OT:RR:CTF:VS H320286 EE
Mr. Joshua Holland
Expeditors Tradewin, LLC
1015 Third Avenue
Seattle, WA 98104
RE: 9801.00.10, HTSUS; Trousers; Shorts
Dear Mr. Holland:
This is in response to your letter, dated August 5, 2021, on behalf of your client, Miller International Inc. (“Miller”), concerning the applicability of subheading 9801.00.10, Harmonized Tariff Schedule of the United States (“HTSUS”), to certain men’s trousers and women’s trousers, and shorts. Your request, submitted as an electronic ruling request, was forwarded to this office from the National Commodity Specialist Division for review. Our ruling is set forth below.
FACTS:
Miller Brands, the sister company to Miller, imports men’s trousers and women’s trousers, and shorts classified under headings 6203 and 6204, Harmonized Tariff Schedule of the United States (“HTSUS”), sourced from an unrelated manufacturer in Nicaragua. You state that the goods will be imported through the port of Gulfport, MS and move in-bond to the port of El Paso, TX where they will be entered for consumption with Miller Brands claiming duty-free treatment under the Dominican Republic—Central America—United States Free Trade Agreement (“DR-CAFTA”). After release, Miller Brands will sell the goods to Miller which will export the merchandise to Mexico for entry into a bonded facility at the Tecma Group of Companies’ (“Tecma”) warehouse in Juarez. You state that while in Mexico, the goods will follow Mexico’s maquiladora program requirements and will not enter the commerce of Mexico. As Miller’s customers place orders for the merchandise, Tecma will pick and pack the goods needed to fulfill the orders and ship the merchandise back to the United States through the port of Santa Teresa.
You state that the goods will remain in Mexico for no more than 18 months and will not be advanced in value or further processed while in Mexico. Throughout the export and reimport process Miller assumes all risk of loss and retains the title to the goods.
ISSUE:
Whether certain men’s trousers and women’s trousers and shorts, previously imported into the United States duty-free under DR-CAFTA, are eligible for duty-free treatment under subheading 9801.00.10, HTSUS, when reimported to the United States from Mexico.
LAW AND ANALYSIS:
You claim that the men’s trousers and women’s trousers and shorts entered for consumption under DR-CAFTA, exported and warehoused in Mexico under the maquiladora program where they are repackaged and then reimported within three years of exportation qualify for duty-free treatment under subheading 9801.00.10, HTSUS. It is important to note that “[i]n the absence of a specific provision to the contrary, the tariff status of an article is not affected by the fact that it was previously
imported into the customs territory of the United States and cleared through customs whether or not duty was paid upon such previous importation.” U.S. Note 2, Chapter 98, HTSUS. Subheading 9801.00.10, HTSUS provides such an exception.
Section 904(b) of the Trade Facilitation and Trade Enforcement Act of 2015 (Pub. L. 114-125, February 24, 2016) amended subheading 9801.00.10, HTSUS, to include any products which are returned within 3 years after having been exported. Previously, subheading 9801.00.10, HTSUS, only applied to products of the United States. Subheading 9801.00.10, HTSUS, now provides for the duty-free treatment of:
Products of the United States when returned after having been exported, or any other products when returned within 3 years after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad.
You state the men’s trousers and women’s trousers and shorts are products of Nicaragua. Although we have not been provided with any information on the value of your shipments, we assume for purposes of your inquiry that they would be valued at over $2,500. Section 10.1, U.S. Customs and Border Protection (“CBP”) Regulations (19 C.F.R. § 10.1) sets forth the documentary requirements for entry under subheading 9801.00.10, HTSUS. We note that CBP has not yet amended the regulations to implement the change to subheading 9801.00.10, HTSUS. Nonetheless, 19 C.F.R. § 10.1(a)(1) provides that the foreign shipper declare the following information with regard to articles in a shipment valued over $2,500: the port of exportation, the date of exportation, the quantity, the description of the merchandise, the value of the merchandise, the date of the declaration, and whether the articles were returned without having been advanced in value or improved in condition by any process of manufacture or other means. In addition, the documentation is to be filed “in connection with the entry.”
