HQ 559072
JUNE 21,1995
CLA-2 CO:R:C:S 559052 BLS
Mr. Jerry Walk
President
National Distributing Co., Inc.
23366 Farmington Rd.
Farmington, MI 48366
RE: Aplicability of subheading 9802.00.50, HTSUS, to laundered
wearing apparel
Dear Mr. Walk:
This is in reference to your letter dated February 9, 1995,
requesting a ruling in connection with the laundering or cleaning
of wearing apparel in Canada, and informal entry requirements.
FACTS:
You state that soiled clothing and uniforms will be
delivered from your dry cleaning establishments in the U.S. to
Windsor, Ontario, where they will laundered by either dry
cleaning or through a wet wash method. The clothing will then
be returned to the U.S. You advise that some of the items will
be of foreign origin.
ISSUE:
Whether the returned clothing will be eligible for duty-free
treatment under subheading 9801.00.10, Harmonized Tariff Schedule
of the United States (HTSUS), or the partial duty exemption under
subheading 9802.00.50, HTSUS.
LAW AND ANALYSIS:
Subheading 9801.00.10, HTSUS, provides for the free entry of
articles of U.S. origin which are exported and returned without
having been advanced in value or improved in condition while
abroad.
In Headquarters Ruling Letter (HRL) 555318 dated September
20, 1989, we held that soiled
textile products, consisting of sheets, pillowcases, tablecloths, napkins and lab coats, sent to
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Mexico, were improved in condition as a result of the washing, drying, and in some cases,
pressing operations performed in Mexico. Since the soiled items were improved in condition
abroad, we held that the returned products were not entitled to free entry under subheading
9801.00.10, HTSUS.
In the instant case, those garments of foreign origin sent abroad will not be entitled to duty-free treatment under subheading 9801.00.10, HTSUS, upon return to the U.S., since the statute
applies only to items of U.S.-origin . Further, since all of the soiled clothing is subject to cleaning
operations in Canada, which improves the condition of the garments, the U.S.-origin apparel as
well as the foreign origin clothing will not be entitled to duty-free treatment under subheading
9801.00.10, HTSUS.
Subheading 9802.00.50, HTSUS, provides a partial duty exemption for articles returned to the
U.S. after having been exported to be advanced in value or improved in condition by means of
repairs or alterations. Such articles repaired or altered in Canada are dutiable only upon the value
of the foreign repairs or alterations, provided the documentary requirements of section 181.64,
Customs Regulations (19 CFR 181.64), are satisfied. However, entitlement to this tariff
treatment is precluded in circumstances where the operations performed abroad destroy the
identity of the articles or create new or commercially different articles. See A.F. Burstrom v.
United States, 44 CCPA 27, C.A.D. 631 (1956); Guardian Industries Corp. V. United States, 3
CIT 9 (1982). Tariff treatment under subheading 9802.00.50, HTSUS, is also precluded where
the exported articles are incomplete for their intended use prior to the foreign processing.
Guardian.
In HRL 221046 dated May 11, 1989, we held that the cleaning and sanitizing of soiled U.S.
linens in a Mexican laundry facility qualified as an alteration as that term is used in subheading
9802.00.50, HTSUS. We further stated in that ruling that, as the returned items were considered
foreign articles pursuant to section 12.130(c), Customs Regulations (19 CFR 12.130(c)), and
U.S. Note 2, subchapter II, Chapter 98, HTSUS, they would be subject to applicable visa
requirements and quota restrictions as products of Mexico. See also HRL 555318, above.
Accordingly, we find that the laundering operations in the present case may be considered an
alteration, thereby entitling the returned textile products to the partial exemption from duty under
subheading 9802.00.50, HTSUS. However, the textile products will be subject to all applicable
visa requirements and quota restrictions as products of Canada.
In connection with your inquiry regarding informal entry, we note that while generally
shipments of merchandise valued under $1,250 may be eligible for informal entry (see 19 CFR
143.21)), the district director of Customs at the port the merchandise will be entered may require
a formal entry for any merchandise if deemed necessary for import admissibility enforcement
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purposes, revenue protection, or the efficient conduct of Customs business. (See 19 CFR
143.22.) Accordingly, you should contact the appropriate district director to determine whether
informal entry may be required, regardless of the value of the shipments.
HOLDING:
Soiled clothing sent to Canada to be laundered will not be entitled to duty-free entry under
subheading 9801.00.10, HTSUS, upon return to the U.S., since the cleaning operations improve
the condition of the garments. However, the garments will be eligible for the partial duty
exemption under subheading 9802.00.50, HTSUS, upon return to the U.S. Duty will be assessed
only on the value of the foreign cleaning operations, upon compliance with the documentary
requirements of 19 CFR 181.64(c). The apparel articles will also be subject to applicable visa
requirements and quota restrictions as products of Canada. The returned merchandise may be
eligible for informal entry if the value of the shipments do not exceed $1,250, and upon
compliance with all other requirements of 19 CFR 143.21. However, the district director where
the merchandise will be entered may require formal entry regardless of value under certain
circumstances.
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 fuiled 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