OT:RR:CTF:VS H209471 KSG
Mr. Jefferson Perin
20291 Valencia Circle
lake Forest, CA 92630
RE: Revocation of NY N069900; Subheading 9801.00.25; Not conforming due to sample or specifications; Cameras
Dear Mr. Perin:
This is in reference to New York Ruling Letter (“NY”) N069900, dated August 5, 2009, regarding the eligibility of imported cameras, lenses, batteries, battery chargers, battery packs, and battery plates for duty-free treatment under subheading 9801.00.25, of the Harmonized Tariff Schedule of the United States (“HTSUS”). In NY N069900, CBP held that cameras and accessories reimported for repair, upgrade or exchange are eligible for duty-free treatment under subheading 9801.00.25, HTSUS, if documentary requirements are met. Upon review of NY N069900, CBP has determined that it is incorrect.
Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. 1625 (c)(1)), as amended by section 623 of Title VI, of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat. 2057), notice of the proposed action was published on August 15, 2012, in Volume 46 , Number 34, of the Customs Bulletin. No comments were received in response to this notice.
FACTS:
Red.com imports cameras, lithium batteries, battery chargers, battery packs, and battery plates, which are kept in inventory for worldwide distribution. Duty is paid on the goods on the initial importation. Goods that are defective or require upgrade are returned to Red.com in the U.S. for repair, upgrade, or exchange when under warranty. The goods are not advanced in value or improved in condition abroad.
ISSUE:
Whether reimported cameras and accessories described above are eligible for duty-free treatment under subheading 9801.00.25, HTSUS.
LAW AND ANALYSIS:
Section 141.2 of the Customs Regulations (19 CFR 141.2) provides that dutiable merchandise imported and afterward exported, even though duty thereon may have been paid on the first importation, is liable to duty on every subsequent importation into the Customs territory of the United States unless exempt by law.
Subheading 9801.00.25, HTSUS, provides for the duty-free treatment of:
[a]rticles, 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 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.
We assume for the purposes of this ruling that paragraphs (1), (2), and (4) are satisfied in this case. In order to qualify for duty-free treatment under subheading 9801.00.25, HTSUS, there must be some tangible evidence that the returned merchandise does not conform to “sample or specifications.”
The application of this provision is clear where the failure to meet specifications relates to the physical nature of the goods such as a shipment which includes the wrong style number, the wrong size, the wrong color, or defective workmanship. In Headquarters Ruling Letter (“HRL”) 558746, dated January 6, 1995, Customs held that alarm and security equipment which was defective due to mishandling during delivery failed to conform to specification and was entitled to duty-free treatment under subheading 9801.00.25, HTSUS, upon reimportaton into the United States. By contrast, in HRL 559298, dated February 7, 1996, Customs held that goods which were returned that physically conformed to contract specifications but which did not comply with other terms of the contract, such as the quantity of the merchandise or timeliness of delivery were not eligible for duty-free treatment under subheading 9801.00.25, HTSUS. In HRL 560421, dated August 20, 1997, Customs held that merchandise reimported for repair but subsequently returned without repair due to the costliness of repair was not eligible for duty-free treatment under subheading 9801.00.25, HTSUS. CBP concluded in this ruling that the importer must be able to submit evidence that the goods were reimported because they do not conform to specifications. In HRL 562057, dated August 27, 2002, CBP held that a vacuum pump reimported because it did not work properly was not eligible for duty-free treatment under subheading 9801.00.25, HTSUS, because no evidence was submitted to establish that the pump was delivered in a defective condition.
The issue presented is whether cameras and accessories reimported for repair, upgrade or exchange would be considered reimported for the reason that such articles do not conform to sample or specifications.
Red.com did not submit evidence to establish that any of the cameras or accessories did not conform to sample or specification. The reimported goods include goods reimported for upgrade or exchange that may conform to sample or specification. Goods that need repair or are exchanged because they are physically defective are covered by this provision where the importer submits appropriate documentation to show physical defect or non-conformance with sample or specification. However, goods that are upgraded or exchanged due to lack of demand or other rationale are not considered to constitute a lack of conformance to sample or specification. Therefore, we find that cameras and accessories reimported for upgrade would not be eligible for duty-free treatment under subheading 9801.00.25, HTSUS. Further, cameras and accessories reimported for repair or exchange are only eligible for duty-free treatment under subheading 9801.00.25, HTSUS, if those goods as exported failed to conform to sample or specification and the importer, upon their return, submits sufficient documentation to demonstrate that the goods do not conform to sample or specification.
HOLDING:
Cameras and accessories reimported for upgrade or exchange due to lack of demand are not eligible for duty-free treatment under subheading 9801.00.25, HTSUS. Cameras and accessories not conforming to sample or specification that are reimported for repair or exchange are eligible for duty-free treatment under subheading 9801.00.25, HTSUS, provided the documentary requirements set forth in 19 CFR 10.8a are satisfied.
EFFECT ON OTHER RULINGS:
NY N069900, dated August 5, 2009, is revoked. In accordance with
19 U.S.C. 1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.
Sincerely,
Myles B. Harmon, Director
Commercial & Trade Facilitation Division