Application for Further Review of Protest No. 2809-03-100680; Eligibility of Hair Trimmers for Preferential Tariff Treatment Under Subheading 9802.00.40, HTSUS; Repair or Alteration Made Pursuant to Warranty; Replacement of Battery; 19 CFR 10.8

HQ 562949 February 1, 2005 CLA-02 RR:CR:SM 562949 SS CATEGORY: Classification TARIFF NO.: 9802.00.40 Port Director U.S. Customs & Border Protection P.O. Box 2450San Francisco, CA 94126 RE: Application for Further Review of Protest No. 2809-03-100680; Eligibility of Hair Trimmers for Preferential Tariff Treatment Under Subheading 9802.00.40, HTSUS; Repair or Alteration Made Pursuant to Warranty; Replacement of Battery; 19 CFR 10.8 Dear Sir or Madam: This is in reference to a protest and application for further review filed by West Coast Beauty Supply (hereinafter "West Coast"), contesting the denial of the duty exemption under subheading 9802.00.40, Harmonized Tariff Schedule of the United States (HTSUS), to hair trimmers imported from Taiwan. FACTS: West Coast exported hair trimmers from the United States to Taiwan. In Taiwan, the spent batteries in the hair trimmers were removed and replaced with new batteries. The hair trimmers were then imported into the United States. The merchandise was entered under subheading 8510.20.00, HTSUS, which provides for, among other things, hair clippers. The entry was liquidated on September 5, 2003. On November 28, 2003, the importer filed the instant protest contesting the classification and liquidation of the merchandise under subheading 8510.20.00, HTSUSA. The importer claims that the merchandise should have received the benefit of a partial duty exemption under subheading 9802.00.40, HTSUS, as hair trimmers returned after having been exported for repair. The importer requests re-liquidation and a partial refund of duties. The Port denied the protest because it believed that replacing the battery in the hair trimmers did not qualify as a repair operation under subheading 9802.00.40, HTSUS. ISSUE: Whether hair trimmers exported to Taiwan for battery replacement are eligible for preferential tariff treatment under subheading 9802.00.40, Harmonized Tariff Schedule of the United States (HTSUS). LAW AND ANALYSIS: Initially we note that the protest was filed within the required 90 days of the Customs determination that gave rise to the protest (i.e., the liquidation). Applicability of subheading 9802.00.40, HTSUS Subheading 9802.00.40, HTSUS, provides a partial or complete duty exemption for articles returned to the U.S. after having been exported to be advanced in value or improved in condition by means of repairs or alterations made pursuant to a warranty. Subheading 9802.00.50, HTSUS, provides the same duty exemption for articles exported for repairs or alterations made other than pursuant to a warranty. Such articles are dutiable only upon the cost or value of the foreign repairs or alterations, provided that the documentary requirements are met. Repairs are operations aimed at restoring articles to their original condition, but cannot be so extensive as to destroy the identity of the exported article or 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. 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.” The court held that the use of improved materials in the restoration was immaterial, as long as the article was not considered a new and different article of commerce or its identity was destroyed. Thus, the replacement and/or addition of parts to restore products to their original condition may constitute repair operations for purposes of subheadings 9802.00.40 and 9802.00.50, HTSUS, if the particular article does not lose its identity and the replacements and/or additions are not so extensive as to create a new or different article. 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) and Guardian Industries Corp. v. United States, 3 CIT 9 (1982), 3 CIT 9 (1982). Customs has previously considered whether the replacement of batteries constitutes an acceptable “repair” or “alteration” in the context of subheading 9802.00.50, HTSUS. In Headquarters Ruling Letter (HQ) 555819, dated October 11, 1991, Customs considered the applicability of subheading 9802.00.50, HTSUS, to cordless telephones, answering machines and combination telephone/answering machines returned to the U.S. after undergoing certain repair operations in Mexico. As many as seventeen (17) defective parts, including batteries, were replaced in the units. In replacing these parts, the integrity of each unit was maintained (i.e., there was no commingling of disassembled parts with other like parts from other units). The repairs only required the replacement of a few worn parts. In some telephones, only the batteries needed replacement. Customs stated that “these minimal replacements fall within the parameters of genuine repair operations.” In HQ 562443, dated July 17, 2002, Customs found that repaired printed circuit boards were eligible for a duty exemption under subheading 9802.00.50, HTSUS, provided the applicable documentary requirements were met. The repair operations, which consisted primarily of replacing faulty components, restored the PCBs to their original condition and did not create a new or commercially different article. See also HQ 559012, dated May 9, 1995, and HQ 558987, dated May 17, 1995 (testing, disassembly, replacement of damaged parts, upgrading of flex circuit and reassembly of voice terminal constituted repairs or alterations when returned to the U.S., provided the documentary requirements were met). With respect to the hair trimmers at issue, we are of the opinion that the replacement of the batteries performed in Taiwan is similar to the replacement operations performed in HQ 555819. As in that case, the replacement of batteries does not create a new or commercially different article, nor does it change the character or use of the hair trimmer. It merely restores the hair trimmer to original working order. Accordingly, we find that the battery replacement operations performed in Taiwan constitute acceptable repair operations within the meaning of subheading 9802.00.40, HTSUS. HOLDING: The battery replacement operations performed in Taiwan on the exported hair trimmers constitute an acceptable “repair” within the meaning of subheading 9802.00.40, HTSUS. Therefore, the hair trimmers are eligible for the partial duty exemption available under this tariff provision. Accordingly, the protest should be granted. In accordance with the Protest/Petition Processing Handbook (CIS HB 3500-08, June 2002, pp. 18 and 21), you are to mail this decision, together with the CBP Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution. Sincerely, Myles B. Harmon, Director Commercial Rulings Division