CLA-2 CO:R:C:V 555046 DBI
Mr. John P. Donohue
Donohue and Donohue
421 Chestnut Street, Fifth Floor
Philadelphia, PA 19106
RE: Applicability of partial duty exemption of item
806.20, TSUS, to certain copiers exported to Mexico
to be cleaned and subassemblies overhauled
Dear Mr. Donohue:
This is in response to your letters of March 24 and June 6,
1988, (your file 519-01), in which you request a ruling
concerning the applicability of item 806.20, Tariff Schedules of
the United States (TSUS), to certain copier-duplicators
manufactured in the U.S. and exported to Mexico for cleaning and
removal of subassemblies for overhaul.
FACTS:
You advise that your client will ship U.S.-made copiers to
Mexico where they will be cleaned and all major subassemblies
will be examined in detail to determine configuration and need
for repairs or alteration. If necessary, subassemblies will be
removed from the mainframe for individual overhaul. You indicate
that the following specific procedures will be performed:
I. Cabinet
A. Remove all cabinet panels
B. Remove material from logic molding cover
C. Repaint all cabinet panels
D. Install a new top cover assembly with built-in stacker
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II. Logic and Control Assembly
A. Replace memory board, CPU (central processing unit)
board, and Operator Control Board
B. Update the input and output boards by soldering in new
components
C. Replace the EPROM (erasable programmable read only
memory) on the zoom board
D. Replace two fans
II. Feeder Upgrade
A. Remove and disassemble the feeder unit
B. Modify copier frame to accept new feeder configuration
C. Reassemble the feeder and add new document positioner
feature
IV. A. Remove 15 volt supply from fuser board
B. Update wire harnesses
C. Place one additional relay on relay board
Following the above-described procedures, copier assemblies,
parts and cabinet panels previously removed are fitted to the
mainframe.
In a telephone conversation dated June 29, 1988, an employee
of your client spoke with a member of my staff and stated that
the software on the memory board had to be reprogrammed in order
to accommodate the new paper feeder and shuttle tray
capabilities. You also indicated that the zoom board would be
replaced in order to change physical mechanisms on the outside of
the copier. Previously, the machine had three buttons, each
pressed once to control reduction capabilities. Following
replacement, the copier will have one button to be pressed three
times. You stated that only the physical structure of the
machine would change and not the reduction capabilities. You
also stated that none of the new memory that resulted from the
reprogramming would change the copier's capabilities, but rather,
the new memory would only make the new physical structures
possible, i.e., feeders, trays and buttons.
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ISSUE:
Whether the described copiers, when returned to the U.S.,
will be eligible for the partial exemption from duty in item
806.20, TSUS, (9802.00.40, Harmonized Tariff Schedule of the
United States (HTSUS))?
LAW AND ANALYSIS:
Item 806.20, TSUS, provides for the assessment of duty on
the value of repairs or alterations performed on articles
returned to the U.S. after having been exported to be advanced in
value or improved in condition by any process of manufacture or
other means. However, the application of this tariff provision
is 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 (1957); Guardian Industries
Corporation v. United States, USITR 3 CIT 9, Slip Op. 82-4 (Jan.
5, 1982).
We have previously held that the reprogramming of EPROMs and
the central processing unit of a video game resulted in the
creation of a new product which had a commercial importance
significantly different from what was exported and, therefore,
constituted more than a repair or alteration within the meaning
of item 806.20, TSUS. C.S.D. 84-8, 18 Cust. Bull. 844 (1984).
We have also held that the rationale of the Court of
International Trade in Data General Corporation v. United States,
4 CIT 182, Slip Op. 82-93, (October 29, 1982), applied to support
the opinion that the reprogramming of an EPROM resulted in a new
and different article of commerce. C.S.D. 84-85, 18 Cust. Bull.
1044 (1984). In Data General, the court held that the
programming of an imported PROM (programmable read only memory)
in the U.S. constituted a substantial transformation so that the
resulting programmed device became a product of the U.S. for the
purposes of item 807.00, TSUS. The court specifically found that
a PROM was a recognized article of commerce which was sold for
the purpose of being programmed and that a programmed PROM was a
different article having as its essence the pattern of
interconnections or stored memory which was established by
programming. We held in our ruling that the essence of an
integrated circuit memory storage device was established by
programming in both a PROM and an EPROM and, therefore, the
reprogramming of an EPROM resulted in a new and different article
of commerce.
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Based on our previous rulings, we believe that the
reprogramming of the memory board and EPROM constitute operations
that exceed a repair or alteration.
In support of our opinion we note that the returned copiers
not only have such enhancements as a feeder, offset stacker and
enhanced control panel, but these copiers also have a new model
number, all of which contribute to the creation of a new and
commercially different article. For these reasons as well, the
operations performed abroad exceed an alteration or repair.
HOLDING:
On the basis of the information submitted, it is our opinion
that the reprogramming of the memory board and EPROM and the
addition of the feeder, stacker and enhanced control panel may
not be considered an alteration as that term in used in item
806.20, TSUS. Therefore, tariff treatment of the returned
copiers under the provisions of item 806.20, TSUS, is precluded.
Sincerely,
John Durant, Director
Commercial Rulings Division
1cc: CO:R:C:V:DIZZO:LDC:7/21/88
Mr. John P. Donohue
Donohue and Donohue
421 Chestnut Street, Fifth Floor
Philadelphia, PA 19106