Applicability of subheading 9802.00.50 to wardrobe door installation kits; repair

HQ 563289 January 20, 2006 CLA-02 RR:CTF:VS 563289 FP CATEGORY: Classification TARIFF NO.: 9802.00.50 Mr. Francisco Gómez, Jr. R.L. Jones Customhouse Brokers 476 & 484 Tecate Road P.O. Box 970 Tecate, California 91980 RE: Applicability of subheading 9802.00.50 to wardrobe door installation kits; repair Dear Mr. Gómez: This is in response to your letter dated May 5, 2005, on behalf of John Sterling Corporation, in which you seek a determination of the eligibility of certain repair and alteration activities to be performed in Mexico for duty free treatment under subheading 9802.00.50, Harmonized Tariff Schedules of the United States (HTSUS), 19 U.S.C. § 1202. FACTS: John Sterling Corporation (Sterling) imported two models of a wardrobe installation kit from China. A sample of the hangers was submitted for our examination. According to the samples provided, Model number 12-071 consists of four hangers, one plastic floor guide, two steel disks and various sized screws. Model number 12-079 consists of four hangers, one plastic floor guide and various sized screws. Based on the information provided, Sterling determined that some of the rivets, which hold the plastic wheels to the steel body of the hangers, were defective upon receipt. To correct this problem, the Chinese supplier sent Sterling replacement hangers. We are informed that Sterling intends to ship both the kits with defective hangers and the new, replacement hangers to Mexico. In Mexico, the bags containing the installation kits will be opened and any defective hangers will be replaced with good ones. Finally, the kits will be repackaged and sealed in new bags for export back to the United States. ISSUE: Whether the operations performed in Mexico, as described above, constitute “repairs and alterations” under subheading 9802.00.50, HTSUS, when returned to the U.S., thereby qualifying the returned wardrobe door installation kits for the duty exemption under this tariff provision. LAW AND ANALYSIS: Subheading 9802.00.50, HTSUS, provides a full or partial 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. Articles returned to the U.S. after having been repaired or altered in Mexico, whether or not pursuant to warranty, may beare eligible for duty-free treatment, provided the documentation requirements of section 181.64, Customs Regulations (19 CFR § 181.64), are satisfied. Section 181.64(a), Customs Regulations, (19 CFR § 181.64(a)), states that: ‘Repairs or alterations’ means restoration, addition, renovation, redyeing, cleaning, resterilizing, or other treatment which does not destroy the essential character of, or create a new and commercially different good from, the good exported from the United States. Entitlement to the benefits of subheading 9802.00.50, HTSUS, are 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 CCPA 27, C.A.D. 631 (1956); Guardian Industries Corp. v. United States, 3 CIT 9 (1982). In previous rulings, we have held that subheading 9802.00.50, HTSUS, will be applicable to articles subject to both partial and complete disassembly, where repairs are made and parts are replaced as long as the essential components and therefore the identify of the article remain intact throughout the repair process. For example, in Headquarters Ruling Letter 562515, dated January 14, 2003, Customs and Border Protection considered photocopiers which involved the replacement of partsafter disassembly. CBP determined that the photocopiers qualified for subheading 9802.00.50, HTSUS, treatment, even though the processing involved replacement of a number of parts, because the changes were not so extensive as to destroy the essential identity of the exported photocopier or create a new or commercially different article. As we noted in HRL 555819, dated October 11, 1991, replacement and/or addition of parts that are not so extensive as to create a new or different article constitutes acceptable repair operations for purposes of subheading 9802.00.50, HTSUS. 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 to create a new or different article. Press Wireless, Inc. v. U.S., C.D. 4386, Cust. Ct. 102 (1941). The replacement or addition of parts to restore products to their original condition may constitute repair operations for purposes of subheading 9802.00.50, HTSUS, if the particular product does not lose its identity and the replacements or additions are not so extensive as to create a new or different article. CBP finds that the repair operations at issue will not cause the product to lose its identity or create a new and different article. It is apparent that Sterling intends to repair the defective units to restore them to working order and reintroduce them to the United States market as the same items that were previously found defective. The operations noted above, in our view, do not alter the essential character of the wardrobe installation kits. Although certain parts of these assemblies were replaced, the changes were not so extensive as to create a new or commercially different article. Therefore, we find that the operations performed in Mexico, consisting of replacement of defective hangers, constitute “repairs” within the meaning of subheading 9802.00.50, HTSUS. When the wardrobe door installation kits are returned from Mexico after being repaired, they it will be entitled to duty-free treatment, assuming compliance with the documentation requirements of 19 CFR 181.64. HOLDING: On the basis of the information and sample provided, it is our opinion that the Mexican operations enumerated above constitute “repairs” within the meaning of subheading 9802.00.50, HTSUS. Therefore, upon re-importation into the United States, the repaired wardrobe door installation kits are entitled to duty-free treatment under subheading 9802.00.50, HTSUS, 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 official handling the transaction. Sincerely, Monika R. Brenner, Chief Valuation and Special Programs Branch