H308933

HQ H308933 June 17, 2020 OT:RR:CTF:VS H308933 EGJ CATEGORY: CLASSIFICATION Alex Romero A.F. Romero Co., Inc. 1749 Stergios Rd. Calexico, CA 92231 RE: Eligibility for Preferential Tariff Treatment under Subheading 9802.00.50, HTSUS Dear Mr. Romero: This is in response your ruling request letter filed on behalf of your client AddArmor, dated January 9, 2020. In the request, you asked us to address whether motor vehicles exported from the United States to Mexico to be equipped with one of three different armoring packages are eligible for preferential tariff treatment under subheading 9802.00.50, Harmonized Tariff Schedule of the United States (“HTSUS”) when they are returned to the United States. You have requested confidential treatment for certain information contained in your submission and in the file. Inasmuch as this request conforms to the requirements of 19 C.F.R. § 177.2(b)(7), the request for confidentiality is approved. The information contained within brackets in your request will not be released to the public and will be withheld from published versions of this ruling. FACTS: AddArmor is a U.S. company which exports new and used vehicles to Mexico for installation of protective armoring, and then imports them back into the United States. The vehicles can be any make or model. Each vehicle is fully functional and completely finished when it is exported to Mexico. At a facility in Mexico, workers alter the vehicle by replacing the windshield and windows with bullet-resistant glass, and installing ballistic protection panels. The degree of enhanced protection depends upon which of the three armoring packages that the client selects. With your ruling request, you provided descriptions of the protection packages as featured on a full-sized Cadillac Escalade Sport Utility Vehicle (“SUV”). You note that part of the armoring process involves replacing factory installed vehicle windows with bullet resistant, shatter-proof glass. You state that the ballistic glass is a multi-layered sandwich of acrylic, polycarbonate (a type of plastic), and leaded glass. The thinnest option – 0.8 inch – will stop rounds such as those from a 9 mm or .44 magnum handgun, as well as prolonged physical attacks from blunt objects such as bats and cinder blocks. The thickest glass – 2 inches – will stop a sniper bullet from a high-powered rifle. The workers also install ballistic protection panels inside each door and hatch of the vehicle. You state that ballistic protection panels are made up of ultra-light synthetic laminate materials that are 60% lighter and ten times stronger than ballistic steel. You note that AddArmor’s proprietary ballistic panels add minimal weight to the vehicle, which maintains the look of the vehicle’s exterior appearance and does not compromise the vehicle’s mechanical performance. You note that when the relevant passenger vehicles are exported from the United States, they are classified under subheading 8703.24, HTSUS, which provides for “Motor cars and other motor vehicles principally designed for the transport of persons…: Other vehicles, with only spark-ignition internal combustion reciprocating piston engines.” You note that they remain classified under subheading 8703.24, HTSUS, after the protection packages are installed and they are returned to the United States. You have asked us to issue a determination on the applicability of preferential tariff treatment under subheading 9802.00.50, HTSUS, for each of the three armoring packages. A description of each armoring package is set forth below. #1 Anti-Intrusion Protection Package Vehicles in this package may be shipped new from a dealer, or used from its owner/operator to the facility in Mexico, which: Replaces all of the vehicle factory installed windows with bullet resistant, shatter-proof glass; Reassembles the vehicle to ensure it maintains its original appearance with no visual cues that the vehicle is armored; Fortifies the vehicles doors by installing custom fit ballistic protection panels inside each door and rear hatch; and, Prepares the finished vehicle for export to the United States. #2 Full Protection Package This package is geared towards clients who want to mitigate higher-level deliberate threats such as kidnappings, car bombings, or for working and traveling in combat zones. The vehicle may either be shipped new from the dealer, or used from the owner/operator to the facility in Mexico, which: Replaces all of the factory installed windows with bullet resistant, shatter-proof glass; Encases the entire passenger compartment in ballistic protection; Attaches tires which are designed to run while flat; Installs ballistic protection for the major engine components such as: the radiator, battery, fuel tank, and the computer circuit boards in the Engine Control Module (“ECM”); Reassembles the vehicle so that it maintains its original appearance with no visual cues that the vehicle is armored; and, Prepares the finished vehicle for export to the United States. #3 Executive Protection Package Just like the prior two packages, the vehicles equipped with the executive protection package can either be shipped new from the vehicle dealer, or used from the owner/operator. Upon arrival in Mexico, the processing facility will: Add ballistic protection for either Package #1 or Package #2, per the client’s request; Upgrade the vehicle’s interior cabin with an array of upgraded features, such as built-in flat screen televisions, mini-bars, and leather upholstery; and, Prepares the armored vehicle for export to the United States. You have provided us with the following price range for each armoring package: Anti-Intrusion Package #1 costs approximately [$XXXX - $XXXX] for an SUV, Full Protection Package #2 costs approximately [$XXXX - $XXXX] for a sedan or SUV, and the Executive Protection Package #3 costs approximately [$XXXX - $XXXX]. According to the online version of Kelly’s Blue Book, a model year 2020 Cadillac Escalade SUV has a retail price of $75,000 - $90,000, depending on the vehicle’s features. ISSUE: Whether a vehicle which undergoes antiballistic modification in Package #1, 2, or 3, is eligible for preferential tariff treatment under subheading 9802.00.50, HTSUS. LAW & ANALYSIS: Subheading 9802.00.50, HTSUS, provides for, “Articles returned to the United States after having been exported to be advanced in value or improved in condition by any process of manufacture or other means: other.” Articles returned to the United States after having been repaired or altered in Mexico, whether or not pursuant to warranty, may be eligible for duty-free treatment, provided the documentary requirements of 19 C.F.R. § 181.64 are satisfied. The first two subsections of 19 C.F.R. § 181.64 provide, in pertinent par, as follows: § 181.64 Goods re-entered after repair or alteration in Canada or Mexico. (a) General. This section sets forth the rules which apply for purposes of obtaining duty-free or reduced-duty treatment on goods returned after repair or alteration in Canada or Mexico as provided for in subheadings 9802.00.40 and 9802.00.50, HTSUS. Goods returned after having been repaired or altered in Mexico, whether or not pursuant to a warranty, and 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 … 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. Example. Glass mugs produced in the United States are exported to Canada for etching and tempering operations, after which they are returned to the United States for sale. The foreign operations exceed the scope of an alteration because they are manufacturing processes w

Subheading 9802.00.50, HTSUS, provides for, “Articles returned to the United States after having been exported to be advanced in value or improved in condition by any process of manufacture or other means: other.” Articles returned to the United States after having been repaired or altered in Mexico, whether or not pursuant to warranty, may be eligible for duty-free treatment, provided the documentary requirements of 19 C.F.R. § 181.64 are satisfied. The first two subsections of 19 C.F.R. § 181.64 provide, in pertinent par, as follows:§ 181.64 Goods re-entered after repair or alteration in Canada or Mexico.(a) General. This section sets forth the rules which apply for purposes of obtaining duty-free or reduced-duty treatment on goods returned after repair or alteration in Canada or Mexico as provided for in subheadings 9802.00.40 and 9802.00.50, HTSUS. Goods returned after having been repaired or altered in Mexico, whether or not pursuant to a warranty, and 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 … 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.Example. Glass mugs produced in the United States are exported to Canada for etching and tempering operations, after which they are returned to the United States for sale. The foreign operations exceed the scope of an alteration because they are manufacturing processes which create commercially different products with distinct new characteristics.(b) Goods not eligible for duty-free or reduced-duty treatment after repair or alteration. The duty-free or reduced-duty treatment referred to in paragraph (a) of this section shall not apply to g