CLA-2 RR:TC:SM 559547 KBR
TARIFF NO: 9801.00.10; 9801.00.60
Port Director
U.S. Customs Service
San Francisco, CA 94105
RE: Application for Further Review of Protest No. 2809-95-100864; applicability of duty exemption under HTSUS
subheading 9801.00.60, or HTSUS subheading 9801.00.10,
to articles of jewelry exported to Hong Kong and
Taiwan; HQ 067426; HQ 559492; HQ 559008; HQ 557731; HQ
221961; C.S.D. 92-23
Dear Sir:
The above-referenced protest, timely filed on behalf of Sue
Trading Co., concerns your classification and duty assessment for
articles of jewelry exported to Hong Kong and Taiwan and then
returned. Protestant claims that the articles at issue are
eligible for a complete duty exemption under subheading
9801.00.60, Harmonized Tariff Schedule of the United States
(HTSUS), or 9801.00.10, HTSUS.
FACTS:
The protest involves Sue Trading Co. importing jewelry from
Hong Kong and Taiwan which was originally exported from the U.S.
According to Sue Trading Co., the intent with respect to the
merchandise subject to the protest was to bring jewelry from the
U.S. to exhibit at jewelry shows in Hong Kong and Taiwan. Sue
Trading Co. submitted letters from various companies from which
Sue Trading Co. purchased the jewelry. These letters indicate
that the jewelry is used or estate jewelry. Some of the jewelry
may have been of U.S. origin and some of the jewelry was of
foreign or unknown origin.
Sue Trading stated that the intention was to exhibit jewelry
at three trade shows: "Hong Kong Jewelry and Watch Fair 94",
"Jewelry Taipei 94", and "Hwa Fua Exhibition". The brochures
relating to the "Hong Kong Jewelry and Watch Fair 94" state that
the fair is open to trade buyers only and that badges are non-transferrable. The brochure from "Jewelry Taipei 94" states
that the admission policy is "Strictly for professional and trade
visitors only. General Public and persons under 18 will not be
admitted." Another brochure from the show states that admission
is "By Invitation Only". The record does not contain
information as to the admittance policy of "Hwa Fua Exhibition".
The jewelry was returned to the U.S., except for a small
portion which was sold at each of the three trade shows. In the
three importations, three of 212, twenty-seven of 423, and seven
of 476, pieces were sold. The exportation documentation states
that the jewelry is being exported for "show & possible sale &
return to U.S.A."
Counsel for Sue Trading also argues that Customs should be
estopped from denying duty-free treatment for these importations
because Customs did not deny similar importations duty-free
treatment, and a Customs agent may have misinformed Sue Trading
about the ability to receive duty-free treatment.
Counsel for Sue Trading believes that certain precious or
semi-precious stones (in particular, item PS #1, carved jade
stone, and PS #2, alexandrite stone) were incorrectly classified
under subheading 7116.20.10, HTSUS, dutiable at 6.5 percent.
Instead, the stones should have been classified under subheading
7103.99.10, HTSUS, dutiable at 2.1 percent. Further, counsel for
Sue Trading states that an error was made as to the value of an
estate watch valued at $22,667 which should have been valued at
$2,667.
Duty-free treatment was denied by your office for the
jewelry subject to the protest.
ISSUE:
Whether jewelry exported from the U.S. to Taiwan under the
circumstances described above and returned are eligible for
duty-free treatment under subheading 9801.00.60, HTSUS, or
9801.00.10, HTSUS.
LAW AND ANALYSIS:
9801.00.60, HTSUS
Subheading 9801.00.60, HTSUS, (formerly item 802.30, Tariff
Schedules of the United States (TSUS)), provides for the free
entry of articles which are returned after having been exported
for temporary use abroad solely for exhibition or use in
connection with any public exposition, fair, or conference,
provided such articles are returned by or for the account of the
person who exported them.
The Customs Service has addressed the requirements of
subheading 9801.00.60, HTSUS, in a number of rulings. In HQ
067426, dated December 8, 1981, medical equipment was exported to
Canada for exhibition and demonstration at a joint meeting of the
International Society of Hematology and the International Society
of Blood Transfusion. The meeting or conference was open only to
members of these two societies, and not to the public at large.
Therefore, it was found not to be a "public" conference, within
the meaning of item 802.30, Tariff Schedules (TSUS)(now
subheading 9801.00.60 HTSUS), and entry of the equipment under
that provision was precluded.
In HQ 221961 dated May 15, 1990, which was a response to an
internal advice request, a corporation exhibited jewelry and
semi-precious and precious gemstones at the Hong Kong Watch and
Jewelry Fair, and subsequently returned the articles to the U.S.
We held that because the primary intention of the importer was to
exhibit the goods at the trade fair and return them to the U.S.,
entry of the goods under subheading 9801.00.60, HTSUS, was not
precluded. The fact that a secondary objective of the importer
was the acquisition of future orders at the fair did not negate
the primary intention of the company at the time of exportation
to exhibit its wares. We found that the sole act of taking
future orders, without delivery of any goods at the show, was not
a sale of goods so as to preclude classification under subheading
9801.00.60, HTSUS. This finding was affirmed in HQ 222792 dated
January 10, 1991, which was a reconsideration of HQ 221961. We
noted in HQ 222792 that the trade fair's own rules prohibiting
sales buttressed the importer's argument that its intent was not
to sell goods at the fair.
