CLA-2-CO:R:C 555365 CW
Mr. S. Richard Shostak
1101 Seventeenth Street, N.W.
Washington, D.C. 20036-4704
RE: Applicability of subheading 9801.00.10, HTSUS, and country
of origin marking requirements, to U.S.-made junction boxes
exported to Mexico and packaged with foreign screws
Dear Mr. Shostak:
This is in response to your letter of April 14, 1989, on
behalf of Assemble in Mexico, Inc., requesting a ruling on the
tariff treatment and country of origin marking requirements
applicable to U.S.-made junction boxes packaged abroad with
foreign-made screws and returned to the U.S. We regret the delay
Base metal junction boxes of U.S. origin are packaged in
Mexico with three foreign-made installation screws, after which
the packaged merchandise is imported into the U.S. With the
exception of the screws, all items (including the packaging
materials) are made in the U.S. You advise that it is unlikely
that any of the screws included in the packaged boxes will be
used in normal installations in view of the grounding and
mounting procedures usually followed. The screws make up 2.3% of
the total value of the packaged product.
1. Whether U.S.-made junction boxes and foreign screws,
packaged together in Mexico, are entitled to free entry under
subheading 9801.00.10, Harmonized Tariff Schedule of the United
States (HTSUS), when imported into the U.S.
2. Whether the packaged junction boxes and screws are
subject to country of origin marking requirements.
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LAW AND ANALYSIS:
1. Applicability of subheading 9801.00.10, HTSUS
Subheading 9801.00.10, HTSUS, provides for the free entry of
U.S.-made products that are 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), aff'd 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 retail sale, will not preclude
free entry of the merchandise under item 800.00, Tariff Schedules
of the United States (TSUS) (the precursor to subheading
Moreover, in Superscope, Inc. v. United States, 13 CIT ,
727 F.Supp. 629 (CIT 1989), the court held that certain glass
panels of U.S. origin that were exported, repacked abroad with
certain foreign components, and returned to the U.S. as part of
unassembled audio cabinets, were entitled to free entry under
item 800.00, TSUS, since the U.S. panel portion of the imported
article was "not 'advanced in value or improved in condition ...
while abroad,' but [was] merely repacked."
You maintain that the foreign screws and U.S. junction
boxes constitute "goods put up in sets for retail sale," within
the meaning of General Rule of Interpretation (GRI) 3(b), HTSUS.
Since the junction box imparts the essential character to the
"set", you contend that the box as well as the screws are
classifiable in the HTSUS provision applicable to the box. Thus,
you conclude that because the junction box is entitled to free
entry under subheading 9801.00.10, HTSUS, the foreign screws also
are eligible for free treatment under this tariff provision.
We disagree with your underlying premise that the screws and
junction boxes constitute "goods put up in sets for retail sale."
GRI 1, HTSUS, provides, in pertinent part, that:
... classification shall be determined according to
the terms of the headings and any relative section or
chapter notes, and, provided such headings or notes do
not otherwise require, according to [GRI's 2 through 5].
The Explanatory Notes, which constitute the office interpretation
of the HTSUS at the international level, state in regard to GRI 1
that the phrase "provided such headings or notes do not otherwise
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require" is "intended to make quite clear that the terms of the
headings and any relative Section or Chapter Notes are paramount,
i.e., they are the first consideration in determining
Electrical junction boxes are specifically described in
subheading 8536.90.00, HTSUS, which provides for a duty rate of
5.3% ad valorem. It is our experience that such boxes are
typically sold with mounting and grounding screws and that these
screws constitute an integral part of the junction box. This is
true regardless of the fact that, for whatever reason, the screws
may not actually be used in the box's installation. Thus, it is
our opinion that the boxes, and their accompanying screws, are
properly classifiable by reference to GRI 1, HTSUS, in a single
subheading (8536.90.00, HTSUS) for tariff classification
purposes, and that recourse to the remaining GRI's is unncessary.
Having determined that each junction box and its
installation screws constitute a single tariff entity for tariff
classification purposes, it remains to determine the extent to
which the boxes and screws are entitled to duty-free treatment
under subheading 9801.00.10, HTSUS. In view of the Carr and
Superscope cases, there is no question that the junction boxes
(excluding the screws) are entitled to free entry under
subheading 9801.00.10, HTSUS, when returned to the U.S., since
they are products of the U.S. which are merely repackaged abroad.
