HQ 557991

October 17, 1994

CLA-2 CO:R:C:S 557991 WAS

CATEGORY: Classification

John N. Peterson, Esq.

80 Broad Street

Suite 3400

New York, N.Y. 10004

RE: Applicability of subheading 9802.00.50, HTSUS, to photocopier drum
cartridges; repairs; alterations; NAFTA; Article 509; Article 307;
section 181.64

Dear Mr. Peterson:

This is in response to your letter dated June 30, 1994, on

behalf of your client, Katun Corporation, concerning the

applicability of subheading 9802.00.50, Harmonized Tariff

Schedule of the United States (HTSUS), to used photocopier drum

cartridges from Mexico. You have included a brochure depicting

the merchandise in question for our review.

FACTS:

You state that Katun Corporation will gather used drum

cartridges in the U.S. which are specially designed for use with

particular models of Canon plain paper electrostatic

photocopiers. You further state that each cartridge consists of

a photoreceptor drum \-- the primary component of the drum unit \--

which is installed into a specially designed plastic housing.

According to your submission, the housing also features a corona

wire assembly, which electrically charges the drum, and a drum

cleaning blade. You claim that the cartridges will be exported

to Mexico, where they will be repaired, altered, and restored to

their original operating condition, and returned to the U.S.

The operations in Mexico are as follows:

\(1\) In Mexico, the used cartridges will be partially

disassembled, to a pre-determined level, for examination,

cleaning and repair;

\(2\) The handle will be removed from the drum unit, and the

fastener holding the corona assembly will be undone;

\(3\) The waste toner hopper and drum cleaning blade will also

be disassembled from the cartridge;

\(4\) After disassembly, the cartridge frame will be inspected

for damage and cleaned thoroughly;

\(5\) Foam seals and mylar blades will be inspected for

damage, notches and defects;

\(6\) End blocks of the corona wire assemblies will be

inspected for cracks, damage and \"burns\" caused by high

temperature operation;

\(7\) The corona wire will be replaced;

\(8\) All labels will be removed and replaced;

\(9\) Individual components will be replaced or repaired, as

necessary;

\(10\) A new photoreceptor drum will be inserted into the

cartridge housing;

\(11\) A new cleaning blade will be installed, other

components of the cartridge will be reassembled, and the

refurbished cartridge will be inspected and packed for shipment

to the U.S. in a protective sealed foil bag (which protects the

light-sensitive photoreceptor).

You state that where parts are removed during the

disassembly and cleaning process, Katun will ensure that the

subcomponents are inventoried in the correct machine model

application parts bins and labeled accordingly. In this way, you

submit that the identity of each of the cartridges exported for

repair and alteration will be maintained. A part which is

removed from one cartridge will generally be returned to another

cartridge of the same model number (although not necessarily the

exact same cartridge from which removed).

You claim that the extent to which particular parts of these

cartridges will be replaced will depend upon the condition of

each individual cartridge. However, you state that the following

components will be replaced in 100% of all cases:

Cartridge Model Part Origin

Canon 1010 Photoreceptor drum U.S.

Drum cleaning blade U.S.

Corona wire Japan

Mylar sealing tape U.S.

Canon 1215 Photoreceptor drum U.S.

Drum cleaning blade Japan

Corona wire Japan

Mylar sealing tape U.S.

Canon 2020 Photoreceptor drum U.S.

Drum cleaning blade Japan

Corona wire Japan

Mylar sealing tape U.S.

It is your opinion that the refurbished cartridges will have

the same physical specifications and capabilities as the

cartridges exported for repair had when new. You state that the

refurbished cartridges will be returned to the U.S. and sold as

replacement aftermarket copier parts and supplies.

ISSUE:

Whether the used copier drum cartridges which are

refurbished in Mexico will qualify for the duty exemption

available under subheading 9802.00.50, HTSUS, when returned to

the U.S.

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 or complete 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 commercially different articles through

a process of manufacture. See A.F. Burstrom v. United States, 44

CCPA 27, C.A.D. 631 (1956), aff\'d C.D. 1752, 36 Cust. Ct. 46

(1956); Guardian Industries Corp. v. United States, 3 CIT 9

(1982). Accordingly, entitlement to this tariff treatment is

precluded where the exported articles are incomplete for their

intended purpose prior to the foreign processing and the foreign

processing operation is a necessary step in the preparation or

manufacture of finished articles. Dolliff & Company, Inc. v.

