HQ H261216
VAL OT:RR:CTF:VS H261216 YAG
Ms. Mary-Anne Hardy
Senior Trade Consultant
Russell A. Farrow Limited
220, 5397 Eglinton Avenue West
Etobicoke, ON Canada M9C 5K6
RE: Ruling Request; U.S. origin plastic wrap; Subheading 9801.00.10, Harmonized Tariff Schedule of the United States (“HTSUS”)
Dear Ms. Hardy:
This is in response to your letter dated September 23, 2014, in which you request a prospective ruling, on behalf of your client, Econ-O-Pac (“Econ”), on whether plastic wrap of U.S. origin can be declared separately from the imported goods, which originate in China, at the time of importation into the United States.
FACTS:
Econ imports toys from China into Canada. In Canada, Econ overwraps these toys with plastic. Econ then imports these goods into the United States. According to your submission, the plastic overwrap is of the U.S. origin; however, the imported toys are of Chinese origin.
ISSUES:
Is the value of the U.S. origin packing included in the appraised value of the imported toys?
Whether the U.S. origin packing materials used to wrap toys in Canada are eligible for the duty exemption under subheading 9801.00.10, HTSUS, when returned to the United States.
LAW AND ANALYSIS:
Merchandise imported into the United States is appraised in accordance with section 402 of the TAA (19 U.S.C. §1401a). The preferred method of appraisement is transaction value, defined as “the price actually paid or payable for the [imported] merchandise when sold for exportation to the United States,” plus certain enumerated additions, including the packing costs incurred by the buyer with respect to the imported merchandise. 19 U.S.C. §1401a(b)(1)(A).
Assuming transaction value is the appropriate basis of appraisement, packing costs constitute an addition to the price actually paid or payable. 19 U.S.C. §1401a(b)(1)(A). In this regard, section 402(h) of the TAA provides:
The term “packing costs” means the cost of all containers and coverings of whatever nature and of packing, whether for labor or materials, used in placing merchandise in condition, packed ready for shipment to the United States.
19 U.S.C. §1401a(h)(3).
Additionally, with respect to packing materials, General Rule of Interpretation (“GRI”) 5(b), HTSUS, provides that:
[p]acking 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 such goods. However, this provision does not apply when such packing materials or packing containers are clearly suitable for repetitive use.
Therefore, the value of non-reusable packing materials or containers normally used for packing such goods is considered a part of the value of the contents and is dutiable at the rate of the contents.
However, we have held that upon submission of satisfactory proof that a container is of U.S. origin and that it is returned without having been advanced in value or improved in condition while abroad, it is entitled to duty-free treatment under subheading 9801.00.10, HTSUS. Headquarters Ruling Letter (“HRL”) 731806 dated November 18, 1988. Furthermore, HRL 544294 dated July 7, 1989, and HRL 544458, dated February 23, 1990, held that, if packing material of U.S. origin is classifiable under subheading 9801.00.10, HTSUS, there is no legal authority to treat the packing as part of the appraised value of the imported merchandise because items which are separately classified must be separately appraised. This position was affirmed in HRL 544667, dated July 30, 1991. There we stated, in pertinent part, that:
With regard to determining appraised value, the principle that imported merchandise be appraised in accordance with its classification applies. Thus, where American packaging is classified under subheading 9801.00.10, HTSUS, and the merchandise packed in the American packaging is classified in a subheading within the nomenclature between Chapters 1 and 97, no authority exists to combine the respective appraised values. Because the packaging and merchandise are treated as separately classifiable entities, their appraised values are separate....
Subheading 9801.00.10, HTSUS, provides a full duty exemption for:
Products of the United States when returned after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad.
Articles satisfying the above conditions of the statute will be afforded duty-free treatment, provided the documentary requirements of 19 CFR §10.1 are met. In HRL 555806, dated January 14, 1991, thin-gauged plastic bags qualified for duty-free treatment under subheading 9801.00.10, HTSUS, because the bags were non-reusable U.S. origin packing material that were exported in their finished condition and not subject to any other operation prior to their re-importation into the United States.
In this case, the plastic wrap is a U.S. origin product that will be exported to Canada for the purpose of packing toys, and importing the packed toys into the United States. Overwrapping toys with the U.S. origin plastic wrap does not constitute an advancement or improvement of the wrap. Therefore, we find that the plastic wrap may be classified separately and is eligible for duty-free treatment under the provisions of subheading 9801.00.10, HTSUS, provided the documentary requirements of 19 CFR §10.1 are met. HOLDING:
Based on the information provided, the U.S. origin plastic wrap is not included in the appraised value of the imported merchandise and is eligible for duty-free treatment under subheading 9801.00.10, HTSUS, upon compliance with the documentation requirements set forth in 19 CFR §10.1.
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