CLA-2 CO:R:C:S 555806 KCC
Mr. Marty Langtry
Castelazo & Associates
5420 West 104th Street
Los Angeles, California 90045
RE: Inflatable plastic bags used to give shape to handbags in
retail displays.GRI 5(b); packing material; 731806; advanced
in value; improved in condition
Dear Mr. Langtry:
This is in response to your letter dated November 2, 1990,
to the Area Director, New York Seaport, on behalf of Sirco
International Corporation, requesting a ruling concerning the
applicability of subheading 9801.00.10, Harmonized Tariff
Schedule of the United States (HTSUS), to U.S. manufactured
plastic bags used to give shape to handbags in retail displays.
Your letter and a sample were forwarded to this office for a
response.
FACTS:
Sirco purchases inflatable thin gauge plastic bags
manufactured in the U.S. by Experience Design, Inc. Sirco
exports the plastic bags to overseas vendors of handbags,
sportsbags and other types of bags where the vendors insert the
uninflated plastic bags into handbags and ship the handbags back
to the U.S. In the U.S., the plastic bags will be inflated to
give shape to the handbags for display in retail stores. After
the handbags are purchased, the plastic bag is deflated and
disposed of by the retailer.
ISSUE:
Whether the inflatable plastic bags will be eligible for the
duty exemption available under subheading 9801.00.10, HTSUS, when
returned to the U.S.
LAW AND ANALYSIS:
With respect to packing materials, General Rule of
Interpretation 5(b), HTSUS, provides that:
[p]acking 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 packing materials or
containers 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. See, Headquarters Ruling
Letter (HRL) 731806 dated November 18, 1988.
Subheading 9801.00.10, HTSUS, provides for duty-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. Articles satisfying the above conditions of the
statute will be afforded duty free treatment, provided the
documentary requirements of section 10.1, Customs Regulations (19
CFR 10.1), are met.
The packaging abroad of U.S.-made products will not preclude
classification under this tariff provision when there is no
improvement in condition or advancement in value of the products
themselves (apart from the containers). See, United States v.
John V. Carr & Sons, Inc., 69 Cust.Ct. 78, C.D. 4377 (1972),
aff'd, 61 CCPA 52, C.A.D. 1118 (1974), in which the court stated
that absent some alteration or change in the item itself, the
mere repackaging of the item even for the purpose of resale to
the ultimate consumer, is not sufficient to preclude the
merchandise from being classified under item 800.00, Tariff
Schedules of the United States (TSUS) (the precursor provision to
subheading 9801.00.10, HTSUS).
We are of the opinion that the thin gauge plastic bags are
properly considered non-reuseable packaging material. Although
the plastic bags are not the typical packing material associated
with shipment of articles, they are an alternative to paper
stuffing often used in imported sport and handbags. Furthermore,
the plastic bags are the kind of packing material often
associated with the display of articles offered for retail sale.
The plastic bags will be exported abroad in a finished condition
to be packaged with handbags, and will not be subjected to any
other operations prior to their return to the U.S. The plastic
bags will not be advanced in value or improved in condition while
abroad. They are also not designed for repetitious use.
Accordingly, the plastic bags will qualify for duty-free
treatment under subheading 9801.00.10, HTSUS.
HOLDING:
On the basis of the information and samples submitted, as
the plastic inflatable bags will not be advanced in value or
improved in condition abroad as a result of the packaging
operation, the plastic bags will qualify for the duty exemption
available under subheading 9801.00.10, HTSUS, upon compliance
with the documentary requirements of 19 CFR 10.1.
Sincerely,
John Durant, Director
Commercial Rulings Division