CLA-2 OT:RR:CTF:VS H274355 EE
Peter W. Klestadt
David M. Murphy
Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP
399 Park Avenue, 25th Floor
New York, NY 10022
RE: Subheading 9801.00.10, HTSUS; Jewelry
Dear Messrs. Klestadt and Murphy:
This is in response to your letter, dated March 22, 2016, on behalf of your client, Effy group of companies (collectively referred to as “Effy”), concerning the dutiable status of certain jewelry.
FACTS:
Effy is a jewelry design house and manufacturer based in New York. Effy products are produced primarily at its related facilities in New York, New York. Additional items are produced for Effy by other artisans also in New York. In such cases of U.S. manufacture, the settings are cast in the United States and then the stones are set. A small percentage of finished merchandise is imported into the United States and all applicable duties are paid.
Effy sells products on various passenger cruise ships either through its own shops aboard the cruise ships or on consignment through third party retail operations on the cruise ships. The cruise ships are of foreign registry and are operated by Princess Cruise and Carnival Cruise lines, departing mainly from the Ports of Everglades and Miami.
All passengers on the cruise ships are ticketed and manifested for round trip voyages. While at sea, the cruise ship passengers may purchase the subject jewelry items for their personal use. For U.S. origin goods and duty-paid foreign goods, Effy intends to supply a certificate of origin to the purchaser to facilitate entry under subheading 9801.00.10, Harmonized Tariff Schedule of the United States (“HTSUS”), assuming U.S. Customs and Border Protection (“CBP”) considers the items to be exported. You provided us a copy of this certificate of origin, which states that the particular item (listing date of purchase, customer name, ship name, item number, and description) was manufactured in the United States, or that it was imported into the United States with duty paid and is being returned within 3 years of the original exportation.
The cruise ships will call on various foreign ports and return to the Port of Everglades or Miami where the passengers disembark with the purchased jewelry items. Unsold merchandise will likewise be off-loaded and returned to Effy in the United States. It is stated that in any event, all merchandise will be returned to the United States within three years of the date the merchandise is loaded onto the cruise ships, the merchandise will not be subject to any claims for duty drawback, and will not be produced in a bonded warehouse, foreign trade zone, or under a temporary importation bond (under subheading 9813.00.05, HTSUS).
ISSUE:
Whether the merchandise is eligible for duty-free treatment under subheading 9801.00.10, HTSUS.
LAW AND ANALYSIS:
Section 904(b) of the Trade Facilitation and Trade Enforcement Act of 2015 (Pub. L. 114-125, February 24, 2016) amended subheading 9801.00.10, HTSUS, to include any products which are returned within 3 years after having been exported. Previously, subheading 9801.00.10, HTSUS, only applied to products of the United States. Subheading 9801.00.10, HTSUS, now provides for the duty-free treatment of:
Products of the United States when returned after having been exported, or any other products when returned within 3 years after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad.
In the instant case, we find that the jewelry is considered exported for purposes of Chapter 98, HTSUS, preferential tariff treatment. We note that the rulings you cited, Headquarters Ruling Letter (“HQ”) 215583, dated June 13, 1983, and HQ 223791, dated April 15, 1992, concerned the exportation requirement under the drawback rules. HQ 225339, dated January 10, 1995, involved a unique situation whereby U.S. origin and imported duty-paid oil spill equipment were sent to a spill site in the U.S. Virgin Islands (“USVI”), and once completed, all equipment and supplies were cleaned and returned to their point of origin. CBP found that no exportation of the equipment and supplies occurred because there was no intent to unite them to the mass of things belonging to the USVI. HQ 114291, dated May 7, 1998, involved U.S. or foreign-origin textile sales samples which were taken to Guam by U.S.-based sales representatives and then returned to the United States from Guam. CBP found that the sales samples were not considered imported because merchandise sent from the United States to Guam was not exported. The instant case is more analogous to HQ H096897, dated April 6, 2011, and HQ 557668, dated March 3, 1994, which involved the sale of merchandise on cruise ships. In these cases, CBP found that the merchandise was considered exported for purposes of Chapter 98, HTSUS. We confirm these decisions as the passengers on the cruise ship would need to take into account all purchases they make during the cruise and while on shore after they disembark.
Section 10.1, Customs Regulations (19 C.F.R. § 10.1) sets forth the documentary requirements for entry under subheading 9801.00.10, HTSUS. 19 C.F.R. § 10.1(a) requires that, unless otherwise provided, a declaration by the foreign shipper and a declaration by the owner, importer, consignee, or agent having knowledge of the facts must be filed in connection with the entry of articles in a shipment valued over $2,500 and claimed to be duty-free under subheading 9801.00.10, HTSUS. The information required includes the port of exportation, the date of exportation, the quantity, the description of the merchandise, the value of the merchandise, the name of the manufacturer, the location of the manufacturer, and the date of the declaration. Relevant to this situation, “[a] certificate from the master of a vessel stating that products of the United States are returned without having been unladen from the exporting vessel may be accepted in lieu of the declaration of the foreign shipper. . ..” 19 C.F.R. § 10.1(c). See also HQ 557668, dated March 3, 1994.
