OT:RR:CTF:VS H175555 CMR
U.S. Customs and Border Protection
Miami International Airport (Service Port)
6601 NW 25th Street Room 272 Miami, FL 33122
RE: Request for Internal Advice; Classification of consignment jewelry previously imported; 9801.00.20
Dear Mr. Suliveras:
By letter dated July 13, 2011, Sandler, Travis & Rosenberg, P.A., sought internal advice from this office, on behalf of their client, Jabel Jewelers, Inc. (hereinafter, Jabel), regarding the proper classification of unliquidated entries at your port. This office contacted the involved import specialist for comments. Having reviewed the comments received from the port and the submissions from Sandler Travis & Rosenberg, our decision on this matter is set forth below.
Counsel has requested confidential treatment of certain information contained in the record. Pursuant to 19 C.F.R. § 177.2(b)(7), the information has been specifically identified. It is bracketed and underlined in the text herein and will be redacted in the public version of this decision.
FACTS:
Jabel claims to act as a sales agent for several U.S. jewelry companies soliciting sales on behalf of those companies in Panama. Currently, Jabel is working with Company A and Company B. These companies import jewelry into the U.S. from China or Thailand and pay the duties owed on the importations. The companies consign the imported jewelry to Jabel who takes the jewelry to Panama to sell. If the jewelry is sold, then Jabel receives a commission. If the jewelry is not sold, the jewelry is reimported and returned to the companies.
The parties state that title does not transfer to Jabel at any time and that it has been acting as a sales agent for the parties for at least 10 years. As support for this assertion, a consignment agreement between Company A and Jabel, dated June 9, 2011, has been submitted, along with an affidavit by the President of Company B attesting to the business relationship between the company and Jabel.
The jewelry in the unliquidated entries at issue at the port were entered under subheading 9801.00.25, Harmonized Tariff Schedule of the United States (HTSUS). This provision provides for:
Articles, previously imported, with respect to which the duty was paid upon such previous importation if (1) exported within three years after the date of such previous importation, (2) reimported without having been advanced in value or improved in condition by any process of manufacture or other means while abroad, (3) reimported for the reason that such articles do not conform to sample or specifications, and (4) reimported by or for the account of the person who imported them into, and exported them from, the United States
Counsel for Jabel asserts that the jewelry at issue in the unliquidated entries should be classified in subheading 9801.00.20, HTSUS. Subheading 9801.00.20, HTSUS, provides for:
Articles, 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 or Title V of the Trade Act of 1974, 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
Goods classifiable in subheadings 9801.00.20 and 9801.00.25, HTSUS, are subject to a Free rate of duty.
Counsel notes that due to the consignment arrangement with Company A and Company B, Jabel is continuously exporting and reimporting consigned jewelry. In the past, Jabel was the importer of record, but in the future, it is contemplated that Jabel will sometimes act as the importer of record or that the jewelry company which has consigned goods to Jabel (the consignor) will sometimes act as the importer of record. Counsel seeks advice as to both scenarios.
ISSUE:
Is the merchandise at issue, consigned jewelry exported for sale, eligible for classification in subheading 9801.00.20, HTSUS, as submitted by counsel for the importer?
LAW AND ANALYSIS:
The Customs and Border Protection (CBP) Regulations provide the following at 19 CFR § 10.108 with regard to entry of goods under subheading 9801.00.20, HTSUS:
Free entry shall be accorded under subheading 9801.00.20, Harmonized Tariff Schedule of the United States (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 or was previously entered free of duty pursuant to the Caribbean Basin Economic Recovery Act or Title V of the Trade Act of 1974, 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 reimported by or for the account of the person who imported it into, and exported it from, the United States.
CBP recently issued a ruling on a situation similar to that at issue here. In Headquarters Ruling Letter (HQ) H096897, dated April 6, 2011, this office examined, in part, whether non-U.S. origin merchandise, imported and duty paid, and exported under consignment, was eligible for duty free entry under subheading 9801.00.20, HTSUS, upon its return to the United States. As in this case, the merchandise was consigned to be sold outside the U.S. (in that case, on board a cruise ship). Merchandise not sold was returned to the consignor. If the merchandise was sold, the consignor received payment.
