CLA-2-05 RR:TC:SM 560168 DEC
Mr. Douglas Davidson
Joliette Porcelain, Incorporated
516 rue Cartier
Joliette, Quebec J6E 4T7
RE: Alteration; ceramic dinnerware; HRL 557770; HRL 554371; HRL
555021
Dear Mr. Davidson:
This is in response to your letters dated October 18 and
October 30, 1996, requesting a ruling concerning the
applicability of subheading 9802.00.50, Harmonized Tariff
Schedule of the United States (HTSUS), to the decoration of
ceramic dinnerware. Samples of the dinnerware before and after
the decorating process were submitted for examination.
FACTS:
Joliette Porcelain, Incorporated (Joliette), currently
exports blank dinnerware products from the U.S. to Canada where
ceramic decals, and in some cases painting bands will be applied
to the articles in Canada. After the decorating process, the
dinnerware will be kiln fired and returned to the U.S. You state
that undecorated dinnerware, which is produced by the Pfaltzgraf
Company, is currently being sold in the U.S. marketplace. The
decorating processes may include an over-the-glaze application of
decals and/or painted bands. In addition, the processes may also
include direct printing, tampographie, or spray decoration.
ISSUE:
Whether the "decorating" operation described above qualifies
as a repair or alteration under subheading 9802.00.50, HTSUS.
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 returned from Canada which are 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 181.64 are
satisfied.
In Headquarters Ruling Letter (HRL) 557770, dated February
24, 1994, we held that plastic fingernails, which were sold as a
wearable accessory, produced in the U.S. and then sent abroad to
be painted with decorative designs were not entitled to
classification under subheading 9802.00.50, HTSUS. We stated
that the foreign decorative painting constituted an operation
that exceeds an alteration under subheading 9802.00.50, HTSUS.
The design painting operations imparted substantially new and
different characteristics to the fingernails. Although the
plastic nails may be worn whether a design is painted or not, 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
viewed 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.
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 various
decorated dinnerware articles to be imported by Joliette. The
application of ceramic decals or painting bands on blank
dinnerware products, followed by kiln firing, the use of an over-the-glaze process to apply decals and/or painted bands, direct
printing, tampographie, or spray decoration on blank dinnerware
products which produce results similar to the samples submitted
with your ruling request constitute operations that exceed an
alteration under subheading 9802.00.50, HTSUS. The design
painting operations to be performed in Canada on the exported
blank dinnerware clearly will impart substantially new and
different characteristics to the dinnerware. Although the
dinnerware may be used whether a design is applied to it or not,
as in the printing and silk screening operations described in the
above cases, the application of a particular design on the
dinnerware gives them a unique and specialized appeal, and is a
prerequisite to marketing and selling these dinnerware items in
the U.S. Thus, we view the exported dinnerware as incomplete for
its intended use and the foreign painting operations as a
necessary step in the production of the final article - -
decorative dinnerware.
HOLDING:
On the basis of the information submitted, it is our opinion
that the foreign decoration processes are not considered proper
alterations within the meaning of subheading 9802.00.50, HTSUS.
Therefore, upon return to the U.S., the decorated dinnerware as
described above will not be entitled to the partial duty
exemption available under this tariff provision, but will be
dutiable upon their full value.
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.
Sincerely,
John Durant, Director
Tariff Classification Appeals
Division