OT:RR:CTF:VS H108098 TJB
Mr. S. A. Havey
Customs Compliance Special Projects Manager
Russell Brands, LLC
One Fruit of the Loom Drive
Bowling Green, KY 42103
Re: Subheading 9801.00.10; Holographic Stickers
Dear Mr. Havey:
This is in response to your ruling request dated May 14, 2010, concerning the valuation and eligibility of certain holographic stickers for subheading 9801.00.10, Harmonized Tariff Schedule of the United States (HTSUS), treatment.
FACTS:
Russell Brands, LLC (“Russell”), purchases U.S.-origin holographic stickers from a supplier in the U.S. The holographic stickers are exported to foreign manufacturers who affix the stickers to the immediate packaging of Russell’s products. The stickers serve to designate Russell’s products as endorsed by a licensor of a particular trademark, and each sticker contains a unique identification number. Russell assumes all costs associated with transporting the stickers to the foreign destinations. There is no relationship between Russell, the sticker supplier, the licensor(s), and the foreign manufacturers.
Russell provides the stickers to its foreign manufacturers at no charge. The foreign manufacturers do not include the value of the sticker on the imported merchandise. Russell does, however, include the foreign manufacturer’s labor cost of affixing the stickers to the merchandise in its value.
You provided a photocopy of the sticker already affixed to the immediate packaging of one of Spalding’s products.
ISSUE:
Whether the value of U.S.-origin holographic stickers exported to foreign countries where they are affixed to non-originating merchandise are included in the appraised value of the imported merchandise, and whether the stickers are entitled to duty-free treatment under subheading 9801.00.10 HTSUS, or to the partial duty exemption under subheading 9802.00.80, HTSUS, when returned to the U.S.
LAW AND ANALYSIS:
Merchandise imported into the United States is appraised in accordance with section 402 of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (“TAA”) codified at 19 U.S.C. §1401a. The preferred method of appraisement under the TAA is transaction value, defined as “the price actually paid or payable for the 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)). For purposes of this decision, we will assume that transaction value is the appropriate basis of appraisement.
The statute, in 19 U.S.C. §1401a(h)(3), defines “packing costs” as “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.” See also, 19 CFR §152.102(e). Price tickets, hang tags, radio frequency identification (RFID) tags, and security tags are all considered packing additions to transaction value. See, e.g. HQ 545154, dated June 3, 1994; HQ H028000, dated June 20, 2008.
The price of the sticker that Russell sends to its foreign manufacturers is not included in the price paid or payable to those manufacturers. Russell purchases the stickers domestically and exports them directly to the foreign manufacturers. The foreign manufacturer affixes the sticker to the retail packaging of each finished product. The finished products are then shipped to the United States.
We find that the stickers are “materials, used in placing [the] merchandise in condition, packed ready for shipment to the United States.” 19 U.S.C. §1401a(h)(3). Therefore, they constitute an addition to the price actually paid or payable for the imported merchandise under 19 U.S.C. §1401a(b)(1)(D).
Subheading 9801.00.10, HTSUS, provides for the free entry of products of the United States that have been 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. Some change in the condition of the product while it is abroad is permissible. However, operations which either advance the value or improve the condition of the exported product render it ineligible for duty-free entry upon return to the United States. Border Brokerage Company, Inc. v. United States, 314 F.Supp. 788 (1970), appeal dismissed, 58 CCPA 165 (1970). See, HQ 545970, dated August 30, 1995.
CBP has held that “if packing material of U.S. origin is separately classified as American goods returned, no legal authority exists for also treating this packing as part of the appraised value of the imported [good].” HQ 544294, decided July 7, 1989. See also, HQ 544667, dated July 30, 1991; HQ 545970, dated August 30, 1995; and HQ 544708, dated February 13, 1992.
We note that the stickers are manufactured in the United States. As such, we find that they are eligible for duty-free treatment under subheading 9801.00.10, HTSUS. Therefore, we find that the holographic stickers are not part of the appraised value of the imported merchandise. See, HQ H028000, dated June 20, 2008.
HOLDING:
The U.S.-origin holographic stickers are eligible for duty-free treatment under subheading 9801.00.10, HTSUS, when returned to the U.S., provided the documentary requirements of 19 CFR §10.1 are satisfied. They are not part of the appraised value of the imported merchandise.
A copy of this letter should be attached to the entry documents filed at the time the merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP official handling the transaction.
Sincerely,
Monika R. Brenner, Chief
Valuation and Special Programs Branch