CLA-2 R:C:S 559088 MLR
Ms. Judy Campbell
W.Y. Moberly, Inc.
Box 164
Sweetgrass, Montana 59484
RE: Applicability of HTSUS subheading 9802.00.50 to alpine
skis; Canada; NAFTA; Article 307; Article 509; remove
top sheet; apply epoxy; sand; grind; urethane coat;
screen print; clean
Dear Ms. Campbell:
This is in reference to your letter of February 21,
1995, to the New York Area Seaport, requesting a ruling on
behalf of Canada Ski Corp., regarding the applicability of
subheading 9802.00.50, Harmonized Tariff Schedule of the
United States (HTSUS), to alpine skis.
FACTS:
A U.S. company obtains used alpine skies from various
U.S. ski areas and rental shops. These skis are exported to
Canada Ski Corp. where they are evaluated for repairable
damage. As necessary, depending on the damage of the skis,
the skis are sanded to remove the existing plastic top
sheet; ultra violet reactive epoxy is applied to replace the
eliminated top sheet; gouges to the top surface and sidewall
are filled with epoxy; the ski bases are shaped and patched;
the ski tops and bases are ground, hand sanded, and washed
and dried; a coat or two of pigmented urethane is applied to
provide a basic color on top of which a graphic is screen
printed; and lastly, a final ultra violet reactive clear
coat is applied to protect the art. The skis are then
returned to the ski areas and rental shops in the U.S. The
New York Area Seaport informs us that the alpine skis are
classifiable under subheading 9506.11.40, HTSUS.
ISSUE:
Whether the operations performed to the used alpine
skies constitute repairs within the meaning of subheading
9802.00.50, HTSUS.
LAW AND ANALYSIS:
Subheading 9802.00.50, HTSUS, provides a partial or
complete duty exemption for articles exported from and
returned to the U.S. after having been advanced in value or
improved in condition by repairs or alterations, provided
the documentary requirements of section 181.64, Customs
Regulations (19 CFR 181.64), are satisfied. However,
entitlement to this tariff treatment is precluded in
circumstances where the operations performed abroad destroy
the identity of the exported articles or create new or
commercially different articles through a process of
manufacture. 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 Corp. v. United States, 3 CIT 9
(1982).
Section 181.64, Customs Regulations (19 CFR 181.64),
which implements Article 307 of the North American Free
Trade Agreement (NAFTA), provides that goods returned after
having been repaired or altered in Canada pursuant to a
warranty, are eligible for duty-free treatment, provided
that the requirements of this section are met. However,
goods returned after having been repaired or altered in
Canada other than pursuant to a warranty are subject to duty
upon the value of the repairs or alterations using the
applicable duty rate under the United States-Canada Free
Trade Agreement, provided that the documentation and other
requirements of this section are met.
"Repairs or alterations" for purposes of 19 CFR 181.64
are defined as follows:
... restoration, addition, renovation, redyeing,
cleaning,
resterilizing, or other treatment which does not destroy
the
essential characteristics of, or create a new or
commercially different good from, the good exported from
the
United States.
In Headquarters Ruling Letter (HRL) 956746 dated January
3, 1995, Customs determined that used or scrap automobile
and light truck bumpers were eligible for subheading
9802.00.50, HTSUS, treatment when they were returned from
Mexico to the U.S. In Mexico, the plastic bumpers were
straightened, an epoxy mixture was applied, and they were
sanded, primed, and painted. The steel bumpers were
straightened through pounding and the use of hydraulic
presses, sanded, and polished. It was determined that the
articles returned were the same articles that were exported
for repairs, namely automobile and light truck bumpers.
Furthermore, the various foreign operations did not destroy
the identity of the articles, nor did they create a new or
different commercial article.
Similarly, in this case, we find that the operations
performed in Canada, consisting of removing the existing top
sheet, applying epoxy, sanding, grinding, urethane coatings,
screen printing, and cleaning constitute repairs, since the
used alpine skis are restored to their original condition.
Therefore, consistent with definition of repairs in 19 CFR
181.64 and the ruling cited above, the alpine skis will
qualify for the preferential tariff treatment provided by
subheading 9802.00.50, HTSUS, when returned to the U.S.,
provided the documentary requirements of 19 CFR 181.64 are
satisfied.
HOLDING:
On the basis of the information submitted, it is our
opinion that the Canadian operations consisting of removing
the existing top sheet, applying epoxy, sanding, grinding,
urethane coatings, screen printing, and cleaning constitute
"repairs" since these operations return the used alpine
skies to their original condition. Therefore, the alpine
skies qualify for the for the preferential tariff treatment
provided by subheading 9802.00.50, HTSUS, when returned to
the U.S., provided the documentary requirements of 19 CFR
181.64 are satisfied.
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 handling the transaction.
Sincerely,
John Durant, Director
Commercial Rulings Division