CLA-2-98:OT:RR:NC:4:434
Mr. James King
Delmar International (USA)
5 Coton Lane
Champlain, NY 12919
RE: The applicability of subheading 9802.00.50 or 9801.00.10 to customized journals returned from Canada
Dear Mr. King:
In your letter, dated March 29, 2019, you requested a classification ruling on behalf of your client, Bankers’ Pen Inc. DBA Spector & Co. The ruling was requested on journals, produced in China, imported into the United States with duty paid, then exported to Canada to be customized to a buyer’s specifications before re-importation into the United States. Specifically you requested a ruling on whether the re-imported journals qualify for treatment under special subheading 9802.00.50 or 9801.00.10, Harmonized Tariff Schedule of the United States (HTSUS). Descriptive literature and samples were submitted for our review.
The journals will be manufactured in China and imported into the U.S. under subheading 4820.10.20, HTSUS, with duties and fees paid. You state that the journals will then be exported temporarily to Canada to have a company logo, decoration or inspirational message printed on the goods per the customer’s order. You presented samples with corresponding scenarios of proposed operations to be performed in Canada, as summarized here:
Scenario 1: Style number ST4347, The Bradford journal combo, is a bound cardboard notebook covered in vinyl-like plastic sheeting containing approximately 160 lined pages with an accompanying ballpoint pen secured in a pen loop. The journal measures approximately 6.75” by 8.5”. You provided samples of the journal in its condition as imported from China and then its customized version as re-imported from Canada. The first version has a blank, unadorned front cover. The second version has a company name and logo embossed prominently in the center of the cover.
Scenario 2: Style number ST4143, the Neoskin hardcover journal, is a bound cardboard journal covered in vinyl-like plastic sheeting with approximately 192 lined pages. The journal measures approximately 5.5” by 8.25”. It incorporates an interior gusseted pocket, a ribbon bookmark and elastic closure. Per the sample, the version imported from China has a blank cover, while the version re-imported after customization in Canada has been foil embossed with decorative scrolls in each corner and the words, “Live Create Enjoy” centered on the front cover.
First we will consider applicability of subheading 9802.00.50, HTSUS.
Subheading 9802.00.50, HTSUS, provides for a partial or complete duty exemption for, “Articles returned to the United States after having been exported to be advanced in value or improved in condition by any process of manufacture or other means: Articles exported for repairs or alterations.”
Section 181.64(a), Customs and Border Protection (CBP) Regulations, (19 CFR 181.64(a)), defines the term “repairs or alterations” as it applies to goods returning from Canada or Mexico under subheading 9802.00.50, HTSUS:
“‘Repairs or alterations’ means restoration, addition, renovation, redyeing, cleaning, resterilizing, or other treatment which does not destroy the essential characteristics of, or create a new and commercially different good from, the good exported from the United States.”
We find that the addition of the logos, names and messages constitutes an “addition” enumerated within the definition of “repairs or alterations.” Further, customizing the journals with company logos, names and messages in Canada does not create a new or commercially different article through a process of manufacture. The journals were finished articles usable to record events and take notes in their condition upon exportation to Canada and continued to be upon re-importation.
Thus, we find that the operations performed in Canada constitute proper alterations within the meaning of subheading 9802.00.50, HTSUS, and, therefore, the journals are entitled to reduced duty treatment when returned to the U.S., provided the documentary requirements of 19 CFR 181.64 are satisfied.
We will now consider the applicability of subheading 9801.00.10, HTSUS.
Subheading 9801.00.10, HTSUS, provides for, “Products of the United States when returned after having been exported, or any other products when returned within three 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.”
The scenario presented for sending the journals to Canada for further processes fails to meet the requirements for treatment under subheading 9801.00.10, HTSUS, as the goods have been advanced in value or improved in condition by virtue of the added company names and logos or inspirational messages.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at https://hts.usitc.gov/current.
Effective July 6, 2018, the Office of the United States Trade Representative (USTR) imposed an additional tariff on certain products of China classified in the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(b), HTSUS. The USTR imposed additional tariffs, effective August 23, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(d), HTSUS.
Subsequently, the USTR imposed further tariffs, effective September 24, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(f) and U.S. Note 20(g), HTSUS. For additional information, please see the relevant Federal Register notices dated June 20, 2018 (83 F.R. 28710), August 16, 2018 (83 F.R. 40823), and September 21, 2018 (83 F.R. 47974).
Products of China that are provided for in subheading 9903.88.01, 9903.88.02, 9903.88.03, or 9903.88.04 and classified in one of the subheadings enumerated in U.S. Note 20(b), U.S. Note 20(d), U.S. Note 20(f) or U.S. Note 20(g) to subchapter III shall continue to be subject to antidumping, countervailing, or other duties, fees and charges that apply to such products, as well as to those imposed by the aforementioned Chapter 99 subheadings.
Products of China classified under subheading 4820.10.20, HTSUS, unless specifically excluded, are subject to the additional 10 percent ad valorem rate of duty. When submitting an entry using a Chapter 98 provision that normally requires the reporting of a secondary Chapter 1-97 HTSUS classification, a filer must first report the applicable Chapter 98 provision, then subheading 9903.88.03, followed by the applicable Chapter 1-97 HTSUS classification for the commodity being imported, in this case 4820.10.20, HTSUS. The additional duties apply to the value of repairs or alterations preformed abroad, as described in the applicable heading.
The tariff is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Notice cited above and the applicable Chapter 99 subheading.
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 Charlene Miller at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division