CLA-2-CO:R:C 554935 RA
TARIFF NO: 9801.00.10, HTSUS, (formerly 800.00, TSUS)
Herbert J. Lynch, Esq.
Sullivan & Lynch, P.C.
156 State Street
Boston, Massachusetts 02109
RE: Classification of U.S.-made articles in a medical kit
assembled abroad.
Dear Sir:
This ruling is in response to your letter of February 26,
1988, requesting a clarification and reconsideration of our
decision of December 10, 1987 (554829/159777), regarding the
constructive segregation of various medical articles imported in
a kit packaged in Mexico.
FACTS:
Dialysis kits for home or hospital use contain items made
in the U.S., such as syringes, gloves, needles, pads, band-aids,
and sponges, and some foreign-made articles, all of which are
sent to Mexico and placed in plastic trays, heat sealed, and
packaged before they are returned to this country. The articles
are fully manufactured and packaged for ultimate use and all have
a separate commercial identity. The quantity and identity of
each article can be readily ascertained by sampling and from the
packing lists or other entry documents.
ISSUE:
Can the articles of U.S. origin be returned duty free
under the provisions of item 800.00, Tariff Schedules of the
United States (TSUS), which has now been replaced by subheading
9801.00.10, Harmonized Tariff Schedule of the United States
(HTSUS)?
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LAW AND ANALYSIS:
Subheading 9801.00.10, HTSUS, copy enclosed, provides that
products of the U.S. may be returned without the payment of duty
if they have not been advanced in value or improved in condition
while abroad. The articles in this case are in the same
condition and have the same value as when exported from the U.S.
except that they are returned packed in a tray with other
domestic and foreign articles in the dialysis kit. In our letter
of December 10, 1987, we indicated that if foreign-made articles
are packaged with domestic-made articles, there can be no
constructive segregation of commingled articles for separate
tariff treatment in an imported tariff entity. As you now state
that the quantity and identity of each article can be readily
ascertained by sampling or from the entry documents, the
domestic-made articles in this case cannot be treated as
commingled. However, if the dialysis kit in its imported
condition is considered to be a single tariff entity, it cannot
be constructively separated into its constituent parts so as to
allow free entry of the U.S.-made portion under item 800.00,
TSUS.
In a ruling dated April 9, 1984 (073615), we stated:
While the Tariff Schedules of the United States (TSUS),
contain several specific provisions for kits, kits not
qualifying under those provisions are generally not
dutiable as entireties, and each item in the kit is
separately dutiable or duty-free. However, any kit
which, in effect, is an unfinished or unassembled version
of the finished article made from the kit, or any
aggregation of articles within the kit constituting an
unfinished article specifically provided for in the TSUS,
must be classified as an entirety and duty must be
assessed at the rate applicable to the entirety in
accordance with the rule of construction in General
Headnote 10(b), TSUS. When merchandise is classifiable
as an entirety under the provision, the separate parts
are not separately dutiable and are not subject to a
separate exemption from duty when the exemption is a
partial exemption based on the rate applicable to the
article as a separate dutiable entity. The exemption in
item 806.20, TSUS, for articles of American origin
returned after repairs or alterations
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abroad is such an exemption under Headnote 2(c), Subpart
B, Part 1, Schedule 8, TSUS, and, therefore, is not
applicable to an article dutiable as an entirety with
other articles although the exemption would be applicable
to the article when imported as a separate tariff
entity.
In the same ruling we also held that any articles in the
kits which are of U.S. origin and which are not classifiable as
entireties with other articles in the kits are entitled to an
exemption from duty under the provision for returned American
goods which have not been advanced in value or improved in
condition while abroad.
In United States v. John Wanamaker, 16 Cust. Appls. 548,
T.D. 43266 (1929), certain pieces of canvas and yarns imported in
an embroidery kit were held to be materials rather than parts of
an entirety and were separately dutiable. It is clear that the
fact that items are imported in a kit is not, in itself,
sufficient cause to preclude their classification as separate
entities under the TSUS if their relationship with other items in
the kit has not transformed them into parts of an entirety.
Also, the fact that the kit may be made up of foreign-made and
domestic-made articles should not be cause for denying free entry
of the domestic-made articles as American goods returned if they
have retained their status as individual entities. United States
v. John V. Carr and Son, Inc., 61 CCPA 52, C.A.D. 1118 (1974).
However, under the HTSUS, the dutiable status of items of
U.S. origin in a kit does not depend upon whether they retain
their individual identities as separate entities under the
doctrine of entireties. Rather, the question is whether the
merchandise qualifies as "goods put up in sets" under General
Rule of Interpretation 3(b), HTSUS. If so, the classification is
determined by the material or item of the set which gives the set
its essential character. Therefore, if the material or item
which gives the set its essential character is entitled to free
entry under subheading 9801.00.10, HTSUS, then the entire set is
free of duty under this tariff provision. However, if such
material or item is not entitled to classification under
subheading 9801.00.10, HTSUS, then free entry under this
provision for the set or any part thereof is precluded.
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With respect to the dialysis kits under consideration here,
you advise that, depending on the type and location of the
dialysis to be performed, the contents of the kits may vary. For
this reason and because insufficient descriptive information has
been provided concerning the items to be included in a typical
kit, we are unable to determine which item gives the kit its
essential character.
HOLDING:
Articles of U.S. origin imported prior to January 1, 1989,
in a dialysis kit which may also contain foreign-made articles,
may be accorded free entry under the provision of item 800.00,
TSUS, if they have not been advanced in value or improved in
condition while abroad and retain their individual identity
apart from other items in the kit, upon compliance with section
10.1, Customs Regulations (19 CFR 10.1). Our letter of
December 10, 1987, is modified accordingly. Under the HTSUS, the
classification of the imported kit in a particular case would be
determined by the classification of the material or component
which gives the set its essential character. Therefore, this
factor is determinative of the issue of whether the imported kits
would be entitled to free entry under subheading 9801.00.10,
HTSUS.
Sincerely,
John Durant, Director
Commercial Rulings Division
Enclosure