HQ 544010: Ruling request concerning the tariff classification of certain exposed film, magnetic media and optical media from Barbados, and the eligiblity of these products for CBI treatment.

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                                      HQ 544010

                                 September 19, 1988


          CLA-2 CO:R:C:V  544010 CW

          CATEGORY:  Classification; Valuation

          TARIFF NO.:  4911.91.40, HTSUS (274.70, TSUS); 724.40, TSUS

          Thomas E. Johnson, Esq.
          Baker & McKenzie
          Prudential Plaza
          Chicago, Illinois 60601

          RE:  Ruling request concerning the tariff classification of
               certain exposed film, magnetic media and optical media from
               Barbados, and the eligiblity of these products for CBI
               treatment.

          Dear Mr. Johnson:

               This is in response to your letter of September 2, 1987, in
          which you request a ruling on behalf of
          ("importer") that certain exposed film and encoded magnetic and
          optical storage media to be imported from Barbados will qualify
          for duty-free treatment under the Caribbean Basin Initiative
          (CBI).  You also request advice concerning the proper tariff
          classification of these articles.

          FACTS:

               You state that your client, a U.S. commercial printing
          company, plans to ship to its wholly-owned subsidiary in
          Barbados,                             , preliminary production
          equipment, office supplies and shipping material, as well as
          customer-supplied artwork, unexposed film transparencies and
          blank data storage media.  The blank data storage media includes
          magnetic media, such as tapes and cartridges, and optical media,
          such as high density, "write-once-read-many" ("WORM") disks.
          We assume that the materials to be shipped to Barbados will be of
          U.S. origin.

               You advise that in Barbados the unexposed film will be
          exposed and the blank media processed, after which they will be
          labeled, packed, and shipped back to the U.S.  We understand that
          the processing to be performed in Barbados consists of several
          steps necessary to the transformation of the text and artwork
          supplied by a customer to image carriers (e.g., plates or














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          cylinders) that are used on printing presses.  In the first step
          of the processing performed in Barbados, the artwork supplied by
          the customer is photographed with a camera or scanned with an
          electronic image scanner.  This is typically done to scale the
          artwork to the proper size and generate the proper screen angles
          for printing.  This step also may be necessary to change
          reflective copy to a transparent film form or to break up certain
          types of artwork into a series of very small dots to facilitate
          the printing process.  In full color printing, color separations
          also are made during this phase of the processing.

               The result of the first step is either a set of one or more
          halftone positives or negatives on transparent film, or a
          computer file containing graphics arts data.  Following this
          step, corrections are made to the film or data to emphasize
          detail, adjust or change the images and, in the case of full
          color printing, to improve color fidelity.  The pieces of artwork
          then are combined, either mechanically or electronically, with
          the text into complete pages that match the customer's layout.
          The completed pages then are either combined onto a large piece
          of film in the order in which they are to be printed or are
          communicated electronically to a computer.  The exposed film or
          encoded storage media imported into the U.S. is used to make
          image carriers, such as lithographic plates or rotogravure
          cylinders.

               You estimate that the direct processing costs to be incurred
          in Barbados per page of film will be $2.88, and the appraised
          value of each page of the exposed film will be between $3.62 and
          $5.40.  The estimated direct processing costs per page of
          information encoded on any magnetic media will be $2.88, and the
          appraised value per page is expected to be between $3.68 and
          $5.46.

               In your opinion, the exposed film and optical media, such as
          "WORM" disks, are classifiable in item 274.70, Tariff Schedules
          of the United States (TSUS), while the magnetic media, such as
          magnetic tapes and cartridges, are classifiable in item 724.40,
          TSUS.

          ISSUE:

               1.  Whether the described film and optical and magnetic
          storage media to be imported into the U.S. will be eligible for
          duty-free treatment under the CBI.

               2.  Whether the exposed film and optical media are properly
          classifiable in item 274.70, TSUS, and the magnetic media are
          properly classifiable in item 724.40, TSUS.













                                        - 3 -

          LAW AND ANALYSIS:

               With respect to the first issue, an eligible article
          imported directly from a CBI beneficiary country may qualify for
          duty-free entry under the CBI only if it meets the country of
          origin criteria set forth in section 10.195(a) of the Customs
          Regulations (19 CFR 10.195(a)).  The first of these criteria
          provides that an article must either be wholly the growth,
          product, or manufacture of a beneficiary country, or be
          substantially transformed in a beneficiary country into a new and
          different article of commerce.  The second of the country of
          origin criteria provides that the sum of the cost or value of the
          materials produced in the beneficiary country or countries, plus
          the direct costs of processing operations performed in the
          beneficiary country or countries, must not be less than 35
          percent of the appraised value of the imported article.

               In regard to the first country of origin criterion, it is
          clear that the exposed film and the encoded storage media will
          not be "wholly the growth, product, or manufacture of a
          beneficiary country."  Therefore, to be considered products of a
          beneficiary country, the film and storage media to be imported
          into the U.S. must have been substantially transformed in
          Barbados into new and different articles of commerce.

               Based on the information you have provided, it is our
          opinion that the processing to be performed in Barbados will
          substantially transform the unexposed film transparencies and
          blank data storage media into new and different articles of
          commerce (the exposed film and encoded storage media).  This
          conclusion is consistent with previous rulings issued by this
          office involving similar fact situations.  See ruling letters
          dated September 24, 1986 (HQ 554230), May 26, 1986 (HQ 554016),
          and August 17, 1981 (HQ 067445).

               Concerning the second country of origin requirement, the
          estimated cost information you have provided indicates that the
          direct costs of processing operations to be performed in Barbados
          clearly will exceed 35 percent of the appraised value of the
          imported products.

               Concerning the classification of the articles in question,
          we regret to advise that we have misplaced the samples that you
          apparently furnished to us.  However, based on the descriptive
          information provided, we agree that the exposed film and optical
          media are classifiable under the provision for photographs,
          engravings, etchings, lithographs, and wood cuts, and pictorial
          matter produced by relief or stencil printing process, all the
          foregoing, whether bound or not bound, and not specially provided
          for, other, in item 274.70, TSUS, with a duty rate of 3.1 percent












                                        - 4-

          ad valorem.  The exposed film and optical media are classifiable
          under the Harmonized Tariff Schedule of the United States
          (HTSUS), which will replace the TSUS effective January 1, 1989,
          under the provision for other printed matter, including printed
          pictures and photographs, other, other, other, in subheading
          4911.91.40, with duty at the rate of 3.1 percent.

               We also agree that the magnetic media is classifiable under
          the provision for sound recordings and magnetic records recorded
          on magnetic tape or on any medium other than wire, in item
          724.40, TSUS, with duty at the rate of .9 cents per square foot
          of recording surface.  Although there is insufficient descriptive
          information concerning the magnetic media to enable us to
          determine the applicable HTSUS subheading, we have enclosed a
          copy of the applicable HTSUS heading (8524), which relates to
          records, tapes and other recorded media for sound or other
          similarly recorded phenomena.

          HOLDING:

               On the basis of the information presented, it is our opinion
          that the described exposed film and encoded magnetic and optical
          storage media would qualify for duty-free entry under the CBI
          upon importation into the U.S. from Barbados.

               The exposed film and encoded optical storage media is
          classifiable in item 274.70, TSUS (subheading 4911.91.40, HTSUS).
          The encoded magnetic storage media is classifiable in item
          724.40, TSUS.

                                     Sincerely,




                                    John Durant
                                    Director, Commercial
                                    Rulings Division

          Enclosure