Section 10.1(a)(2), CBP Regulations (19 C.F.R. § 10.1(a)(2)), requires the owner, importer, consignee, or agent having knowledge of the facts regarding the claim for free entry to declare that the foreign shipper’s statement is true, and, that the articles were not manufactured or produced in the United States under subheading 9813.00.05, HTSUS, and that the articles were exported from the United States without benefit of drawback. The information required also pertains to the name of the manufacturer, the location of the manufacturer, and the date of the declaration.
As the men’s trousers and women’s trousers, and shorts are of Nicaraguan origin, they must be returned to the United States within three years in order to qualify for duty-free treatment under subheading 9801.00.10, HTSUS. You state that the merchandise will be reimported to the United States within 18 months years after being exported to Mexico (i.e., less than the three-year limit established in subheading 9801.00.10, HTSUS) before being returned to the United States. Accordingly, the remaining issue is whether the goods are “advanced in value or improved in condition by any process of manufacture or other means” when they are in Mexico.
The courts have consistently held that the mere packaging of an item does not constitute advancing in value or improving in condition for purposes of subheading 9801.00.10, HTSUS. For example, in John v. Carr & Sons, Inc. v. United States, 69 Cust. Ct. 78, C.D. 4377, 347 F. Supp. 1390 (1972), aff’d 61 CCPA 52, C.A.D. 1118, 496 F.2d 1225 (1974), the court held that U.S.-origin fish hooks were not advanced in value or improved in condition when they were sent to Hong Kong to be sorted and placed into containers. The court explained that “[a]bsent an alteration or change in the fish hooks themselves, their mere sorting and repackaging, even for the purposes of resale to the ultimate consumer, do not preclude their classification as returned American products” for purposes of item 800.00, Tariff Schedules of the United States (TSUS) (the precursor provision to subheading 9801.00.10, HTSUS). See also Superscope, Inc. v. United States, 13 C.I.T. 997, 727 F. Supp. 629 (1989) (holding that certain glass panels of U.S. origin that were exported, repacked abroad with certain foreign components, and returned to the United States as part of unassembled audio cabinets, were entitled to free entry under item 800.00, TSUS, since the U.S. panel portion of the imported article was “not advanced in value or improved in condition . . . while abroad, but (was) merely repacked.”).
CBP has also consistently determined that mere packaging of a good does not constitute advancement in value or improvement in condition. For example, in Headquarters Ruling Letter (“HQ”) H302203, dated February 21, 2019, CBP held that household goods repackaged in Mexico, which consisted of placing the finished products in retail packaging for sale in the United States, were not advanced in value or improved in condition in Mexico. See also HQ H285605, dated August 31, 2017; and HQ 555685, dated August 15, 1990.
In the instant case, the men’s trousers and women’s trousers, and shorts will not be further processed or advanced in value while they are in Mexico. Since the operation in Mexico consists of mere repackaging, the goods are not “advanced in value or improved in condition” in Mexico. Accordingly, provided the merchandise is tracked to verify that the reimported goods are the same as those that were exported from the United States, and that all documentary requirements of 19 C.F.R. § 10.1 are met, the goods will be eligible for duty-free treatment under subheading 9801.00.10, HTSUS.
HOLDING:
Based on the information presented, the men’s trousers and women’s trousers, and shorts at issue are eligible for duty-free treatment under subheading 9801.00.10, HTSUS, when reimported into the United States, provided the merchandise can be tracked and the documentary requirements of 19 C.F.R. § 10.1 are satisfied.
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a Customs Service field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.”
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 CBP officer handling the transaction.
Sincerely,
Monika R. Brenner, Chief
Valuation and Special Programs Branch