Applicability of subheading 9802.00.50, HTSUS, to used automobile and light truck bumpers; Article 509; NAFTA

HQ 956746 January 3, 1995 CLA-2 CO:R:C:S 956746 WAS CATEGORY: Classification TARIFF NO.: 9802.00.50 Mr. Randy L. Pohler Dal-Chrome Company, Inc. dba/DC Bumper Exchange 3044 Morrell Street Dallas, TX 75216 RE: Applicability of subheading 9802.00.50, HTSUS, to used automobile and light truck bumpers; Article 509; NAFTA Dear Mr. Pohler: This is in reference to your letter dated May 31, 1994, concerning the eligibility of used automobile and light truck bumpers for duty-free treatment under subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS). FACTS: Based on the information submitted, Dal-Chrome will ship used or scrap automobile and light truck bumpers from the U.S. to a related Mexican factory for repair operations. The bumpers will be repaired to a "like new" condition in Mexico before they are returned to the U.S. In Mexico, the plastic bumpers will be straightened (through immersion in hot water), repaired (through the application of an epoxy mixture), sanded, primed, painted, and boxed for shipment to the U.S. The steel bumpers will be straightened (through pounding and the use of hydraulic presses), sanded, and polished and returned to the importer's Dallas facility for a final chroming process. ISSUE: Whether the used automobile and light truck bumpers which are refurbished in Mexico will qualify for the duty-free treatment under subheading 9802.00.50, HTSUS, when returned to the U.S. LAW AND ANALYSIS: Articles returned to the U.S. after having been exported to Mexico be advanced in value or improved in condition by repairs or alterations may qualify for duty-free treatment under subheading 9802.00.50, HTSUS, provided the foreign operation does not 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'd C.D. 1752, 36 Cust. Ct. 46 (1956); Guardian Industries Corp. v. United States, 3 CIT 9 (1982). Accordingly, entitlement to this tariff treatment is precluded where the exported articles are incomplete for their intended purpose prior to the foreign processing and the foreign processing operation is a necessary step in the preparation or manufacture of finished articles. Dolliff & Company, Inc. v. United States, 455 F. Supp. 618 (CIT 1978), aff'd, 599 F.2d 1015 (Fed. Cir. 1979). Section 181.64, Customs Regulations (19 CFR 181.64) defines "repairs or alterations" for purposes of NAFTA as follows: 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 United States. The replacement and/or addition of parts to restore products to their original condition may constitute repair operations for purposes of subheading 9802.00.50, HTSUS, 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. In Press Wireless, Inc. v. United States, C.D. 438 (1941), worn-out radio tubes were sent abroad for the replacement of filaments damaged through use and for other necessary repairs designed to restore the tubes to a condition which prolonged the use for which they were originally designed. The court held that the tubes returned to the U.S. were identical to the tubes exported for repairs. The court further stated that the fact that they had been restored to their original efficiency so as to prolong their usefulness was of no consequence.  In HRL 556992 dated May 7, 1993, Customs held that the replacement of a monochrome display on a computer with an active-matrix color display qualified as an acceptable repair or alteration within the meaning of subheading 9802.00.50, HTSUS. In addition, in HRL 555084 dated November 29, 1988, Customs held that the replacement of a worn down abrasive surface in a triangular grinding piece used in grinding machinery constituted a repair as that term is used in subheading 9802.00.40, HTSUS. Moreover, in HRL 554922 dated June 13, 1988, Customs held that the replacement of defective components of a fuel nozzle in Mexico constituted an acceptable repair operation. In that case, the nozzle body (or body assembly) and the check valve was kept together as a matched set throughout the repair operation. We held that as long as the identity of the matched sets of nozzles and check valves exported from the U.S. was maintained throughout the repair process, other defective parts could be replaced and the repaired complete units were eligible for the partial duty exemption under subheading 9802.00.50. In HRL 555135 dated October 18, 1988, passenger automobiles were exported to Mexico to be repaired and refurbished and then returned to the U.S. In this case, components such as the engine and drivetrain as well as the steering and suspension, were rebuilt and repaired in Mexico. Repairs were made to other components, including the frame, shell, seats, etc., as needed. In addition, disposable items, such as oil, brake shoes, tires and filters were replaced. The frame, bumpers, and other body parts were repaired by straightening and/or welding. Items such as seats, headliners, carpets and dash items were repaired when possible, but in most cases, these units were replaced or required some replacement parts. Defective windows, windshields, bulbs, lens covers and mirrors were replaced. The automobile was reassembled and painted before being returned to the U.S. for sale. Customs held that the described foreign repairs and refurbishments did not create a new or commercially different article. Customs stated that the automobiles that were returned were the same articles as those exported with the described modifications. Therefore, the foreign operations constituted an acceptable repair operation within the meaning of subheading 9802.00.50, HTSUS, and the automobiles were entitled to a partial duty exemption when returned to the U.S. In the instant case, we are of the opinion that the articles that will be returned - automobile and light truck bumpers - are the same as the articles that will be exported for repairs. Although the bumpers will undergo various foreign operations which include straightening, sanding, priming, painting, and packaging, these operations do not destroy the identity of the article, nor do these operations create a new or different commercial article. The foreign processing operations of the exported bumpers do not produce changes in the performance characteristics of the exported article that would alter its use from that which it was originally designed. According to the reasoning in Press Wireless and the above-cited cases, the fact that the used automobile and light truck bumpers will be restored to their original condition will not preclude the article from receiving duty-free treatment under subheading 9802.00.50, HTSUS. Accordingly, it is our position that the operations performed in Mexico to the used automobile bumpers are considered proper "repairs" within the meaning of subheading 9802.00.50, HTSUS. HOLDING: Based on the information provided, the operations performed in Mexico to the used automobile bumpers are considered "repairs" within the meaning of subheading 9802.00.50, HTSUS, and therefore, the returned automobile bumpers will be entitled to duty-free treatment under this provision, upon compliance with the documentation requirements of 19 CFR 181.64. 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 Divison