The applicability of subheading 9802.00.50 to automotive bumpers from the United States

 N284970 April 26, 2017 CLA-2-98:OT:RR:NC:N1:106 CATEGORY: Classification TARIFF NO.: 9802.00.50 Jasmine Moss Customs Coordinator A.G Simpson (USA) Inc.  6640 Sterling Drive South  Sterling Heights, MI 48312-5845 RE: The applicability of subheading 9802.00.50 to automotive bumpers from the United States Dear Ms. Moss, In your letter dated April, 2017, you requested a ruling on whether automotive bumpers were eligible for duty-free treatment under subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS). The items concerned are automotive bumpers for General Motors (GM) or Chrysler. You state in your request that A.G Simpson USA Inc. purchases steel blanks from U.S. steel processors, and stamps the steel into bumper shells at the Sterling Heights location. These bumper shells are then shipped to a sister plant in Canada where they are painted various colors. After the bumpers are painted, they return to the Sterling Heights Facility where they are then assembled (by adding sensors, fog lamps, fasteners, brackets, electrical harnesses, step pads and end caps) into finished bumpers. The finished bumpers are then sent to your GM or Chrysler customers in the United States to be incorporated into their vehicle assembly.       You inquire as to whether the bumper shells returning to the U.S. from Canada after undergoing the described painting process will qualify for a partial duty exemption so that your company need only pay duty on the value of the painting process. Subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS), provides for articles returned to the United States after having been exported for repairs or alterations not covered under a warranty. As the duty rate would be based on the North American Free Trade Agreement (NAFTA) rate for the finished good from Canada, and that rate is Free, if the bumper shells qualify for classification in subheading 9802.00.50, HTSUS, it would enter from Canada duty free. Subheading 9802.00.50, HTSUS, provides a full or partial duty exemption for articles returned to the United States after having been exported to be advanced in value or improved in condition by means of repairs or alterations, not pursuant to a warranty. Articles returned to the United States after having been repaired or altered in Canada, may be eligible for a duty exemption under this provision, i.e., the articles are subject to duty upon the value of the repairs or alterations using the applicable rate under the NAFTA. In order to receive this preferential duty treatment, the importer must ensure that the documentary requirements of section 181.64, CBP Regulations, (19 C.F.R. § 181.64), are satisfied. Section 181.64(a) states, in pertinent part, “ ‘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.” Classification under subheading 9802.00.50, HTSUS, is precluded where: (1) the exported articles are not complete for their intended use and the foreign processing operation is a necessary step in the preparation or manufacture of finished articles; or (2) the operations performed abroad destroy the identity of the exported articles or create new or commercially different articles through a process of manufacture. See Guardian Indus. Corp. v. United States, 3 Ct. Int’l Trade 9 (1982), and Dolliff & Co., Inc., v. United States, 81 Cust. Ct. 1, C.D. 4755, 455 F. Supp. 618 (1978), aff’d, 66 C.C.P.A. 77, C.A.D. 1225, 599 F.2d 1015 (1979). You state that the bumper shells will be further combined with sensors, fog lamps, fasteners, brackets, electrical harnesses, step pads, and end caps after being reimported from Canada. According to the automotive industry, bumpers may be sold with or without the above-mentioned components. Thus, it is the opinion of this office that the bumper shells in their imported condition are complete articles of commerce. Furthermore, the painting operation in Canada does not transform the bumpers in name, use, performance characteristics or tariff classification. Consideration of all of these factors leads to the conclusion that the bumpers are complete articles upon exportation to Canada, and that the painting operation constitutes an alteration within the meaning of subheading 9802.00.50, HTSUS. Therefore, the bumpers may be entered under this tariff provision with a duty only upon the value of the painting alteration operation, upon compliance with the documentary and regulatory requirements of section 181.64, Customs Regulations (19 CFR 181.64). This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177). A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, please contact National Import Specialist Liana Alvarez at [email protected]. Sincerely, Steven A. Mack Director National Commodity Specialist Division