CLA-2 CO:R:C:V 555516 KAC
Mr. Mark McEwen
A.N. Deringer Inc.
P.O. Box 284
Highgate Springs, Vermont 05460
RE: Applicability of partial duty exemption of subheading
9802.00.50, HTSUS, to hockey jerseys exported to Canada for
silk screening
Dear Mr. McEwen:
This is in response to your letter of September 22, 1989,
on behalf of Maska U.S., requesting a ruling on the applicability
of subheading 9802.00.50, Harmonized Tariff Schedule of the
United States (HTSUS), to hockey jerseys exported to Canada for
silk screening, and then returned to the U.S. Samples were
submitted for examination.
FACTS:
You state that U.S. made 100% polyester knitted hockey
jerseys are shipped to Maska's parent company, Sport Maska Inc.,
in St. Hyacinthe, Canada. The plain hockey jerseys with
alternating strips located at the bottom and mid-sleeve will be
placed on a machine which silk screens a crest onto the front of
the hockey jersey. The jerseys are then returned to the U.S.
ISSUE:
Whether hockey jerseys which are exported to Canada for silk
screening will be entitled to the partial duty exemption in
subheading 9802.00.50, HTSUS, when returned to the U.S.
LAW & ANALYSIS:
Subheading 9802.00.50, HTSUS, provides for the assessment of
duty on the value of repairs or alterations 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 (1956), aff'g, C.D. 1752, 36
Cust.Ct. 46 (1956); Guardian Industries Corporation v. United
States, 3 CIT 9 (1982), Slip Op. 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).
We have previously held in Headquarters Ruling Letter 555021
dated July 1, 1988 that certain U.S. socks, silk screened abroad
and returned to the U.S., were not eligible for item 806.20,
Tariff Schedules of the United States (TSUS) (now subheading
9802.00.50, HTSUS), treatment because the silk screening was more
than a mere alteration. We stated that the silk screening
created a different article of commerce and constituted a
finishing step in the manufacture of the socks. See also,
Headquarters Ruling Letter 555249 dated June 16, 1989 (silk
screening and chenilling designs on sweatshirts abroad exceeds an
alteration).
With regard to the facts you have provided and based on our
previous rulings, we are of the opinion that the foreign silk
screening process constitutes an operation that exceeds an
alteration. Although garments may 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 subheading 9802.00.50,
HTSUS. Hockey jerseys which have a crest, as a result of a silk
screening process, are different from hockey jerseys without such
a design, and, as such, the foreign silk screening process has
created a different article with unique, specialized appeal.
Furthermore, the silk screening process constitutes a finishing
step in the manufacture of the hockey jerseys.
HOLDING:
On the basis of the information and samples submitted, it is
our opinion that the foreign silk screening process may not be
considered an alteration, and, therefore, tariff treatment of the
returned goods under subheading 9802.00.50, HTSUS, is precluded.
Sincerely,
John Durant, Director
Commercial Rulings Division