CLA-2 CO:R:C:S 557770 WAS
Mr. Thomas O. Powers
4180 Huanui Street
Honolulu, HI 96816
RE: Eligibility of plastic fake fingernails for the partial duty
exemption under subheading 9802.00.50; 554371; 555021
Dear Mr. Powers:
This is in response to your letter dated November 29, 1993,
concerning the applicability of the partial duty exemption under
subheading 9802.00.50, Harmonized Tariff Schedule of the United
States (HTSUS), to painted plastic fake fingernails from
Indonesia.
FACTS:
You state that the plastic imitation fingernails are
produced in the U.S. by Allied Mold & Die Corp., California. The
nails are available in assorted solid colors and are sold in sets
of 24. You state that you purchase the nails for approximately
two cents per nail. The nails are sent to Puri Mas Art Gallery,
Indonesia, where they are painted with decorative designs. The
cost of the painting is approximately two cents per nail. You
also state that the importer provides the assorted paints and
other supplies, which are purchased in the U.S. The decorated
nails are then returned to the U.S., where they are packaged and
then sold as a decorative, wearable accessory.
ISSUE:
Whether the U.S.-origin plastic fake fingernails which are
painted with decorative designs in Indonesia are entitled to the
partial duty exemption 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
be advanced in value or improved in condition by repairs or
alterations may qualify for the partial duty exemption under
subheading 9802.00.50, HTSUS, provided the foreign operation does
not destroy the identity of the exported articles or create new
or different articles through a process of manufacture. However,
entitlement to this tariff treatment is precluded where the
exported articles are incomplete for their intended use prior to
the foreign processing, Guardian Industries Corp. v. United
States, 3 CIT 9 (1982), or where the foreign operation
constitutes an intermediate processing operation, which is
performed as a matter of course in the preparation or the
manufacture of finished articles. Dolliff & Company, Inc. v.
United States, C.D. 4755, 81 Cust. Ct. 1, 455 F. Supp. 618
(1978), aff'd, C.A.D. 1225, 66 CCPA 77, 599 F.2d 1015 (1979).
Articles entitled to this partial duty exemption are dutiable
only upon the cost or value of the foreign repairs or alterations
when returned to the U.S., provided the documentary requirements
of 19 CFR 10.8 are satisfied.
In HRL 554371 dated December 10, 1986, we held that the
process of hand-painting sweatshirts abroad is not considered a
proper repair or alteration under item 806.20, Tariff Schedules
of the United States (TSUS) [the precursor to subheading
9802.00.50, HTSUS]. In HRL 554371, we held that the hand-painting operations constituted a finishing of the garment
performed in the course of manufacture - the last step in the
total process of producing hand-painted sweatshirts. We further
noted that, depending upon customer needs, the garments were not
considered finished until they had undergone the final design
painting and had become ready for marketing and sale.
In another case, we held that silk screening U.S.-origin
socks in Taiwan constituted an operation that exceeded an
alteration. See HRL 555021 dated July 1, 1988. In HRL 555021,
we stated that although the garments can be worn whether a design
is imprinted by silk screening or not, silk screening, like
printing and hand-painting, is considered neither a repair nor an
alteration under the provisions of item 806.20, TSUS. We further
stated in HRL 555021 that socks which have a design as a result
of a silk screening process are different from socks without such
a design, and, as such, the foreign silk screening process has
created a new and different article of commerce.
We believe that our holdings in the above-described rulings
are controlling with respect to the applicability of subheading
9802.00.50, HTSUS, to the plastic fingernails under consideration
in the instant case. We believe that the foreign decorative
painting constitutes an operation that exceeds an alteration
under subheading 9802.00.50, HTSUS. The design painting
operations to be performed in Indonesia on the exported
fingernails clearly will impart substantially new and different
characteristics to the fingernails. Although the plastic nails
may be worn whether a design is painted or not, as in the
printing and silk screening operations described in the above
cases, the application of a particular design on the fingernails
gives them a unique and specialized appeal, and is a prerequisite
to marketing and selling these fingernails in the U.S. Thus, we
view the exported fingernails as incomplete for their intended
use and the foreign painting operations as a necessary step in
the production of the final article - decorative painted
fingernails.
HOLDING:
On the basis of the information submitted, it is our opinion
that the foreign painting operations are not considered proper
alterations within the meaning of subheading 9802.00.50, HTSUS.
Therefore, upon return to the U.S., the painted plastic
fingernails will not be entitled to the partial duty exemption
available under this tariff provision, but will be dutiable upon
their full value.
Sincerely,
John Durant, Director
Commercial Rulings Division