CLA-2 CO:R:C:S 557685 MLR
Mr. John G. Bradford
Sara Lee Knit Products
P.O. Box 3019
Winston-Salem, NC 27102
RE: Applicability of HTSUS subheading 9801.00.10 or 9802.00.80
to U.S.-origin labels; ink; J-boards; plastic bags; company
name; identifying information
Dear Mr. Bradford:
This is in reference to your letter of August 8, 1993, to
U.S. Customs, New York Seaport, requesting a ruling on the
applicability of subheading 9801.00.10, Harmonized Tariff
Schedule of the United States (HTSUS), to certain U.S.-origin
labels. Samples were forwarded on September 28, 1993.
FACTS:
Sara Lee Knit Products plans to export U.S.-origin labels to
Honduras or any other foreign country with U.S.-origin ink where
they will be printed. The labels are affixed either to U.S.-
origin plastic bags or J-boards. Based upon the sample, the
label is printed with a bar code, content information, style
designation, size, and the country of assembly of imported
briefs.
ISSUE:
Whether certain U.S.-origin labels exported to Honduras or
any other foreign country for printing with U.S.-origin ink, and
affixed to either U.S.-origin plastic bags or J-boards are
entitled to duty-free treatment under subheading 9801.00.10,
HTSUS, or the partial duty exemption available under subheading
9802.00.80, HTSUS, when returned to the U.S.
LAW AND ANALYSIS:
Subheading 9801.00.10, HTSUS, provides for the free entry of
products of the United States that have been exported and
returned without having been advanced in value or improved in
condition by any process of manufacture or other means while
abroad, provided the documentary requirements of section 10.1,
Customs Regulations (19 CFR 10.1), are met. Some change in the
condition of the product while it is abroad is permissible.
However, 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 United States. Border Brokerage
Company, Inc. v. United States, 314 F. Supp. 788 (1970), appeal
dismissed, 58 CCPA 165 (1970).
We have held that foreign stamping or printing of a product
to identify the manufacturer and describe the product does not
advance its value or improve its condition so as to preclude
entry under 9801.00.10, HTSUS. See Headquarters Ruling Letter
(HRL) 071449 dated October 17, 1983 (surgical drapes stamped in
ink with the name of the company, size, and model number, and
packaged in plastic bags were not precluded from item 800.00,
Tariff Schedules of the United States (TSUS) (now 9801.00.10,
HTSUS), treatment); and HRL 555183 dated February 15, 1989,
(printing dental floss dispensers with the company name and
description of the floss type, flavor and length, and bulk-
packaged in cardboard boxes did not preclude subheading
9801.00.10, HTSUS, treatment for the dispensers); and HRL 557071
dated April 2, 1993 (plastic bottles labeled by a silk screening
process with a company name, identifying data of a product,
instructions, and the bottle's capacity were eligible for
subheading 9801.00.10, HTSUS, treatment).
In the instant case, printing the labels with U.S.-origin
ink with a bar code, content information, style designation,
size, and the country of assembly of imported briefs is analogous
to the printing of the dental floss dispensers and plastic
bottles. Therefore, printing the labels will not preclude
subheading 9801.00.10, HTSUS, treatment. However, the printed
labels will also be affixed to U.S.-origin plastic bags or J-
boards which advances the value and improves the condition of the
labels by an assembly process, thereby precluding 9801.00.10,
HTSUS, treatment.
Subheading 9802.00.80, HTSUS, provides a partial duty
exemption for:
[a]rticles assembled abroad in whole or in part of
fabricated components, the product of the United
States, which (a) were exported in condition ready for
assembly without further fabrication, (b) have not lost
their physical identity in such articles by change in
form, shape, or otherwise, and (c) have not been
advanced in value or improved in condition abroad
except by being assembled and except by operations
incidental to the assembly process, such as cleaning,
lubricating and painting.
All three requirements of subheading 9802.00.80, HTSUS, must be
satisfied before a component may receive a duty allowance. An
article entered under this tariff provision is subject to duty
upon the full cost or value of the imported assembled article,
less the cost or value of the U.S. components assembled therein,
upon compliance with the documentary requirements of section
10.24, Customs Regulations (19 CFR 10.24).
Section 10.14(a), Customs Regulations {19 CFR 10.14(a)},
states in part that:
[t]he components must be in condition ready for
assembly without further fabrication at the time of
their exportation from the United States to qualify for
the exemption. Components will not lose their
entitlement to the exemption by being subjected to
operations incidental to the assembly either before,
during, or after their assembly with other components.
Section 10.16(a), Customs Regulations {19 CFR 10.16(a)},
provides that the assembly operation performed abroad may consist
of any method used to join or fit together solid components, such
as welding, soldering, riveting, force fitting, gluing,
lamination, sewing, or the use of fasteners.
Operations incidental to the assembly process are not
considered further fabrication operations, as they are of a minor
nature and cannot always be provided for in advance of the
assembly operations. See 19 CFR 10.16(a). However, any
significant process, operation or treatment whose primary purpose
is the fabrication, completion, physical or chemical improvement
of a component precludes the application of the exemption under
subheading 9802.00.80, HTSUS, to that component. See 19 CFR
10.16(c).
In this case, affixing the U.S.-origin labels to the U.S.-
origin plastic bags or J-boards is considered an acceptable
assembly operation pursuant to 19 CFR 10.16(a). Regarding the
printing of the labels, in 19 CFR 10.16(b)(7), marking is
specifically enumerated as an incidental operation. In C.S.D.
79-314, 13 Cust. Bull. 1468 (1979), Customs determined that
printing which serves the purpose of "origin markings, trademark,
polarity, color coding, part number identification, or
instruction for use," would not preclude tariff treatment under
item 807.00, TSUS. Consequently, the labels which are printed
and affixed to plastic bags or J-boards will be entitled to
9802.00.80, HTSUS, treatment.
HOLDING:
On the basis of the information and sample submitted, it is
our opinion that the U.S.-origin labels exported to Honduras or
any other foreign country solely for printing are eligible for
duty-free treatment under subheading 9801.00.10, HTSUS, when
returned to the United States, provided the documentation
requirements of 19 CFR 10.1 are satisfied, unless they are also
affixed to plastic bags or J-boards because this constitutes an
advancement in value or improvement in their condition. However,
allowances in duty may be made under subheading 9802.00.80,
HTSUS, for the cost or value of the U.S.-origin labels, plastic
bags, or J-boards upon their return to the U.S., provided the
documentary requirements of 19 CFR 10.24 are satisfied.
Sincerely,
John Durant, Director