(In Superscope, the court granted item 800.00, TSUS, treatment to
the U.S. glass panels even though it recognized that the panels
were part of a single tariff entity (unassembled furniture) for
tariff classification purposes).
However, it is our opinion that U.S. Note 1, Chapter 98,
HTSUS, and the specific language of subheading 9801.00.10, HTSUS,
preclude such treatment for the three foreign-made screws. The
referenced U.S. Note provides, in relevant part, that "[a]ny
article which is described in any provision in this chapter is
classifiable in said provision if the conditions and requirements
thereof and any applicable regulations are met." (Emphasis
added). The "conditions and requirements" of subheading
9801.00.10, HTSUS, are that (1) the article be a product of the
U.S., and (2) it not be advanced in value or improved in
condition by any means while abroad. Granting duty-free
treatment under this tariff provision to the foreign screws,
which do not meet these "conditions and requirements," would
clearly contravene the plain meaning and intent of U.S. Note 1,
Chapter 98, HTSUS, and subheading 9801.00.10, HTSUS.
Therefore, we conclude that the foreign screws are dutiable
under subheading 8536.90.00, HTSUS, at the rate of 5.3% ad
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II. Applicability of country of origin marking requirements
With respect to country of origin marking, section 304,
Tariff Act of 1930, as amended (19 U.S.C. 1304), requires that
every article of foreign origin (or its container) imported into
the U.S., subject to certain specified exceptions, shall be
marked in a conspicuous place as legibly, indelibly, and
permanently as the nature of the article (or container) will
permit in such a manner as to indicate to the ultimate purchaser
in the U.S. the English name of the country of origin of the
article. U.S. products exported and returned are specifically
excepted from country of origin marking requirements under
section 134.32(m), Customs Regulations (19 CFR 134.32(m)). In
applying this section, Customs has ruled that products of the
U.S. which are exported and returned are generally not subject to
country of origin marking unless, prior to their return, they are
substantially transformed. See Headquarters Ruling Letter
729519, dated May 18, 1988, in which this principle is restated.
In order for a substantial transformation to be found, an
article having a new name, character, or use must emerge from the
processing. See United States v. Gibson-Thomsen Co. Inc., 27
CCPA 267, C.A.D. 98 (1940).
For purposes of 19 U.S.C. 1304, it is clear that repackaging
alone does not constitute a substantial transformation. See
section 134.26, Customs Regulations (19 CFR 134.26) (imported
articles which are to be repacked in the U.S. after release from
Customs custody are subject to the requirements of 19 U.S.C.
1304). Thus, unless the addition of three foreign-made screws
substantially transforms the U.S. junction boxes into a product
of Mexico, the junction boxes are excepted from the marking
requirements of 19 U.S.C. 1304 upon their return to the U.S. In
view of the fact that the screws are of minor importance to the
product as a whole and do not change the name, character or use
of the junction box, we find that the addition of the screws does
not substantially transform the junction box into a product of
Mexico. Accordingly, pursuant to 19 CFR 134.32(m), the U.S.
goods exported to Mexico are excepted from marking upon their
return to the U.S.
Moreover, we find that the foreign-made screws are also
excepted from the requirements of 19 U.S.C. 1304 because, when
packaged with the U.S. junction box, the screws lose their
separate identity and become an integral part of the U.S.
product. What the ultimate purchaser in the U.S. is buying is a
junction box kit and not individual screws. Accordingly, the
package does not have to indicate the country of origin of the
screws. Whether or not the packaged junction boxes may be marked
with the U.S. as the country of origin is a question for the
Federal Trade Commission, not Customs.
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The junction boxes of U.S. origin which are merely
repackaged in Mexico and returned are entitled to duty-free
treatment under subheading 9801.00.10, HTSUS, upon compliance
with the documentary requirements of 19 CFR 10.1. The three
foreign-made screws which are imported packaged with the junction
boxes are classifiable in the provision for junction boxes,
subheading 8536.90.00, HTSUS, dutiable at the rate of 5.3% ad
The junction boxes and screws are excepted from country of
origin marking requirements.
John Durant, Director
Commercial Rulings Division