In HQ 222792, Customs tangentially addressed the "public"
requirement of subheading 9801.00.60, HTSUS. Even though the
Hong Kong Watch and Jewelry Fair was allegedly open only to
members of the watch and jewelry trades, Customs found no
indication that the fair excluded the general public. More
specifically, we stated that no evidence was presented, by way of
brochures or other tangible proof, that "if the general public
showed up at the fair and offered to pay admission (assuming one
was needed) they would be excluded." We stated that the general
public can be distinguished from those who belong to a private
club or association where admission is restricted to members
only. However, although the present case concerns a show by
similar name, it is a later year, 1994, and the admission policy
is specifically limited as stated in the brochure.
In HQ 092277 dated December 9, 1968, machinery and equipment
was to be displayed by sales representatives at an exposition
held in conjunction with a nonprofit professional association's
convention in Canada, and subsequently was to be returned to the
U.S. A registration fee was charged for the convention, and the
association targeted its advertising at its members and their
guests. However, the association stated that if any person
interested in the displayed equipment wished to attend the
convention, he or she could do so. Therefore, Customs ruled that
the convention was open to the "public" and was not a private
sales exposition. Provided the documentary requirements were
met, i.e., section 10.66, Customs Regulations (19 CFR 10.66), the
equipment would be eligible for duty-free treatment under item
802.30, TSUS, upon its return to the U.S.
In C.S.D. 92-23 (HQ 556092 dated October 22, 1991) fur goods
were exported to Canada from the U.S. for display at an annual
"fur show", for the purpose of soliciting sale orders from
attendees. Admission to the show was not restricted to members
of a private trade association; however, only someone with a
reasonable business interest in attending the show was permitted
to attend. The show was advertised through trade or professional
journals, and through invitations or letters sent to prospective
attendees. Preregistration was required because of space
limitations, and no items were actually sold and delivered at the
show. It was held that a fair or conference may be considered
"public" so long as it does not deny admission, for reasons other
than space limitation, to persons who have a reasonable business
interest in attending the event. Therefore, the returned fur
goods were determined to be eligible for duty-free treatment
under subheading 9801.00.60, HTSUS.
With respect to the instant case, the record before us
reveals that the Jewelry Taipei 94 show was not open to the
public. Brochures stated that it was "Invitation only" and
"Strictly for professionals and trade visitors only. General
Public and persons under 18 will not be admitted." With regard
to Hong Kong Jewelry and Watch Fair 94, the brochures also
showed a restricted admission policy, "open to trade buyers only"
and "badges ... are non-transferrable...." No information was
submitted to establish that the Hwa Fua Exhibition was open to
the public, and Customs will not assume this requirement to be
met. Therefore, the jewelry returned from these shows does not
qualify for duty-free treatment under subheading 9801.00.60,
HTSUS.
9801.00.10, HTSUS
Subheading 9801.00.10, HTSUS, provides for the free entry of
products of the U.S. 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 satisfied. 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. Border Brokerage Company, Inc. v. United States, 314 F.
Supp. 788 (1970), appeal dismissed, 58 CCPA 165 (1970). See HQ
557668 (March 3, 1994).
In the instant protest, Sue Trading has not fully complied
with the documentary requirements of 19 CFR 10.1. Further, Sue
Trading has not adequately established that the jewelry is of
U.S. origin. No manufacturers' affidavits were supplied. The
letters which were submitted indicate that the country of origin
of much of the jewelry is unknown, of foreign origin, or simply
"used " in the U.S. but not necessarily made in the U.S.
Therefore, we find that the jewelry is ineligible for duty-free
treatment under subheading 9801.00.10, HTSUS.
Classification and Value
Your office states that you agree with counsel for Sue
Trading that certain precious or semi-precious stones (described
above) were incorrectly classified under subheading 7116.20.10,
HTSUS. You agree that the stones should correctly be classified
under subheading 7103.99.10, HTSUS. You also agreed with counsel
for Sue Trading that the value of the estate watch was
incorrectly listed as $22,667 when it should have been listed as
$2,667. We accept your conclusions and grant the protest for the
classification of the precious or semi-precious stones and the
incorrectly listed value of the estate watch.
HOLDING:
The evidence submitted does not establish that this
merchandise is entitled to duty- free treatment under subheading
9801.00.60, HTSUS, or subheading 9801.00.10, HTSUS. We agree
with your conclusions that the classification and duty rate for
the precious or semi-precious stones, as discussed above, was
incorrectly determined to be within subheading 7116.20.10, HTSUS,
but instead should correctly be classified under subheading
7103.99.10, HTSUS. We also agree with your conclusion that the
value of an estate watch was incorrectly listed as $22,667 when
it should have been listed as $2,667. Accordingly, this protest
should be denied in part and granted in part.
In accordance with Section 3A(11)(b) of Customs Directive
099 3550-065, dated August 4, 1993, Subject: Revised Protest
Directive, this decision, together with the Customs Form 19,
should be mailed by your office to the Protestant no
later than 60 days from the date of this letter. Any
reliquidation of the entry in accordance with the decision must
be accomplished prior to mailing of the decision.
Sixty days from the date of the decision the Office of
Regulations and Rulings will take steps to make the decision
available to Customs personnel via the Customs Rulings Module in
ACS and the public via the Diskette Subscription Service, Freedom
of Information Act, and other public access channels.
Sincerely,
John Durant, Director
Tariff Classification Appeals
Division