CLA-2 RR:TC:SM 560443 MLR
Mr. Timothy E. Casey
Chippenhook
3105 Justin Road
Lewisville, TX 75067-3196
RE: Applicability of HTSUS subheading 9802.00.50 to jewelry
boxes; Mexico; NAFTA; Article 307; Article 509; imprint
customer name; in bond
Dear Mr. Casey:
This is in reference to your letter of April 29, 1997,
requesting a ruling regarding the applicability of
subheading 9802.00.50, Harmonized Tariff Schedule of the
United States (HTSUS), to jewelry boxes imprinted in Mexico.
We apologize for the delay in responding.
FACTS:
It is stated that Chippenhook is a manufacturer and
distributor of jewelry display items and jewelry boxes. It
is stated that jewelry boxes will be purchased from sources
in Thailand and/or China. The jewelry boxes will then be
imported into the U.S. and shipped to Mexico in bond. As
individual customer orders arrive for the boxes, the
customer's (jewelry store's) name will be imprinted on the
box and/or container in Mexico, and the product will be
reshipped to the customer in the U.S. It is intended at
that time to pay duty on the Thailand/China jewelry box, but
not on the value of the imprinting performed in Mexico.
ISSUE:
Whether the jewelry boxes imported from Thailand and/or
China, transported through the U.S. to Mexico in bond, and
imprinted in Mexico may qualify for subheading 9802.00.50,
HTSUS, treatment, once they are returned to the U.S.
LAW AND ANALYSIS:
Articles exported from and returned to the U.S., after
having been advanced in value or improved in condition by
repairs or alterations in Mexico, may qualify for a partial
or total duty exemption under HTSUS subheading 9802.00.50,
provided the foreign operation does not destroy the identity
of the exported articles or create new or commercially
different articles through a process of manufacture. See
A.F. Burstrom v. United States, 44 CCPA 27, C.A.D. 631
(1956), aff'g C.D. 1752, 36 Cust. Ct. 46 (1956); Guardian
Industries Corp. v. United States, 3 CIT 9 (1982). Articles
are entitled to this duty treatment provided the documentary
requirements of section 181.64, Customs Regulations (19 CFR
181.64), are satisfied.
"Repairs or alterations" are defined in 19 CFR 181.64
as the restoration, addition, renovation, redyeing,
cleaning, resterilizing, or other treatment which does not
destroy the essential characteristics of, or create a new or
commercially different good from, the good exported from the
U.S.
In Headquarters Ruling Letter (HRL) 559639 dated June
25, 1996, Customs considered flashlights manufactured in the
Philippines, imported into the U.S., and then exported to
Mexico where a product nameplate or label was affixed to the
underside of the flashlights, which included the product
catalog number, the "UL" symbol, and a product warning
statement, and the company's logo and product name was
pad-printed on the flashlight adjacent to the on/off switch.
It was held that since the flashlights were suitable for
their intended use in their condition as exported, the
Mexico operations did not destroy the identity of the
exported article or create a new or different article of
commerce, and the labeling added name brand recognition and
value to the flashlights, the flashlights were entitled to
duty-free treatment under subheading 9802.00.50, HTSUS, when
returned to the U.S.
Similarly, in this case, we find that imprinting the
jewelry boxes with the company name advances the value of
the jewelry boxes, and does not destroy their identity as
jewelry boxes. However, it is also indicated that the
jewelry boxes are transported in bond from the U.S. to
Mexico and that once the boxes are returned to the U.S.,
Chippenhook plans to pay duty on the boxes, as applicable,
without adding the value of the alterations performed in
Mexico (which in this case would be "free" under subheading
9802.00.50, HTSUS, for alterations performed in Mexico).
U.S. Note 1(a), Subchapter II, Chapter 98, HTSUS, states
that "except for goods subject to NAFTA drawback, this
subchapter (of which subheading 9802.00.50, HTSUS, is a
part) shall not apply to any article exported: From
continuous customs custody with remission, abatement or
refund of duty." In this case, we find that if the jewelry
boxes are imported into the U.S. from the Philippines and/or
China and are transported in bond to Mexico, they are
considered to be exported from continuous customs custody
with remission of duty. Accordingly, once the jewelry boxes
are returned to the U.S., they would not be eligible for
subheading 9802.00.50, HTSUS, treatment.
HOLDING:
On the basis of the information submitted, it is our
opinion that jewelry boxes imported into the U.S. from the
Philippines and/or China and transported in bond to Mexico
will be considered to be exported from continuous customs
custody with remission of duty. Therefore, according to
U.S. Note 1(a), Subchapter II, Chapter 98, HTSUS, the
jewelry boxes will not be eligible for subheading
9802.00.50, HTSUS, treatment, upon their return to the U.S.
from Mexico.
A copy of this ruling letter should be attached to the
entry documents filed at the time this merchandise is
entered. If the documents have been filed without a copy,
this ruling should be brought to the attention of the
Customs officer handling the transaction.
Sincerely,
John Durant, Director
Commercial Rulings Division