CLA-2 CO:R:C:V 554945 CW
Mr. Leslie A. Regenbogen
Darlington Fabrics Corporation
1359 Broadway
New York, New York 10018
RE: Applicability of partial duty exemption to certain fabric
subjected to a crushing operation abroad
Dear Mr. Regenbogen:
This is in response to your letter of February 11, 1988, in
which you request a ruling concerning the applicability of item
806.20, Tariff Schedules of the United States (TSUS), to certain
fabric to be imported from France. Samples have been submitted
for examination.
FACTS:
You advise that your company, a manufacturer of warp knitted
elastic fabrics, is considering exporting fabric to France where
it will be subjected to a processing operation designed to impart
a permanent "crushed" or wrinkled look to the fabric. The fabric
will then be imported into the U.S. and sold to U.S. garment
producers for manufacture into swimsuits.
ISSUE:
Whether the described fabric, when returned to the U.S.,
will be eligible for the partial exemption from duty provided for
in item 806.20, TSUS (subheading 9802.00.40, Harmonized Tariff
Schedule of the United States Annotated (HTSUSA)).
LAW AND ANALYSIS:
Item 806.20, TSUS, provides for the assessment of duty on
the value of repairs or alterations performed on articles that
are sent abroad for that purpose. However, the application of
this tariff provision is precluded where the operations performed
abroad destroy the identity of the articles or create new or
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or different commercial articles. Item 806.20, TSUS, treatment
also is precluded where the exported articles are incomplete for
their intended use and the foreign processing operations are
necessary to the preparation or manufacture of finished articles.
See LeGran Manufacturing Co. v. United States, 59 Cust. Ct. 58,
C.D. 3070 (1967), and Dolliff & Company, Inc. v. United States,
66 CCPA 77, C.A.D. 1225 (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,
TSUS, 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.
It is clear in this case that the fabric in its exported
condition is complete for its intended use as material for
swimsuits. Moreover, as was the case with respect to the beads
in Royal Bead, the identity of the fabric is not lost or
destroyed by the "crushing" operation and no new or different
commercial article is created. The "crushing" process also does
not appear to result in any significant change in the quality,
texture, or character of the fabric.
HOLDING
On the basis of the information and samples submitted, it is
our opinion that the process of "crushing" the subject fabric in
France constitutes an "alteration," as that term is used in item
806.20, TSUS, thereby entitling the returned fabric to the
benefits of that tariff provision.
Sincerely,
John Durant
Director, Commercial
Rulings Division