Only Goods Complete for Intended Use Qualify for 9802.00.50, CBP Says in Proposed Ruling

Goods that are exported before being completed for their intended use are not eligible for treatment under the 9802.00.50 subheading for merchandise returned after alteration or repair, CBP said in a proposed ruling revocation. CBP said in the Jan. 2 Customs Bulletin (Vol. 53, No. 48) that it proposed to revoke a 2006 ruling that allowed for 9802.00.50 treatment on automotive rim forgings. Subheading 9802.00.50 requires duties only on the value of the repairs or alterations.

The forgings are imported from Taiwan and then exported to Mexico and eventually returned. The forgings in Mexico go through “staging, grinding with air grinder, polishing with polishing wheel, sanding, buffing, and cleaning,” CBP said. After being returned to the U.S., the goods “undergo the following operations: compound removal, pre-clean spray wash, clean spray wash, rinse spray wash, deoxidizer spray (pre-treatment process prior to painting the wheels), rinse spray wash, oven drying, application of a clear coat (powder pain process), curing, coating thickness inspection, and packaging.

CBP said the operations in Mexico are in fact “necessary, intermediate steps in the production of the finished good.” The forgings “require additional processing prior to exportation to Mexico to be suitable for their intended use,” CBP said. The U.S. processing steps “are necessary to ensure the automotive rims can withstand rusting and exposure to the outdoor environment,” CBP said. “Since the automotive rim forgings are not complete for their intended use prior to exportation and the Mexican operations are merely a continuation of the production of the finished good, we conclude that the subject goods do not qualify for subheading 9802.00.50,” the agency said.