HQ 560811
February 11,1998
MAR-05 RR:TC:SM 560811 BLS
Mr. Joe A. Estrada
Rudolph Miles & Sons, Inc.
4950 Gateway East
El Paso, Texas 79983
RE: Applicability of subheading 9801.00.10, HTSUS, to steel
screws inserted into carrier strips
Dear Mr. Estrada:
This is in reference to your letter dated January 8, 1998,
on behalf of Stanley-Bostitch, Inc. ("Stanley"), requesting a
ruling concerning the applicability of subheading 9801.00.10,
Harmonized Tariff Schedule of the United States (HTSUS), to steel
screws inserted into slotted plastic carrier strips.
FACTS:
You advise that Stanley intends to produce carrier reels in
Mexico. The operations in Mexico will be as follows:
Steel screws, slotted plastic carrier strips and spools are
exported to Mexico. All of these items are of U.S.-origin. In
Mexico, the screws are automatically inserted into the slotted
plastic carrier strip which is then wound onto the spool creating
a carrier reel. (A sample of the carrier reel was submitted with
the ruling request.)
The carrier reels are used in the U.S. specifically with
pneumatic hand held screw inserter tools. The carrier reel acts
as a cartridge holder to automatically feed the screws into a
pneumatic hand tool manufactured by Stanley. Upon activation of
the pneumatic screw inserter and driver, the plastic carrier
strip aligns the next screw in its proper position for insertion.
After the screw has been used, each section of the plastic
carrier strip is automatically trimmed off and discarded.
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ISSUE:
1) Whether the screws are eligible for duty-free treatment
under subheading 9801.00.10, HTSUS, upon return from Mexico.
2) Whether the carrier reel into which the screws are
inserted is considered a packing container to be classified with
its contents.
LAW AND ANALYSIS:
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 met. In United States v. John V. Carr & Sons,
Inc., 69 Cust. Ct. 78, C.D. 4377, 347 F. Supp. 1390 (1972), 61
CCPA 52, C.A.D. 1118, 496 F.2d 1225 (1974), 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 to subheading 9801.00.10,
HTSUS).
In Headquarters Ruling letter (HRL) 555577 (June 19, 1990),
chip capacitors were sent to Mexico where they were tested for
physical defects, marked with an alphanumeric color code to
identify the capacitance, placed into the slotted piece of paper
carrier tape, covered with a plastic film for protection, and
then wound onto a plastic reel. Upon completion of these
operations, the chip capacitors were exported to the U.S. In
that case, we found that the operations performed in Mexico were
simple packaging operations which did not advance the value or
improve the condition of the chips. See also HRL 556131 (October
28, 1991).
Similarly, we find that the operations performed in Mexico
in which the screws are
inserted into the slotted plastic carrier strip which is then
wound onto the spool creating a carrier reel, does not advance
the value or improve the condition of the screws, but merely
packages them for use with a pneumatic screw inserter tool.
Accordingly, the screws are entitled to duty-free treatment upon
return from Mexico, provided the documentary requirements of 19
CFR 10.1 are satisfied. The secondary issue which we must now
address is whether the imported carrier reel is considered a
packing container to be classified with the goods upon entry.
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General Rule of Interpretation (GRI) 5(b), HTSUS, provides
that packing 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 the goods. This provision does
not apply when the packing materials or containers are "clearly
suitable for repetitive use."
Thus, packing containers of GRI 5(b) which are not "of a
kind normally used for packing such goods" are usually classified
separate from their contents. GRI 5(b) is the successor
provision to General Headnote and Rule of Interpretation 6(b)(i)
of the prior tariff, the Tariff Schedules of the United States
(TSUS), which concerned "containers of usual types ordinarily
sold at retail with their contents."
In Crystal Clear Industries v. United States, 18 C.I.T. 47
(1994), the Court of International Trade treated GRI 5(b), HTSUS,
and General Headnote and Rule of Interpretation 6(b)(i), Tariff
Schedules of the United States (TSUS), as largely analogous
provisions. In that decision, the Court cited with approval the
legislative history relating to General Headnote and Rule of
Interpretation 6(b)(i), TSUS:
The concept of "usual" containers includes a
variety of
containers such as plastic envelopes for carrying
rainwear when not in use, cases designed for
electric
shavers, and tobacco tins, which may continue to
be
used by the purchaser to "house" the original
contents
but which, when that purpose has been fulfilled,
are
usually discarded because of their lack of
durability
or their general unsuitability for other uses. On
the
other hand, this concept does not include
containers,
even though sold at retail with their contents, if
such
containers are designed to have significant uses
quite
apart from their original contents. For example,
humidors filled with tobacco, miniature cedar
chests
containing cigars or candy, and doll houses filled
with
confections would not be regarded as "usual"
containers.
Citing H.R. Rep. No. 342, 89th Cong., 1st Sess., at 5. Thus
a "usual" container (or containers "of a kind normally used for
packing" under the HTSUS) is generally discarded when its
original purpose has been fulfilled as it is insubstantial or is
unsuitable for other uses. A container is not "of a kind
normally used for packing" when it possesses independent
commercial appeal and adds significantly to the value of the
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goods. See, e.g., HRL 085766 dated February 1, 1990 (bubble bath
container).
In the instant case, the carrier reel is used as a container
to feed the screws into the pneumatic screw inserter tool. After
each screw has been used, that section of the carrier strip
carrying the screw is automatically trimmed off and discarded.
Therefore, the carrier reel can have no other use after
application, as it becomes scrap material and is thrown away.
Accordingly, we find that the carrier reels are packing
containers "of a kind normally used for packing the goods" within
the meaning of GRI 5(b), HTSUS, and as a result
these materials will be classified with their contents upon
entry.
HOLDING:
U.S.-origin screws sent to Mexico for insertion in a carrier
reel to be used upon return with a pneumatic screw inserter tool
are not advanced in value or improved in condition as a result of
the operations performed abroad. Accordingly, the screws are
entitled to duty-free treatment under subheading 9801.00.10,
HTSUS, upon return from Mexico, provided the documentary
requirements of 19 CFR 10.1 are satisfied. Under GRI 5(b),
HTSUS, the carrier reel is considered a packing container
normally used for packing the goods, and therefore is classified
with its contents under subheading 9801.00.10, HTSUS.
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