Aplicability of subheading 9802.00.50, HTSUS, to launderedwearing apparel

HQ 559072 JUNE 21,1995 CLA-2 CO:R:C:S 559052 BLS CATEGORY: Classification TARIFF NO.: 9802.00.50 Mr. Jerry Walk President National Distributing Co., Inc. 23366 Farmington Rd. Farmington, MI 48366 RE: Aplicability of subheading 9802.00.50, HTSUS, to laundered wearing apparel Dear Mr. Walk: This is in reference to your letter dated February 9, 1995, requesting a ruling in connection with the laundering or cleaning of wearing apparel in Canada, and informal entry requirements. FACTS: You state that soiled clothing and uniforms will be delivered from your dry cleaning establishments in the U.S. to Windsor, Ontario, where they will laundered by either dry cleaning or through a wet wash method. The clothing will then be returned to the U.S. You advise that some of the items will be of foreign origin. ISSUE: Whether the returned clothing will be eligible for duty-free treatment under subheading 9801.00.10, Harmonized Tariff Schedule of the United States (HTSUS), or the partial duty exemption under subheading 9802.00.50, HTSUS. LAW AND ANALYSIS: Subheading 9801.00.10, HTSUS, provides for the free entry of articles of U.S. origin which are exported and returned without having been advanced in value or improved in condition while abroad. In Headquarters Ruling Letter (HRL) 555318 dated September 20, 1989, we held that soiled textile products, consisting of sheets, pillowcases, tablecloths, napkins and lab coats, sent to - 2 - Mexico, were improved in condition as a result of the washing, drying, and in some cases, pressing operations performed in Mexico. Since the soiled items were improved in condition abroad, we held that the returned products were not entitled to free entry under subheading 9801.00.10, HTSUS. In the instant case, those garments of foreign origin sent abroad will not be entitled to duty-free treatment under subheading 9801.00.10, HTSUS, upon return to the U.S., since the statute applies only to items of U.S.-origin . Further, since all of the soiled clothing is subject to cleaning operations in Canada, which improves the condition of the garments, the U.S.-origin apparel as well as the foreign origin clothing will not be entitled to duty-free treatment under subheading 9801.00.10, HTSUS. Subheading 9802.00.50, HTSUS, provides a partial duty exemption for articles returned to the U.S. after having been exported to be advanced in value or improved in condition by means of repairs or alterations. Such articles repaired or altered in Canada are dutiable only upon the value of the foreign repairs or alterations, provided the documentary requirements of section 181.64, Customs Regulations (19 CFR 181.64), are satisfied. However, entitlement to this tariff treatment is precluded in circumstances where the operations performed abroad destroy the identity of the articles or create new or commercially different articles. See A.F. Burstrom v. United States, 44 CCPA 27, C.A.D. 631 (1956); Guardian Industries Corp. V. United States, 3 CIT 9 (1982). Tariff treatment under subheading 9802.00.50, HTSUS, is also precluded where the exported articles are incomplete for their intended use prior to the foreign processing. Guardian. In HRL 221046 dated May 11, 1989, we held that the cleaning and sanitizing of soiled U.S. linens in a Mexican laundry facility qualified as an alteration as that term is used in subheading 9802.00.50, HTSUS. We further stated in that ruling that, as the returned items were considered foreign articles pursuant to section 12.130(c), Customs Regulations (19 CFR 12.130(c)), and U.S. Note 2, subchapter II, Chapter 98, HTSUS, they would be subject to applicable visa requirements and quota restrictions as products of Mexico. See also HRL 555318, above. Accordingly, we find that the laundering operations in the present case may be considered an alteration, thereby entitling the returned textile products to the partial exemption from duty under subheading 9802.00.50, HTSUS. However, the textile products will be subject to all applicable visa requirements and quota restrictions as products of Canada. In connection with your inquiry regarding informal entry, we note that while generally shipments of merchandise valued under $1,250 may be eligible for informal entry (see 19 CFR 143.21)), the district director of Customs at the port the merchandise will be entered may require a formal entry for any merchandise if deemed necessary for import admissibility enforcement - 3 - purposes, revenue protection, or the efficient conduct of Customs business. (See 19 CFR 143.22.) Accordingly, you should contact the appropriate district director to determine whether informal entry may be required, regardless of the value of the shipments. HOLDING: Soiled clothing sent to Canada to be laundered will not be entitled to duty-free entry under subheading 9801.00.10, HTSUS, upon return to the U.S., since the cleaning operations improve the condition of the garments. However, the garments will be eligible for the partial duty exemption under subheading 9802.00.50, HTSUS, upon return to the U.S. Duty will be assessed only on the value of the foreign cleaning operations, upon compliance with the documentary requirements of 19 CFR 181.64(c). The apparel articles will also be subject to applicable visa requirements and quota restrictions as products of Canada. The returned merchandise may be eligible for informal entry if the value of the shipments do not exceed $1,250, and upon compliance with all other requirements of 19 CFR 143.21. However, the district director where the merchandise will be entered may require formal entry regardless of value under certain circumstances. 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 fuiled without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction. Sincerely, John Durant, Director Commercial Rulings Division