United States, 455 F. Supp. 618 (CIT 1978), aff\'d, 599 F.2d 1015

(Fed. Cir. 1979).

Article 307 of the North American Free Trade Agreement

(NAFTA) and Annex 307.1 of the Agreement provide, that articles

exported from the U.S. to Mexico for \"repairs or alterations\"

may, upon their return, enter into the U.S. free of duty.

Article 307 of NAFTA provides in pertinent part as follows:

1\. Except as set out in Annex 307.1, no Party may apply a

Customs duty to a good, regardless of its origin, that re-enters its
territory after that good has been exported from

its territory to the territory of another Party for repair

or alteration, regardless of whether such repair or

alteration could be performed in its territory.

Section 181.64, Customs Regulations (19 CFR 181.64) defines

\"repairs or alterations\" for purposes of NAFTA as follows:

For purposes of this section, \"repairs or alterations\" means

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.

The replacement and/or addition of parts to restore products

to their original condition may constitute repair operations for

purposes of subheading 9802.00.50, HTSUS, provided that the

particular article does not lose its identity and the replacement

and/or additions are not so extensive as to create a new or

different article. In Press Wireless, Inc. v. United States,

C.D. 438 (1941), worn-out radio tubes were sent abroad for the

replacement of filaments damaged through use and for other

necessary repairs designed to restore the tubes to a condition

which prolonged the use for which they were originally designed.

The court held that the tubes returned to the U.S. were identical

to the tubes exported for repairs. The court further stated that

the fact that they had been restored to their original efficiency

so as to prolong their usefulness was of no consequence.

In HRL 556992 dated May 7, 1993, Customs held that the

replacement of a monochrome display on a computer with an active-matrix
color display qualified as an acceptable repair or

alteration within the meaning of subheading 9802.00.50, HTSUS.

In addition, in HRL 555084 dated November 29, 1988, Customs held

that the replacement of a worn down abrasive surface in a

triangular grinding piece used in grinding machinery constituted

a repair as that term is used in subheading 9802.00.40, HTSUS.

Moreover, in HRL 554922 dated June 13, 1988, Customs held that

the replacement of defective components of a fuel nozzle in

Mexico constituted an acceptable repair operation. In that case,

the nozzle body (or body assembly) and the check valve was kept

together as a matched set throughout the repair operation. We

held that as long as the identity of the matched sets of nozzles

and check valves exported from the U.S. was maintained throughout

the repair process, other defective parts could be replaced and

the repaired complete units were eligible for the partial duty

exemption under subheading 9802.00.50.

In HRL 555819 dated October 11, 1991, Customs found that the

replacement of 17 defective parts (i.e., resistors, capacitors,

diodes, transistors, crystals, switches, integrated circuits,

potentiometers, speakers, microphones, batteries, antennas, and

cords) of cordless telephones, answering machines, and

combination cordless telephone/answering machines in Mexico

constituted a genuine repair operation. In this case, it was

noted that in replacing these parts, the integrity of each unit

was maintained, i.e., there was no commingling of disassembled

parts with other like parts from other units.

In the instant case, we are of the opinion that the product

that will be returned - photoreceptor drum cartridge - is the

same as the product that will be exported for repairs. Although

the photoreceptor drum, cleaning blade, corona wire and mylar

sealing tape will be replaced in all three types of cartridges,

the identity of the article will not be destroyed and the

replacement of these components will not create a new or

different commercial article. According to the reasoning in

Press Wireless and the above-cited cases, the fact that the

photoreceptor drum cartridges will be restored to their original

efficiency will not preclude the article from receiving duty-free

treatment under subheading 9802.00.50, HTSUS.

HOLDING:

Based on the information provided, the operations performed

in Mexico to the used photocopier drum cartridges are considered

\"repairs\" within the meaning of subheading 9802.00.50, HTSUS, and

therefore, the photocopier drum cartridges will be entitled to

duty-free treatment under this provision, upon compliance with

the documentation requirements of 19 CFR 181.64.

Sincerely,

John Durant, Director

Commercial Rulings Division