CLA-2 CO:R:C:V 555576 KAC
Kenneth H. Keefe, Esq.
Sandler, Travis & Rosenberg, P.A.
5200 Blue Lagoon Drive
Suite 600
Miami, Florida 33126-2022
RE: Applicability of subheading 9802.00.50, HTSUS, to gem-set
rings created by polishing, cleaning, and application of
platinum irradium solution and a satin fine line.Alteration;
Royal Bead; 071523; 555640
Dear Mr. Keefe:
This is in response to your letter of January 27, 1990, on
behalf of William Schneider, Inc., requesting a ruling on the
applicability of subheading 9802.00.50, Harmonized Tariff
Schedule of the United States (HTSUS), to gem-set rings. Samples
were submitted for examination.
FACTS:
William Schneider Inc. manufactures 14-karat gold castings
which are processed in the U.S. by grinding, tumbling, stripping,
burnishing, prepare polishing, and gem-setting. The gem-set
rings will then be exported to Mexico for further operations.
The rings will be subjected to various polishing operations which
create a lustered and highlighted effect on the gold settings.
The rings are then cleaned and a solution of irradium platinum is
applied to accent the area surrounding the settings' prongs.
Finally, a satin fine line is applied to produce a contrasting
effect on the gold settings.
Upon completion of the Mexican operations, the gem-set rings
will be returned to the U.S.
ISSUE:
Whether the gem-set rings will be entitled to the partial
duty exemption under subheading 9802.00.50, HTSUS, when imported
into the U.S.
LAW AND ANALYSIS:
Subheading 9802.00.50, HTSUS, provides for the assessment of
duty on the value of repairs or alterations performed on articles
sent abroad for that purpose. However, the application of this
tariff provision is precluded in circumstances where the
operations preformed 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), aff'd,
C.D. 1752, 36 Cust.Ct. 46 (1956); Guardian Industries Corporation
v. United States, 3 CIT 9 (1982), Slip Os. 82-4 (Jan. 5, 1982).
Subheading 9802.00.50, HTSUS, treatment is also precluded where
the exported articles are incomplete for their intended use and
the foreign processing operation is a necessary step in the
preparation or manufacture of finished articles. Dolliff &
Company, Inc. v. United States, 81 Cust.Ct. 1, C.D. 4755, 455
F.Supp. 618 (1978), aff'd, 66 CCPA 77, C.A.D. 1225, 599 F.2d 1015
(1979).
In Royal Bead Novelty Co. v. United States, 68 Cust.Ct. 154,
C.D.4353 (1972), it was held that glass beads which were exported
for the application of a half coating of "Aurora Borealis" to
impart a luster effect were entitled to item 806.20, Tariff
Schedules of the United States (TSUS) (the precursor to HTSUS
subheading 9802.00.50), treatment. The Court stated that "the
identity of the articles in question was not lost or destroyed by
the coating process and no new articles were created; beads went
out and beads came back." The Court further stated that the
application of the coating did not change the "quality, texture,
or character" of the beads.
We have previously held that the polishing and cleaning of
finished articles qualify as alterations under item 806.20,
TSUS. See, Headquarters Ruling Letter (HRL) 071523 dated
December 1, 1983 (drilling, polishing and cleaning pearls qualify
as alterations), and HRL 555640 dated August 13, 1990 (gold
jewelry exported for polishing will qualify for the duty
exemption available under subheading 9802.00.50, HTSUS).
With regard to the facts that you have presented and based
on previous cases and rulings, we are of the opinion that the
Mexican operations constitute alterations within the meaning of
subheading 9802.00.50, HTSUS. The gem-set rings in their
exported condition are complete for their intended use as rings,
and, in fact, are marketed within the jewelry industry in this
condition. The Mexican operations do not destroy the identity of
the gem-set rings or create a new or commercially different
article. Gem-set rings are exported to Mexico and gem-set rings
are imported into the U.S. The Mexican operations do not appear
to result in any significant change in the quality, texture, or
character of the gem-set rings.
HOLDING:
On the basis of the information and samples submitted, we
find that the polishing, cleaning and application of irradium
platinum and the satin fine line constitute alterations within
the meaning of subheading 9802.00.50, HTSUS. Therefore, the gem-
set rings will be entitled to the partial duty exemption
available under this tariff provision, upon compliance with the
documentary requirements of section 10.8, Customs Regulations (19
CFR 10.8).
Sincerely,
John Durant, Director
Commercial Rulings Division