CLA-2 CO:R:C:S 555844 DSN
Ms. Deborah Mayville
A.N. Deringer, Inc.
P.O. Box 827
Fort Covington, New York 12937-0827
RE: Eligibility of glucose syrup and cellulase enzyme from
Canada for a partial duty exemption
Dear Ms. Mayville:
This is in response to your letter dated January 9, 1991, on
behalf of Iogen Corporation, requesting a ruling concerning
whether glucose syrup and cellulase enzyme will be eligible for a
duty exemption under the Harmonized Tariff Schedule of the United
States (HTSUS) when imported to the U.S. from Canada.
You request confidential treatment under 5 U.S.C. 552(b) and
19 C.F.R. 103.12(d) regarding your request and this ruling
letter. You state that release of this information would cause
significant harm to Iogen Corporation. As requested,
confidential treatment will be accorded to your request and this
ruling letter.
FACTS:
According to your submissions, crystalline glucose of U.S.
origin is shipped to Canada where it is processed into glucose
syrup by mixing with water and small amounts of phosphoric acid
and sodium hydroxide. The glucose syrup is then imported into
the U.S. where it is combined with trichoderma reesei (a fungus)
to create crude cellulase enzyme. The cellulase enzyme is then
exported to Canada for finishing and packaging.
The finishing operation consists of concentrating the enzyme
from approximately 40 grams per liter to 140 grams per liter and
removing water and any suspended solids. After the finishing
operation, the cellulase enzyme is packaged in drums and imported
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into the U.S. You assert that when the glucose syrup and the
finished enzyme are imported into the U.S., an allowance in duty
should be granted for the cost of the U.S.-origin crystalline
glucose and U.S. manufacturing costs.
ISSUE:
Whether the glucose syrup and cellulase enzyme will be
entitled to the partial duty exemption under subheading
9802.00.80 or 9802.00.50, HTSUS, when imported into the U.S.
LAW AND ANALYSIS:
Subheading 9802.00.80, HTSUS, provides a partial duty
exemption for:
(A)rticles assembled abroad in whole or in part of
fabricated components, the product of the United
States which (a) were exported in condition ready
for assembly without further fabrication, (b) have
not lost their physical identity in such articles by
change in form, shape, or otherwise, and (c) have not
been advanced in value or improved in condition
abroad except by being assembled and except by
operations incidental to the assembly process, such
as cleaning, lubricating, and painting.
All three requirements of subheading 9802.00.80, HTSUS, must
be satisfied before a component may receive a duty allowance. An
article entered under this tariff provision is subject to duty
upon the full cost or value of the imported assembled article,
less the cost or value of the U.S. components assembled therein,
upon compliance with the documentary requirements of section
10.24, Customs Regulations (19 CFR 10.24).
Section 10.16(a), Customs Regulations (19 CFR 10.16(a)),
provides that the assembly operations performed abroad may
consist of any method used to join or fit together solid
components, such as welding, soldering, riveting, force fitting,
gluing, laminating, sewing, or the use of fasteners. The mixing
or combining of liquids, gases, chemicals, food ingredients, and
amorphous solids with each other or with solid components is not
regarded as an assembly.
Therefore, because 19 CFR 10.16(a) expressly provides that
the combining of chemicals is an unacceptable assembly operation,
the further processing of the U.S.-origin crystalline glucose in
Canada by mixing with phosphoric acid and sodium hydroxide would
render the glucose syrup ineligible for subheading 9802.00.80,
HTSUS, treatment. In addition, the finishing operation performed
on the cellulase enzyme in Canada, consisting of concentrating
the enzyme and removing water and suspended solids is also an
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unacceptable assembly pursuant to that regulation. Thus,
subheading 9802.00.80, HTSUS, in inapplicable to either the
glucose syrup or the cellulase enzyme.
Subheading 9802.00.50, HTSUS, provides for the assessment of
duty on the value of repairs or alterations performed on articles
returned to the U.S. after having been exported for that purpose.
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).
In the present case, we find that the operations performed
in Canada on the crystalline glucose and crude cellulase enzyme
exceed an alteration and constitute manufacturing processes.
The mixing of the crystalline glucose with water and chemicals
and the finishing of the cellulase enzyme are necessary steps in
the manufacture of glucose syrup and cellulase enzyme. Moreover,
in their condition as exported to Canada, the products clearly
are unsuitable for their intended use.
HOLDING:
Based on the information submitted, we are of the opinion
that the processing of the crystalline glucose and the finishing
operation performed on the crude cellulase enzyme are
unacceptable assembly operations. Therefore, the glucose syrup
and cellulase enzyme are not entitled to allowances in duty
under subheading 9802.00.80, HTSUS.
It is our opinion that the foreign operations constitute a
process of manufacture and not an alteration, within the meaning
of subheading 9802.00.50, HTSUS. Accordingly, the glucose syrup
and the cellulase enzyme will not be eligible for the partial
duty exemption available under this tariff provision. Therefore,
these products will be dutiable on their full value under the
appropriate tariff provision when imported into the U.S.
Sincerely,
John Durant, Director
Commercial Rulings Division