H325232

U.S. Department of Homeland Security Washington, DC 20229 U.S. Customs and Border Protection 
 HQ H325232 June 27, 2022 OT:RR:CTF:VS H325232 CMR CATEGORY: Classification Alex Romero AF Romero & Co. U.S. Customs Brokers & Warehouse 1749 Stergios Road Calexico, CA 92231 RE: Refurbished solar panels; Subheading 9802.00.50, HTSUS Dear Mr. Romero: This is in response to your request, on behalf of your client, We Recycle Solar Co. (hereinafter, We Recycle), for a ruling on the applicability of subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS) to used solar panels exported from the United States, processed in Mexico, and returned to the United States. You present three processing scenarios set forth below. FACTS: You state that your client, We Recycle, collects used solar panels in the United States. The used solar panels range in age from 1 to 30 years of use. The used solar panels are collected for refurbishment and re-use, and their individual countries of origin are unknown. You indicate that the used solar panels are classified under subheading 8541.40.60, Harmonized Tariff Schedule of the United States (HTSUS). However, that provision no longer appears in the tariff schedule. We note that the applicable provision in the 2022 tariff schedule is 8541.43.00, HTSUS, which provides for, in relevant part: “Semiconductor devices . . . ; photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels; . . . : parts thereof: Photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels; light-emitting diodes (LED): Photovoltaic cells assembled in modules or made up into panels, Other. The used solar panels are sent to Mexico where they are sorted according to the nature and extent of repair needed. The used solar panels will be processed in one of three methods. First, some used solar panels will only be inspected, tested, and returned to the United States. Second, some used solar panels will be inspected, tested, cleaned, and returned to the United States. Third, some used solar panels will be inspected, tested, cleaned, repaired in Mexico, and returned to the United States. The repairs of used solar panels in Mexico can consist of replacement of a junction box, replacement of cables, replacement of cable ends, repair of glass damage, and repair of the back sheet. After processing in Mexico, the solar panels are packaged for sale. ISSUES: Whether the used solar panels, processed as described above, qualify for preferential tariff treatment under subheading 9802.00.50, HTSUS? What is the origin of the used solar panels under the three processing scenarios described above? LAW AND ANALYSIS: Subheading 9802.00.50, HTSUS The United States – Mexico – Canada Agreement (USMCA) was signed by the Governments of the United States, Mexico, and Canada on November 30, 2018. It was approved by the U.S. Congress with the enactment on January 29, 2020, of the USMCA Implementation Act, Pub. L. 116-113, 134 Stat. 11, 14 (19 U.S.C. § 4511(a)). The USMCA provides at Article 2.8 for goods re-entered after repair or alteration. The agreement states, in relevant part: No Party shall apply a customs duty to a good, regardless of its origin, that re-enters its territory after that good has been temporarily exported from its territory to the territory of another Party for repair or alteration, regardless of whether that repair or alteration could have been performed in the territory of the Party from which the good was exported for repair or alteration or has increased the value of the good. * * * 4. For the purposes of this Article, repair or alteration does not include an operation or process that: destroys a good’s essential characteristics or creates a new or commercially different good; or (b) transforms an unfinished good into a finished good. The provision for articles exported for repair or alteration and re-imported appears at subheading 9802.00.50, HTSUS. This provision provides a 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 in Canada or Mexico. Note 3, Subchapter II, Chapter 98, sets forth additional provisions applicable to subheading 9802.00.50, HTSUS. The Special Program Indicator for the USMCA which appears in the tariff rate column of the tariff is “S” or “S+.” Notes 3(d) and (e), Subchapter II, Chapter 98, indicate, in relevant part, that the symbol “S” in parentheses indicates that the rates of duty in the “Special” column 1 and the “Special” subcolumn of column 1, for goods classified in subheading 9802.00.50, HTSUS, apply to any goods which are returned to the United States after having been repaired in Canada or Mexico, respectively, whether or not such goods are goods of Canada or Mexico under the terms of general note 11 to the tariff schedule. Nineteen CFR § 182.112(a) provides: General. This section sets forth the rules that apply for purposes of obtaining duty-free 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 Canada or Mexico, regardless of whether the repair or alteration could be performed in the United States or has increased the value of the good and regardless of their origin, 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, re-dyeing, cleaning, re-sterilizing, or other treatment that does not destroy the essential characteristics of, or create a new or commercially different good from, the good exported from the United States. At 19 CFR § 182.112(b), the Customs and Border Protection (CBP) Regulations state: Goods not eligible for duty-free treatment after repair or alteration. The duty-free treatment referred to in paragraph (a) of this section will not apply to goods that: In their condition, as exported from the United States to Canada or Mexico, are incomplete for their intended use and for which the processing operation performed in Canada or Mexico constitutes an operation that is performed as a matter of course in the preparation or manufacture of finished goods; or Are imported under a duty-deferral program that are exported for repair or alteration and are not re-imported under a duty-deferral program. Based upon the definition of “repairs or alterations” in § 182.112(a), cited above, the used solar panels which are simply inspected, tested and returned to the United States do not qualify for preferential tariff treatment under subheading 9802.00.50, HTSUS. However, you may wish to reimport these used solar panels under subheading 9801.00.10, HTSUS. Subheading 9801.00.10 provides for: “Products of the United States when returned after having been exported, or any other products when returned within 3 years after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad.” The used solar panels which are cleaned, in addition to being inspected, tested and returned to the United States, and those panels which are cleaned and repaired, are eligible for duty-free treatment under subheading 9802.00.50, HTSUS pursuant to 19 CFR 182.112(a). In addition, Customs and Border Protection (CBP) has previously held that cleaning and sanitizing soiled garments and floor mats in a Mexican or Canadian laundry facility qualified as an alteration under subheading 9802.00.50, HTSUS. See Headquarters Ruling (“HQ”) 254785, dated September 17, 2014; HQ 559072, dated June 21, 1995; and HQ 221046, dated May 11, 1989. Further, the used solar panels are finished articles when exported to Mexico and the repairs described herein do n

Subheading 9802.00.50, HTSUSThe United States – Mexico – Canada Agreement (USMCA) was signed by the Governments of the United States, Mexico, and Canada on November 30, 2018. It was approved by the U.S. Congress with the enactment on January 29, 2020, of the USMCA Implementation Act, Pub. L. 116-113, 134 Stat. 11, 14 (19 U.S.C. § 4511(a)). The USMCA provides at Article 2.8 for goods re-entered after repair or alteration. The agreement states, in relevant part:No Party shall apply a customs duty to a good, regardless of its origin, that re-enters its territory after that good has been temporarily exported from its territory to the territory of another Party for repair or alteration, regardless of whether that repair or alteration could have been performed in the territory of the Party from which the good was exported for repair or alteration or has increased the value of the good.* * *4. For the purposes of this Article, repair or alteration does not include an operation or process that:destroys a good’s essential characteristics or creates a new or commercially different good; or(b) transforms an unfinished good into a finished good.The provision for articles exported for repair or alteration and re-imported appears at subheading 9802.00.50, HTSUS. This provision provides a 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 in Canada or Mexico. Note 3, Subchapter II, Chapter 98, sets forth additional provisions applicable to subheading 9802.00.50, HTSUS. The Special Program Indicator for the USMCA which appears in the tariff rate column of the tariff is “S” or “S+.” Notes 3(d) and (e), Subchapter II, Chapter 98, indicate, in relevant part, that the symbol “S” in parentheses indicates that the rates of duty in the “Special” column 1 and the “Special” subcolumn of column 1, for goods classified in subheading 9802.00.50, HTSUS, apply to any goods which are re