CLA-2 CO:R:C:V 555664 KAC
Mr. William J. LeClair
Trans-Border Customs Services, Inc.
One Trans-Border Drive
P.O. Box 800
Champlain, New York 12919
RE: Applicability of duty exemption in HTSUS subheading
9801.00.10 to cardboard containers.Advance in value;improve
in condition;folding;GRI 5(b);731806
Dear Mr. LeClair:
This is in response to your letter dated May 11, 1990, on
behalf of Dorel Manufacturing, requesting a ruling on the
applicability of subheading 9801.00.10, Harmonized Tariff
Schedule of the United States (HTSUS), to cardboard containers
imported from Canada.
FACTS:
Dorel plans on purchasing "knock-down" cardboard containers
from a U.S. box manufacturer and shipping them to Canada. The
"knock-down" cardboard containers are completed, unformed
cardboard boxes in a flat condition. In Canada, the containers
will be formed by folding the appropriate pieces to form a box.
The containers will then be filled with baby strollers,
presumably of foreign origin, and sealed with tape for shipment
to the U.S. The containers are not reusable, but designed for
one time use only.
ISSUE:
Whether the cardboard containers will be entitled to the
duty exemption available under subheading 9801.00.10, HTSUS, when
imported into the U.S.
LAW AND ANALYSIS:
With respect to containers, General Rule of Interpretation
5(b), HTSUS, provides that "packing materials and packing
containers entered with the goods therein shall be classified
with the goods if they are of a kind normally used for packing
such goods. However, this provision does not apply when such
packing materials or packing containers are clearly suitable for
repetitive use." Therefore, the value of a non-reusable
container normally used for packing such goods is considered a
part of the value of its contents and is dutiable at the rate of
its contents. However, we have held that upon submission of
satisfactory proof that a container is of U.S. origin and that it
is returned without having been advanced in value or improved in
condition while abroad, it is entitled to duty-free treatment
under subheading 9801.00.10, HTSUS. The act of being filled with
its contents is not considered to constitute such an advancement
or improvement. See, Headquarters Ruling Letter (HRL) 731806
dated November 18, 1988.
HTSUS subheading 9801.00.10 provides for the free entry of
U.S. products that are exported and returned without having been
advanced in value or improved in condition by any means while
abroad, provided the documentary requirements of section 10.1,
Customs Regulations (19 CFR 10.1), are met. While some change in
the condition of the product while it is abroad is permissible,
operations which either advance the value or improve the
condition of the exported product render it ineligible for duty
free entry upon return to the U.S. See, Border Brokerage
Company Inc. v. United States, 65 Cust.Ct. 50, C.D. 4052, 314
F.Supp. 788, appeal dismissed, 58 CCPA 165 (1970).
In this case, we are of the opinion that the U.S. origin
cardboard containers are entitled to the duty exemption available
under subheading 9801.00.10, HTSUS. Forming the box by folding
is a change in the condition of the box, but it is not an
advancement in value or improvement in condition. The boxes are
shipped to Canada in their flat condition for ease of
transportation and their value is no greater upon return to the
U.S. than when exported to Canada.
HOLDING:
On the basis of the information submitted, as the cardboard
containers will not be advanced in value or improved in condition
abroad as a result of the foreign operations, they will qualify
for the duty exemption under HTSUS subheading 9801.00.10, upon
compliance with the documentary requirements of 19 CFR 10.1.
Sincerely,
John Durant, Director
Commercial Rulings Division