CLA-2-96:OT:RR:NC:N4:414
Mr. Alex Romero
A.F. Romero Co.
U.S. Customs Brokers
1749 Stergios Road
Calexico, CA 92231
RE: The eligibility for duty free treatment under the U.S. Korea Free Trade Agreement (UKFTA) of ball point pens, felt tipped markers, refills for ball point pens and erasers from Korea
Dear Mr. Romero:
In your letter dated February 2, 2016 you requested a tariff classification ruling on behalf of Sanford LP, a division of Newell Rubbermaid Inc., on whether ball point pens, felt tipped markers, refills for ball point pens and erasers qualify for duty free treatment under the United States Korea Free Trade Agreement (UKFTA) under certain proposed scenarios for importation. Samples were not furnished with your request for a ruling.
Sanford LP purchases ball point pens, felt tipped markers, refills for ball point pens and erasers from vendors in South Korea. Currently Sanford LP imports the ball point pens under subheading 9608.10.0000, Harmonized Tariff Schedules of the United States (HTSUS), the felt tipped markers under subheading 9608.20.0000, HTSUS, the refills for ball point pens under subheading 9608.60.0000, HTSUS, and the erasers under subheading 3926.10.0000, HTSUS. The items are imported directly from Korea into the United States and you state that they qualify for duty free treatment under the UKFTA.
In the future, Sanford plans to import bulk shipments of ball point pens, felt tipped markers, refills for the ball point pens, and erasers from Korea to Mexico. In Mexico, the bulk shipments of the ball point pens, felt tipped markers, ball point pen refills and erasers will be packaged in retail packaging. You indicate that the retail packages would mainly include multiples of the same kind of product, e.g. the ball point pens, felt tipped markers, ball point pen refills and erasers from Korea. However, some retail packages may contain sets that would include different items from different countries, for example, ten pens from Korea and one pen from India. Another example given is mechanical pencils from Korea which will be retail packaged with refill leads from Japan.
In the first scenario, Sanford LP proposes to ship bulk shipments of the ball point pens, felt tipped markers, ball point refills and erasers from Korea to Mexico and entered into Mexico under the in bond program. The items would be packaged in retail packages in Mexico and shipped to the United States for consumption entry or for entry into a Foreign Trade Zone.
In the second scenario, Sanford LP proposes to ship bulk shipments of the ball point pens, felt tipped markers, ball point refills and erasers from Korea to the United States via a United States seaport, such as Los Angeles, San Pedro or Long Beach, and ship the items through the United States to Mexico under the in bond program. In Mexico, the items would be packaged in retail packages and shipped to the United States for consumption entry or for entry into a Foreign Trade Zone.
Transit and transshipment under the under the UKFTA is referenced in the Customs Regulations under 19 CFR 10.1025.
19 CFR 10.1025 (a) states that “a good that has undergone production necessary to qualify as an originating good under this note shall not be considered to be an originating good if, subsequent to that production, the good:
Undergoes further production or any other operation outside the territory of Korea or of the United States, other than unloading, reloading or any other process necessary to preserve the good in good condition or to transport the good to the territory of Korea or the United States, or
Does not remain under the control of customs authorities in the territory of a country other than Korea or the United States.”
The two proposed scenarios involving retail packaging in Mexico of the bulk shipments of the Korean ball point pens, felt tipped markers, ball point pen refills and erasers do not qualify for duty free treatment under the UKFTA because the goods undergo operations that exceed unloading, reloading or any process to preserve the good in good condition or to transport the good to the territory of Korea or the United States. 19 CFR 10.1025(a) (1) is noted.
You state that Customs has held that packaging is not an advancement in value or process of manufacture. However, this determination was made in relation to subheading 9801.00.10, HTSUS. Subheading 9801.00.10, HTSUS, provides for products of the United States when returned after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad. The bulk shipments of the goods in question are from Korea, they are subject to retail packaging in Mexico, and do not contain any United States origin products. The decisions regarding subheading 9801.00.10, HTSUS, do not apply to these scenarios proposed by Sanford LP, which relate to the UKFTA.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Barbara Kiefer at [email protected].
Sincerely,
Deborah C. Marinucci
Acting Director
National Commodity Specialist Division