OT:RR:CTF:VS H262681 AJR
Ms. Julie Vair
Senior Consultant
Expeditors Tradewin, LLC
1015 Third Avenue, 12th Floor
Seattle, WA 98104
Re: Applicability of 9801.00.10; U.S.-origin candy returned to the US after repackaged in China
Dear Mr. Vair:
This is in response to your letter dated March 11, 2015, on behalf of your client, Brown & Haley, requesting a ruling concerning the applicability of subheading 9801.00.10, Harmonized Tariff Schedule of the United States (HTSUS), to candy manufactured in the United States, repackaged in China, and returned to the United States.
FACTS:
Brown & Haley manufactures Almond Rocao® candy (hereinafter the “candy”) in their facility in Tacoma, Washington. Once manufactured, the candy is shipped from the United States to China for repackaging, before being shipped back to the United States. The repackaging in China is performed under the following three scenarios:
First Scenario – Holiday Box: In the United States, the candy is manufactured and each piece is individually foil-wrapped. The candy is then shipped from the United States to China in 20 pound (lb.) bulk bags. In China, 235 grams (g) of the individually foil-wrapped pieces are packaged into sealed trays, and the trays are placed into Chinese-origin holiday paper board boxes that are printed with a picture of the candy, its name, and some Christmas ornaments. The candy is shipped back to the United States. You submitted two photos showing the candy in a sealed tray and in a holiday box.
Second Scenario – Latching Tin: In the United States, the candy is manufactured and each piece is individually foil-wrapped. The candy is then shipped from the United States to China in 396 g pouches. In China, the pouches are placed into Chinese-origin latching tins designed with red and white stripes, a picture of the candy, and its name. The candy is shipped back to the United States. You submitted two photos showing the candy in the pouch and in the latching tin.
Third Scenario – Mini-Gable Top Box: In the United States, the candy is manufactured and each piece is individually foil-wrapped. The candy is then shipped from the United States to China in 20 lb. bulk bags. In China, the individually foil-wrapped pieces are flow wrapped in Chinese-origin film and then two pieces are placed into Chinese-origin mini-gable top paper board boxes printed with a picture of the candy and its name. The candy is shipped back to the United States. You submitted one photo showing the candy flow wrapped in film and in the mini-gable top boxes.
You state that in all three scenarios the United States-origin candy accounts for more than 50% of the final product value. You state that the candy will be re-imported from China to the United States through the Ports of Seattle and Tacoma in Washington.
ISSUES:
Whether the repackaged candy, under all three scenarios, is eligible for the duty exemption under subheading 9801.00.10, HTSUS, when returned to the United States; and
What is the country of origin of the the repackaged candy, under all three scenarios, upon reimportation into the United States?
LAW AND ANALYSIS:
Subheading 9801.00
Subheading 9801.00.10, HTSUS, provides that 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 may be entered duty free provided the documentary requirements of section 10.1, U.S. Customs and Border Protection (“CBP”) Regulations (19 C.F.R. § 10.1) are met. In United States v. John V. Carr & Sons, Inc., 347 F. Supp. 1390 (Cust. Ct. 1972), 496 F.2d 1225 (CCPA 1974), the court stated that absent some alteration or change in the item itself, the mere repackaging of the item, even for the purpose of resale to the ultimate consumer, is not sufficient to preclude the merchandise from being classified under item 800.00, Tariff Schedules of the United States (TSUS) (now subheading 9801.00.10, HTSUS).
In the instant case, the operations that will be performed in China consist of merely packaging the United States-origin candy into the Chinese boxes or tin per the three scenarios. As mere packaging into foreign cases does not advance in value or improve in condition the United States-origin candy, the candy will be eligible for duty-free treatment under subheading 9801.00.10, HTSUS.
The remaining issue in this case concerns the proper classification of the foreign cases, the two boxes and the tin described in the three scenarios, that will hold the candy. Pursuant to General Rule of Interpretation (“GRI”) 5, HTSUS, certain containers may be classified with the articles they are designed to hold. Specifically, GRI 5(b) states:
Subject to the provisions of rule 5(a) above, packing 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, the provision is not binding when such packing materials or packing containers are clearly suitable for repetitive use.
In this case, we are satisfied that the box and sealed tray from the first scenario, and the flow-wrapped film and box from the third scenario, are packaging materials of the kind normally used for packaging candy-type products, and such packaging is clearly not suitable for repetitive use. Thus, the packaging materials from the first and third scenarios will satisfy the requirements of GRI 5(b), HTSUS, and will be classified with their respective candy under subheading 9801.00.10, HTSUS.
In Headquarter Ruling (“HQ”) 081862, dated June 28, 1990, metal liquor boxes, which were considered premium packaging designed to promote the sale of liquor and also to protect the liquor during transport, where held to be typical of the kind of containers used for packing liquor and were not designed for repetitive use. Similarly, we find the latching tins from the second scenario are of the kind typically used for packaging such candy, and are not designed for repetitive use. Thus, the packaging materials described in the second scenario will satisfy the requirements of GRI 5(b), HTSUS, and will be classified with their respective candy under subheading 9801.00.10, HTSUS.
