OT:RR:CTF:VS H070867 ARU
Mr. Federico Felhaber, LCB
Logistica Customs Brokerage, LLC
140 N. Cotton
El Paso, TX 79901
RE: Applicability of Subheading 9801.00.20, HTSUS; Used Clothing
Dear Mr. Felhaber:
This is in response to your letter dated July 14, 2009, on behalf of Neway Outsourcing, Inc. (“Neway”), in which you request a binding ruling regarding the applicability of subheading 9801.00.20, Harmonized Tariff Schedule of the United States ("HTSUS") to used clothing.
FACTS:
The merchandise at issue consists of bales of used clothing purchased in the United States from the Salvation Army, Goodwill Industries, and similar organizations. Neway is not the purchaser of the used clothing in the United States, but rather states that they will enter into a lease or bailment agreement with the original purchaser. Neway will export the bales of used clothes to Mexico where they will be sorted and repacked into bales to be reimported to the United States. The commercial relationship Neway will have with its clients for purposes of sorting used clothing in Mexico and returning them to the United States will be structured as either a Shelter Operation or a Services Agreement. You provided copies of the proposed agreements. Neway will be the exporter and importer of record for the used clothing.
ISSUE:
Whether the returned clothing will be eligible for duty-free treatment under subheading 9801.00.20, HTSUS.
LAW AND ANALYSIS:
Subheading 9801.00.20, HTSUS, provides duty-free treatment for:
[a]rticles, previously imported, with respect to which the duty was paid upon such previous importation or which were previously free of duty pursuant to the Caribbean Basin Economic Recovery Act (CBERA) or Title V of the Trade Act of 1974 (Generalized System of Preferences)(GSP), if (1) reimported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad, after having been exported under lease or similar use agreements, and (2) reimported by or for the account of the person who imported it into, and exported it from, the United States.
Section 10.108 of the CBP Regulations, 19 C.F.R. § 10.108, provides that free entry shall be accorded under subheading 9801.00.20, HTSUS, whenever it is established to the satisfaction of the port director that the article for which free entry is claimed was duty paid on a previous importation, is being reimported without having been advanced in value or improved in condition by any process of manufacture or other means, was exported from the United States under a lease or similar use agreement, and is being imported by or for the account of the person who previously imported it into, and exported it from the United States. It should be noted that CBP has denied subheading 9801.00.20, HTSUS, treatment in situations where such evidence was not provided. See, e.g., Headquarters Ruling Letter (“HRL”) 556528, dated May 27, 1992 (subheading 9801.00.20, HTSUS, denied because no evidence was provided that would indicate that the labeling applicator machine under consideration was exported under lease or similar use agreement).
CBP recognizes that no specific documents are required to show that duty was paid on a previous importation and that the article is being reimported by or for the account of the person who previously imported it into the U.S. (unlike other regulations promulgated for similar statutory conditions such as subheading 9801.00.25, HTSUS, proof must only be submitted to the satisfaction of the port director). See HRL 559008, dated April 27, 1995. In this case, we assume most of the clothing will be of non-U.S. origin. No evidence was submitted to establish that the used clothing was previously imported or that duty was paid on a previous importation. Therefore, we find that the goods are not entitled to subheading 9801.00.20, HTSUS, treatment. As the first requirement of subheading 9801.00.20, HTSUS, is not met, it is not necessary to analyze the remaining requirements.
HOLDING:
Based on the information before us, it cannot be established that the used clothing was duty paid on a previous importation. Therefore, the goods are not entitled to duty-free treatment under subheading 9801.00.20, HTSUS.
Reference to this ruling letter should be made in the entry documents filed at the time the subject goods are entered. See CBP Form 7501 – Instructions, Additional Data Elements (available online at: www.cbp.gov). If the entry summary has been filed without reference to this ruling letter, the ruling letter should be brought to the attention of the appraising officer at the port of entry.
Sincerely,
Monika R. Brenner, Chief
Valuation & Special Programs Branch