Section 10.1(b) (19 C.F.R. § 10.1(b)) states:
In any case in which the value of the returned articles exceeds $2,500 and the articles are not clearly marked with the name and address of the U.S. manufacturer, the port director may require, in addition to the declarations required in paragraph (a) of this section, such other documentation or evidence as may be necessary to substantiate the claim for duty-free treatment. Such other documentation or evidence may include a statement from the U.S. manufacturer verifying that the articles were made in the United States, or a U.S. export invoice, bill of lading or airway bill evidencing the U.S. origin of the articles and/or the reason for the exportation of the articles.
Also relevant is 19 C.F.R. § 10.1(d), which provides that “[i]f the port director is reasonably satisfied, because of the nature of the articles or production of other evidence, that the articles are imported in circumstances meeting the requirements of subheading 9801.00.10, HTSUS, [ . . . the port director] may waive the requirements for producing the documents specified in [19 C.F.R. § 10.1(a)].”
Section 145.25, Customs Regulations (19 C.F.R. § 145.25) provides that:
Products of the United States returned after having been exported, which have not been advanced in value or improved in condition while abroad, may be passed free of duty without issuing an entry and without the declarations provided for in §10.1(a) of this chapter, provided the shipment is valued at not over $2,500 and the port director is satisfied that the merchandise is free of duty under subheading 9801.00.10, Harmonized Tariff Schedule of the United States (19 U.S.C. 1202).
CBP has not yet amended the regulations to implement the change to subheading 9801.00.10, HTSUS. You have also not indicated what the value of the various jewelry articles will be.
You state that the items are produced primarily in New York; for purposes of this ruling, we will assume that they may be considered “products of the United States” and that the value of the jewelry will vary. You state that a small percentage of finished merchandise is imported into the United States and that it will be returned to the United States within 3 years of the date the merchandise is loaded onto the cruise ships.
In HQ 557668, dated March 3, 1994, U.S.-crafted jewelry sailed on board cruise ships on consignment until it was sold. If it was necessary to return the pieces to the owner, CBP held that the jewelry would be eligible for subheading 9801.00.10, HTSUS, treatment so long as all the proper documentation under 19 C.F.R. § 10.1 was completed. HQ 557668 is still applicable to the instant case and we find that all U.S. origin jewelry items valued over $2,500 returned after 3 years may be eligible for subheading 9801.00.10, HTSUS treatment, provided that the documentary requirements of 19 C.F.R. § 10.1 are satisfied, unless the port director waives the requirements for producing the documents specified in 19 C.F.R. § 10.1(a). See 19 C.F.R. § 10.1(d). The certificate that would be provided to the cruise ship purchaser would include the date of purchase, customer name, ship name, item number, description and a general statement that the item was manufactured in the U.S. or returned within 3 years. However, the certificate does not include the date the merchandise was exported. As provided by 19 C.F.R. § 10.1(a), for products of the U.S. returned after 3 years, additional information would be required such as the name of the manufacturer and their location. Further, for U.S. origin jewelry and other jewelry items returned within 3 years regardless of value, they may be eligible for duty-free treatment under subheading 9801.00.10, HTSUS, provided the certificate from Effy can specify the date the particular jewelry item was exported. A generic statement that the jewelry is returned within 3 years would not be acceptable. The port director may also require, in addition to the certificate, such other documentation or evidence as may be necessary to substantiate the claim for duty-free treatment including exportation documents from the Cruise Line such as invoices, bills of lading, or Shipper’s Export Declarations evidencing when the items were exported from the United States and the description of the items as well as invoices from Effy to the passengers corresponding to the items on the exportation documents and demonstrating that the same items were returned within 3 years.
For U.S. origin jewelry items in a shipment not exceeding $2,500 in value, regardless of when they are returned, they may be eligible for duty-free treatment under subheading 9801.00.10, HTSUS, without issuing an entry and without the declarations provided for in 19 C.F.R. § 10.1(a), provided that the port director is satisfied that the merchandise is free of duty under subheading 9801.00.10, HTSUS. See 19 C.F.R. §145.35. In this instance, the certificate of origin from Effy may be acceptable for these items if the certificate can state that the particular product is of U.S. origin.
HOLDING:
Based on the information presented, U.S. origin jewelry items in a shipment valued over $2,500, which are returned after 3 years, are eligible for duty-free treatment under subheading 9801.00.10, HTSUS, provided the documentary requirements of 19 C.F.R. § 10.1 are satisfied.
Shipments of U.S. origin jewelry and other jewelry items returned within 3 years may be eligible for duty-free treatment under subheading 9801.00.10, HTSUS, provided the certificate from Effy states with regard to the particular jewelry item, the date it was exported. The port director may require additional documentation to substantiate the claim for duty-free treatment which demonstrate that the same items were returned within 3 years.
U.S. origin jewelry items not exceeding $2,500 in value, regardless of when they are returned, may be eligible for duty-free treatment under subheading 9801.00.10, HTSUS, without issuing an entry and without the declarations provided for in 19 C.F.R. § 10.1(a), provided that the port director is satisfied that the merchandise is free of duty 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 CBP officer handling the transaction.
Sincerely,
Monika R. Brenner
Chief
Valuation & Special Programs Branch