Accordingly, based on the information submitted, the candy packaged in the boxes, tins, and mini-gable top boxes will be entitled to duty-free treatment under subheading 9801.00.10, HTSUS, provided the documentary requirements of 19 C.F.R. § 10.1 are met.
County of Origin Marking
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. § 1304), requires that, unless excepted, every article of foreign origin (or its container) must be legibly, permanently, and conspicuously marked to indicate the English name of its country of origin to the ultimate purchaser in the United States. The purpose of this provision is to require the identification of foreign goods "so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will." United States v. Friedlaender & Co., 27 C.C.P.A. 297, 302, C.A.D. 104 (1940).
Section 134, Customs Regulations (19 CFR § 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. § 1304. The "ultimate purchaser" of an article for purposes of 19 U.S.C. § 1304 is defined as "generally the last person in the United States who will receive the article in the form in which it was imported." 19 CFR § 134.1(d). In this case, the ultimate purchaser of the candy is the retail buyer in the United States. You state that the packaging materials from the three scenarios need not be marked to show their country of origin pursuant to 19 CFR §134.24(d), which states:
Imported full—(1) When contents are excepted from marking. Usual disposable containers in use as such at the time of importation shall not be required to be marked to show the country of their own origin, but shall be marked to indicate the origin of their contents regardless of the fact that the contents are excepted from marking requirements under paragraph (f), (g), or (h) of § 134.32 or, in the case of a good of a NAFTA country, under paragraph (e), (f), (g), (h), (i), (p), or (q) of that section.
Section 134.24(a), Customs Regulations (19 CFR § 134.24(a)), states that disposable containers are the usual ordinary types of containers, including cans, bottles, paper or polyethylene bags, paperboard boxes, and similar containers, which are ordinarily discarded after the contents have been consumed. In this case, we are satisfied that the packaging materials used in the first and third scenario are of the type ordinarily discarded, and thus will not require a marking to show their (the packaging materials) country of origin pursuant to 19 CFR §134.24(d).
Section 134.23, Customs Regulations (19 CFR § 134.23), describes two types of reusable containers: articles such as heavy duty steel drums, tanks, and other storage or transportation containers; and containers or holders which have a lasting value or decorative use, such as decorative mustard jars reusable as beer mugs, shaving soap containers reusable as shaving mugs and cologne bottles reusable as flower vases.
In HQ 733274, dated June 19, 1990, CBP held that wooden cigar boxes were not designed for reuse and thus excepted from country of origin marking, despite the fact that the boxes had a notably sturdy construction and smooth finish that suggested a degree of permanence and durability that differed from the disposable container examples in 19 CFR § 134.24(a). CBP distinguished the wooden cigar boxes from the reusable container examples in 19 CFR § 134.23 because the boxes were clearly designed for the single purpose of containing and preserving cigars, and not for multiple uses with the same article or for uses after depletion of its contents.
In HQ 734691, dated January 7, 1994, CBP held that jewelry boxes were not disposable containers within the meaning of 19 CFR § 134.24 because their durable and protective quality, along with no indication that these boxes were universally discarded by their users, differentiated the boxes from the examples of disposable containers listed 19 CFR § 134.24(a). It was noted that the boxes, which were covered in felt on the outside and lined in satin and felt on the inside, were made well enough that they would likely be used by some of the purchasers to store their purchased jewelry and other jewelry.
In this case, we find that the latching tins from the second scenario more closely resemble the wooden cigar boxes in HQ 733274, than the jewelry boxes in HQ 734691. Though the latching tins have a durable quality, they do not have the heavy duty or decorative qualities described in 19 CFR § 134.23. Unlike HQ 734691, where the jewelry boxes were built with certain qualities (e.g. felt and satin) that would suggest the boxes could be used to store jewelry for long periods of time, the latching tins will not have any particular qualities that suggest these containers will likely be reused to store candy by its users. Similar to HQ 733274, the latching tins will hold a consumable item, rather than a reusable item. Accordingly, we find that the latching tins and other packaging material described in the second scenario are of the type ordinarily discarded, and thus will not require a marking to show their (the packaging materials) country of origin pursuant to 19 CFR §134.24(d).
Therefore, the packaging materials in all three scenarios need not be marked with their country of origin pursuant to 19 CFR §134.24(d). However, as to whether the repackaged candy in all three scenarios may be marked “Made in USA” or “Product of USA” on its exterior is a question within the jurisdiction of the Federal Trade Commission.
HOLDING:
Based on the information provided, the candy and its packaging materials in all three scenarios will be entitled to duty-free treatment under subheading 9801.00.10, HTSUS, upon compliance with the documentation requirements set forth in 19 CFR §10.1. Furthermore, the packaging materials in all three scenarios will not require a marking to show their country of origin pursuant to 19 CFR §134.24(d).
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 Customs officer handling the transaction.
Sincerely,
Monika R. Brenner, Chief
Valuation and Special Programs Branch