a different trade nomenclature. The court concluded that the tempering process is not an alteration. The Customs Office of Laboratory Services has advised us that the CHP and Di-Cup R have significantly different chemical structures and physical properties. That office concluded that Di-Cup R is not an advanced form of CHP; rather it is a totally different chemical product. Based on these conclusions and the caselaw, discussed above, we conclude that the imported Di-Cup R is a separate and different commercial product. Accordingly, we find that the Di-Cup R is not eligible for a partial duty exemption under subheading 9802.00.50, HTSUS. HOLDING: Based on the information provided, we find that the imported Di-Cup R is not eligible for a partial duty exemption under subheading 9802.00.50, HTSUS, when imported into the U.S. 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