HQ H096897 cites to HQ 560827, dated February 25, 1998, which is even more directly on point to the case at hand. In HQ 560827, sales agents for Esprit de Corp (Esprit) exported samples for the purpose of soliciting orders. The samples included goods previously imported by Esprit. The goods were entrusted to the agents only for the duration of each sales trip. The facts of HQ 560827 are substantially similar, though not identical, to the facts before us. In this case, Company A and Company B import jewelry into the U.S. and pay the duties owed on such jewelry which may then be exported by Jabel, as a sales agent for Company A and Company B, for the purpose of selling the jewelry abroad and returning any jewelry that does not sell. As in HQ 560827 and HQ H096897, title is retained by the original importer/consignor.
In HQ 560827, we found the agreement between Espirt and the sales agents to be a similar use agreement within the meaning of subheading 9801.00.20, HTSUS. Similarly, in HQ H096897, we found the consignment agreement to be a similar use agreement within the scope of the provision. Based on these decisions, the consignment arrangement between the parties herein is a similar use agreement within the scope of subheading 9801.00.20, HTSUS.
It is asserted that the jewelry is not advanced in value or improved in condition while abroad and there is no assertion to the contrary. Additionally, the written consignment agreement between Company A and Jabel and the affidavit by the President of Company B as to his company’s business relationship with Jabel memorialize in writing the oral agreements of the respective parties whereby Jabel is consigned jewelry by Company A and Company B for sale abroad. Whether Jabel acts as the importer of record or whether the original importer, i.e., the consignor, acts as the importer of record, the requirement that the goods be reimported by, or for the account of the person who imported it into, and exported it from, the United States is satisfied.
In addition, the requirements of 19 CFR § 10.108 must also be satisfied. Specifically, with regard to subheading 9801.00.20, HTSUS, free entry will be accorded to goods under this provision:
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 or was previously entered free of duty pursuant to the Caribbean Basin Economic Recovery Act or Title V of the Trade Act of 1974, 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 reimported by or for the account of the person who imported it into, and exported it from, the United States.
By letters, dated September 9, 2011 and October 14, 2011, counsel submitted additional information related to one specific September 2011 entry including – a re-importation entry summary, Jabel memos detailing items re-imported on behalf of Company A and Company B, Company A credit memoranda detailing items returned after re-importation and initial importation entry summaries with invoices. The invoices that match the entry summaries only relate to merchandise previously imported by Company A. The initial importation entry summaries and invoices identify some of the goods imported by Jabel in the September 2011 entry. Evidence of prior importation by Company A for approximately 60 percent of the items identified on the credit memorandum issued by Company A to Jabel has been presented.
An additional supplemental submission, dated October 14, 2011, was presented by counsel to further support classification under subheading 9801.00.20, HTSUS, of the jewelry imported in the specific September 2011 entry previously referenced. The additional information included Company B spreadsheets documenting the initial importation of jewelry re-imported by Jabel for the account of Company B and the corresponding entry summaries. However, no invoices were submitted with the entry summaries. It is impossible to correlate the merchandise identified on the spreadsheet with the submitted entry summaries. Furthermore, it is impossible to know the type of good each of the individually identified items is, i.e., whether the good is a ring, necklace, earrings, ring, etc. Therefore, the submitted information is not helpful in establishing the prior importation of the merchandise in the entry by Company B.
In order to avoid problems with future entries, the port has suggested that Jabel include in the entry package presented to CBP the original entry numbers on the descriptive sheets or credit memoranda. Re-importations should include clearer descriptive information, such as a list of the type of merchandise, number of pieces, value, and identity of the original importer.
HOLDING:
In order to qualify for classification in subheading 9801.00.20, HTSUS, all of the elements of the provision and regulation must be met. Jabel has presented evidence of previous importations of some items consigned by Company A to Jabel. We are satisfied that with regard to those items, classification in subheading 9801.00.20, HTSUS, is proper. As to the remaining items in the entry which were consigned to Jabel by Company A, and as to the items in the entry consigned to Jabel by Company B, the information presented to this office was insufficient to establish that the jewelry was previously imported by Company A or Company B. Therefore, there is insufficient support for classification in subheading 9801.00.20, HTSUS, of these goods. As to other entries at the port, it is within the Port Director’s discretion to require additional information to establish that the goods were previously imported by the parties on whose behalf the goods are being re-imported. If the importer is unable to produce such documentation, if requested to do so, the port should deny classification under subheading 9801.00.20, HTSUS.
Sixty days from the date of this letter, Regulations and Rulings of the Office of International Trade will take steps to make this decision available to Customs and Border Protection ("CBP") personnel and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Monika R. Brenner, Chief
Valuation and Special Programs Branch