CLA-2 RR:TC:SM 560635 JML
TARIFF NO: 9802.00.80
Ms. Brenda S. Ambrose
Healthtex, Inc.
Logistics Manager, Sourcing Department
2303 Meadowview Road
Kinston Building, Suite 200
Greensboro, NC 27407
RE: Dutiability of packing boxes for articles imported under
subheading 9802.00.80, HTSUS; commingling.
Dear Ms. Ambrose:
This is response to your letter of August 26, 1997,
requesting a binding ruling on the dutiability of corrugated
packing boxes for articles imported into the United States
("U.S.") under subheading 9802.00.80, Harmonized Tariff Schedule
of the United States ("HTSUS").
FACTS:
The facts you provided indicate that Healthtex, Inc.
("Healthtex") is engaged in assembling various products in
Honduras, El Salvador, the Dominican Republic and Mexico under
subheading 9802.00.80, HTSUS. Healthtex currently supplies
U.S.-origin boxes to its manufacturers for shipping its finished
products to its distribution centers in the United States. You
state that upon entry, those boxes generally get duty-free
treatment under subheading 9801.00.10, HTSUS.
Healthtex now intends to buy corrugated boxes from a vendor
in the Dominican Republic for use in shipping the finished
products to the United States. Once the boxes reach the United
States they will be emptied and commingled with the existing
inventory of U.S.-origin boxes. You state that upon commingling
it is not possible to differentiate between the origin of the
boxes. The boxes will then be shipped to various countries,
including the Dominican Republic for reuse. You further state
that the boxes can be reused up to 5 or 6 times.
ISSUE:
What is the dutiable status of the boxes?
LAW AND ANALYSIS:
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 10.16(f), Customs Regulations (19 CFR 10.16(f)),
states that:
[a]ssembled articles which otherwise qualify
for the exemption and which are packaged
abroad following their assembly will not be
disqualified from the exemption by reason of
their having so been packaged, whether for
retail sale or for bulk shipment. The tariff
status of the packing materials or containers
will be determined in accordance with General
Rule of Interpretation 5, HTSUS (19 U.S.C.
1202).
General Rule of Interpretation ("GRI") 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 is not binding when such packing
materials or
packing containers are clearly suitable for
repetitive use.
The Explanatory Notes ("EN") to the Harmonized Commodity
Description and Coding System, which represent the official
interpretation of the tariff at the international level,
facilitate classification under the HTSUS by offering guidance in
understanding the scope of the headings and GRIs. EN for GRI
5(b) provides that packing materials of the kind suitable for
repetitive use are, for example, metal drums or containers of
iron or steel. Customs is of the opinion that corrugated boxes
capable of reuse 5 or 6 times are not the type of article
referred to in GRI 5(b) as "clearly suitable for repetitive use."
Consequently, the boxes at issue are subject to the terms of that
rule.
However, Customs has held that U.S.-origin packing materials
which are not advanced in value or improved in condition while
abroad are separately entitled to duty free treatment as American
goods returned under subheading 9801.00.10, HTSUS. Subheading
9801.00.10, HTSUS, provides for the duty-free entry of products
of the U.S. that are returned after having been exported, without
having been advanced in value or improved in condition by any
process of manufacture or other means while abroad, provided
there has been compliance with the documentary requirements of
section 10.1, Customs Regulations (19 CFR 10.1). The act of
being filled with their contents is not considered to be an
advancement in the condition of the container or packing
materials. See HRL 731806, dated November 18, 1988. Unlike
subheading 9802.00.80, HTSUS, which addresses U.S. components
assembled, subheading 9801.00.10, HTSUS, does not provide for a
reduction in value for U.S. components; it merely states that
products fitting the terms of the heading enter free of duty.
Thus, in accordance with your prior practice, the U.S.-origin
boxes are entitled to duty free treatment under subheading
9801.00.10, HTSUS, provided that they are products of the U.S.,
are returned after having been exported, without having been
advanced in value or improved in condition while abroad, upon
compliance with the documentation requirements of section 10.1,
Customs Regulations.
With regard to the Dominican-origin boxes (and for that
matter any other box of non-U.S.-origin), the provisions of GRI
5(b), HTSUS, would apply. Upon entry they would be classified
with their contents. Since they are not U.S.-origin goods they
would not otherwise be entitled to duty free treatment under
subheading 9801.00.10, HTSUS. Rather, they would be included in
the value of and dutiable at the rate applicable to their
contents. Consequently, any of the boxes which you cannot
clearly establish as being of U.S.-origin will be treated
accordingly.
HOLDING:
U.S.-origin corrugated boxes used for packing articles
assembled under subheading 9802.00.80, HTSUS, may obtain duty
free treatment under subheading 9801.00.10, HTSUS, provided they
satisfy the documentary requirements of section 10.1, Customs
Regulations. Pursuant to section 10.16(f), Customs Regulations,
the Dominican-origin boxes are to be included in the value of and
dutiable at the rate of their contents. Those boxes which cannot
be clearly identified as of U.S.-origin and which do not satisfy
the requirements of subheading 9801.00.10, HTSUS, will be
dutiable at the rate applicable to their contents.
A copy of this ruling letter should be attached to the entry
documents filed at the time the goods are 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