Applicability of HTSUS subheading 9802.00.50 to jewelry boxes; Mexico; NAFTA; Article 307; Article 509; imprint customer name; in bond

HQ 560443 December 4, 1997 CLA-2 RR:TC:SM 560443 MLR CATEGORY: Classification TARIFF NO.: 9802.00.50 Mr. Timothy E. Casey Chippenhook 3105 Justin Road Lewisville, TX 75067-3196 RE: Applicability of HTSUS subheading 9802.00.50 to jewelry boxes; Mexico; NAFTA; Article 307; Article 509; imprint customer name; in bond Dear Mr. Casey: This is in reference to your letter of April 29, 1997, requesting a ruling regarding the applicability of subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS), to jewelry boxes imprinted in Mexico. We apologize for the delay in responding. FACTS: It is stated that Chippenhook is a manufacturer and distributor of jewelry display items and jewelry boxes. It is stated that jewelry boxes will be purchased from sources in Thailand and/or China. The jewelry boxes will then be imported into the U.S. and shipped to Mexico in bond. As individual customer orders arrive for the boxes, the customer's (jewelry store's) name will be imprinted on the box and/or container in Mexico, and the product will be reshipped to the customer in the U.S. It is intended at that time to pay duty on the Thailand/China jewelry box, but not on the value of the imprinting performed in Mexico. ISSUE: Whether the jewelry boxes imported from Thailand and/or China, transported through the U.S. to Mexico in bond, and imprinted in Mexico may qualify for subheading 9802.00.50, HTSUS, treatment, once they are returned to the U.S. LAW AND ANALYSIS: Articles exported from and returned to the U.S., after having been advanced in value or improved in condition by repairs or alterations in Mexico, may qualify for a partial or total duty exemption under HTSUS subheading 9802.00.50, provided the foreign operation does not destroy the identity of the exported articles or create new or commercially different articles through a process of manufacture. See A.F. Burstrom v. United States, 44 CCPA 27, C.A.D. 631 (1956), aff'g C.D. 1752, 36 Cust. Ct. 46 (1956); Guardian Industries Corp. v. United States, 3 CIT 9 (1982). Articles are entitled to this duty treatment provided the documentary requirements of section 181.64, Customs Regulations (19 CFR 181.64), are satisfied. "Repairs or alterations" are defined in 19 CFR 181.64 as the restoration, addition, renovation, redyeing, cleaning, resterilizing, or other treatment which does not destroy the essential characteristics of, or create a new or commercially different good from, the good exported from the U.S. In Headquarters Ruling Letter (HRL) 559639 dated June 25, 1996, Customs considered flashlights manufactured in the Philippines, imported into the U.S., and then exported to Mexico where a product nameplate or label was affixed to the underside of the flashlights, which included the product catalog number, the "UL" symbol, and a product warning statement, and the company's logo and product name was pad-printed on the flashlight adjacent to the on/off switch. It was held that since the flashlights were suitable for their intended use in their condition as exported, the Mexico operations did not destroy the identity of the exported article or create a new or different article of commerce, and the labeling added name brand recognition and value to the flashlights, the flashlights were entitled to duty-free treatment under subheading 9802.00.50, HTSUS, when returned to the U.S. Similarly, in this case, we find that imprinting the jewelry boxes with the company name advances the value of the jewelry boxes, and does not destroy their identity as jewelry boxes. However, it is also indicated that the jewelry boxes are transported in bond from the U.S. to Mexico and that once the boxes are returned to the U.S., Chippenhook plans to pay duty on the boxes, as applicable, without adding the value of the alterations performed in Mexico (which in this case would be "free" under subheading 9802.00.50, HTSUS, for alterations performed in Mexico). U.S. Note 1(a), Subchapter II, Chapter 98, HTSUS, states that "except for goods subject to NAFTA drawback, this subchapter (of which subheading 9802.00.50, HTSUS, is a part) shall not apply to any article exported: From continuous customs custody with remission, abatement or refund of duty." In this case, we find that if the jewelry boxes are imported into the U.S. from the Philippines and/or China and are transported in bond to Mexico, they are considered to be exported from continuous customs custody with remission of duty. Accordingly, once the jewelry boxes are returned to the U.S., they would not be eligible for subheading 9802.00.50, HTSUS, treatment. HOLDING: On the basis of the information submitted, it is our opinion that jewelry boxes imported into the U.S. from the Philippines and/or China and transported in bond to Mexico will be considered to be exported from continuous customs custody with remission of duty. Therefore, according to U.S. Note 1(a), Subchapter II, Chapter 98, HTSUS, the jewelry boxes will not be eligible for subheading 9802.00.50, HTSUS, treatment, upon their return to the U.S. from Mexico. 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 Customs officer handling the transaction. Sincerely, John Durant, Director Commercial Rulings Division