CLA-2 CO:R:C:S 556429 RAH
Mr. Patrick D. Gill, Esquire
Rode & Qualey
295 Madison Avenue
New York, New York 10017
RE: Applicability of duty exemption under HTSUS subheading
9801.00.25 to certain articles of wearing apparel returned
to the United States from Canada
Dear Mr. Gill:
This is in response to your letter of November 22, 1991,
requesting a ruling on the applicability of subheading
9801.00.25, Harmonized Tariff Schedules of the United States
(HTSUS), to articles of wearing apparel returned to the United
States from Canada. You also inquire about visa and quota
requirements for such articles.
FACTS:
You state that your client is a well-known retailer which
distributes various articles of merchandise, principally wearing
apparel, by catalog and in retail stores.
The retailer has a program for the return of merchandise
purchased through its U.S. store's catalog and shipped to
customers in Canada. Under this program, when customers in
Canada return merchandise because it does not conform to
specification, they must complete a store form which identifies
the returned article, reason for the return and the names of the
individual customers. The various articles are consolidated for
return to the United States. The consolidated packages contain
forms for all articles being returned.
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ISSUES:
(1) Whether merchandise returned from customers in Canada
who purchased it from a U.S. store's catalog is eligible for a
duty exemption under subheading 9801.00.25, HTSUS.
(2) Whether merchandise returned in consolidated packages
from customers in Canada who purchased it from a U.S. store's
catalog is subject to visa and quota requirements.
LAW AND ANALYSIS:
HTSUS subheading 9801.00.25 provides for the duty-free entry
of:
[a]rticles, previously imported, with respect to which
the duty was paid upon such previous importation if (1)
exported within three years after the date of such
previous importation, (2) reimported without having
been advanced in value or improved in condition by any
process of manufacture or other means while abroad, (3)
reimported for the reason that such articles do not
conform to sample or specification, and (4) reimported
by or for the account of the person who imported them
into, and exported them from the United States.
Articles satisfying each of the above requirements are entitled
to duty-free treatment, assuming compliance with the documen-
tary requirements of section 10.8a, Customs Regulations (19 CFR
10.8a). This regulation contains the same criteria found in
subheading 9801.00.25, HTSUS. The documents required are
declarations by the person abroad who received and is returning
the merchandise and by the owner or importer (or consignee or
agent). Each declaration must include a description of the
articles, and the latter declaration must set forth information
relative to the original importation of the merchandise, such as
port and date of importation, entry number, and name and address
of the importer at the time the duty was paid. (19 CFR
10.8a(b)).
In the instant case, we find that the second and third
requirements of subheading 9801.00.25 are clearly met. Mer-
chandise returned from a customer in Canada to a store in the
United States from which it was ordered is not advanced in value
or improved in condition. Furthermore, such merchandise is
reimported into the United States from Canada because it does not
conform to sample or specification.
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However, there is insufficient evidence to determine whether
the first and fourth requirements of subheading 9802.00.25,
HTSUS, are met. Nevertheless, the information necessary to
determine if those elements are satisfied (the merchandise will
be exported within three years after the date of its previous
importation; and the merchandise is reimported by or for the
account of your client who originally imported it into the United
States) is contained in the documents which must be submitted
with the formal entry of the merchandise. If those requirements
are satisfied, the merchandise may be returned free of duty under
subheading 9801.00.25, HTSUS.
With regard to the quota and visa requirements, we refer to
the ABI administrative message cited in your letter (ABI
Administrative Message, dated October 17, 1991, SPE-CO:T:R:T: RA-
2290051). It provides in part:
Effective immediately textile merchandise manufactured
in a third country subject to quota/visa requirements
that are returned to a U.S. company by a foreign
resident or consumer because the article does not meet
specifications, are not subject to any applicable
quota/visa requirements. The foreign resident or
consumer returning an article to the U.S. must not be a
commercial enterprise.
It further provides that "companies who consolidate returns in a
third country are to have each return individually packed with
the foreign residents name and address on the outside of the
package."
You claim that it would be impractical to individually pack
each of the many articles returned. You further assert that
because the forms identify the articles, the reasons for the
return, and the names of the individual customers, that these are
not returns by commercial enterprises of the type contemplated in
the cited directive and that the policy underlying the directive
would not be undermined if your client is allowed to consolidate
these returns in packages containing all the required
information.
Under the facts presented, as long as the consolidated
packages contain a separate form for each of the returned
articles, they do not have to be individually packaged. Under
these circumstances, the articles will not be subject to visa and
quota requirements.
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HOLDINGS:
(1) Merchandise not conforming to specification which is
returned from customers in Canada who purchased it from a U.S.
store's catalog is eligible for the duty exemption under
subheading 9801.00.25, HTSUS, provided it is exported within
three years after its previous importation, it is reimported by
or for the account of your client who originally imported the
merchandise, and the documentary requirements of section 10.8a,
Customs Regulations (19 CFR 10.8a), are satisfied.
(2) The return of merchandise in a consolidated package
from customers in Canada who purchased it from a U.S. store's
catalog is not subject to visa and quota requirements, provided
the package contains a separate form for each article which
identifies it, states the reason for the return and lists the
names of the individual customers.
Sincerely,
John Durant, Director
Commercial Rulings Division