Applicability of duty exemption under HTSUS subheading 9801.00.20 to apparel; accessories; footwear; loan; foreign exhibition

HQ 560630 September 10, 1997 CLA-2 RR:TC:SM 560630 MLR CATEGORY: Classification TARIFF NO.: 9801.00.20 Steven S. Weiser, Esq. Arthur W. Bodek, Esq. Siegel, Mandell & Davidson, P.C. One Astor Plaza 1515 Broadway, 43rd Floor New York, NY 10036-8901 RE: Applicability of duty exemption under HTSUS subheading 9801.00.20 to apparel; accessories; footwear; loan; foreign exhibition Dear Mr. Weiser and Mr. Bodek: This is in response to your letter of August 26, 1997, requesting a ruling on behalf of Liz Claiborne, Inc. ("LCI"), concerning the free entry of apparel, accessories, and footwear. FACTS: It is stated that various articles of LCI merchandise, primarily apparel, accessories, and shoes, will be exported to the United Kingdom under cover of a carnet, for display at the "Liz Claiborne International Partnership Conference", a company fashion show which is to take place from September 29, 1997 through October 2, 1997. It is stated that all of the articles to be displayed at the conference have either been previously imported into the U.S. by LCI or were made in the U.S. With respect to the previously imported articles, it is stated that all import duties were paid and, where applicable, all textile export visas were presented. LCI plans to loan the articles to its related company in the United Kingdom, Liz Claiborne U.K., Ltd. ("LC -UK"), pursuant to a restricted use agreement, the anticipated format of which is enclosed with the ruling request. The use agreement will provide that title to the property shall remain with LCI at all times and that the articles are to be returned to LCI in the U.S. after the conference. The articles will be either shipped to LCI by vessel or aircraft or hand-carried by LCI representatives. ISSUE: Whether the apparel, accessories, and shoes previously imported by LCI, shipped to LC-UK in the United Kingdom for an exhibition are eligible for the duty exemption under subheading 9801.00.20, Harmonized Tariff Schedule of the United States (HTSUS), when returned to the U.S. LAW AND ANALYSIS: Subheading 9801.00.20, HTSUS, provides duty-free treatment for: [a]rticles, previously imported, with respect to which the duty was paid upon such previous importation ... if (1) reimported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad, after having been exported under lease or similar use agreements, and (2) reimported by or for the account of the person who imported it into, and exported it from, the United States. Section 10.108, Customs Regulations (19 CFR 10.108), provides, in relevant part, that free entry shall be accorded under subheading 9801.00.20, HTSUS, whenever it is established to the satisfaction of the port director that the requirements of the subheading have been met. The predecessor of subheading 9801.00.20, HTSUS, was item 801.00 of the Tariff Schedules of the United States (TSUS). That particular provision was amended in 1984 to provide for, inter alia, articles that had been exported under "similar use agreements" and leases to entities other than foreign manufacturers. Trade and Tariff Act of 1984, Pub. L. No. 98-573, 118, 98 Stat. 4922 (1984). Before the amendment, duty-free treatment applied only to merchandise that had been exported under lease to foreign manufacturers. In this case, Customs is asked to assume that each of the foreign-origin articles was previously imported by LCI with duty paid. It is claimed that LCI is maintaining the relevant initial import entries. Based upon the use agreement presented, we find that the articles will be exported to the United Kingdom from the U.S. pursuant to a lease or similar use agreement. See Werner & Pfleiderer Corp., v. United States, 17 CIT 916, 918 (1993). Furthermore, we find that the merchandise will not advanced in value or improved in condition if they are merely exhibited at the conference abroad. Accordingly, the apparel, accessories, and shoes will qualify for duty-free treatment under subheading 9801.00.20, HTSUS, provided LCI previously imported the foreign-origin articles and paid duty thereon, the articles are reimported by LCI or for its account, and the documentary requirements of 19 CFR 10.108 are satisfied. Textile and apparel products imported under this tariff provision are not subject to visa/quota requirements. 59 FR 14392 (March 28, 1994). In addition, subheading 9801.00.10, HTSUS, provides for the free entry of products of the U.S. that have been exported and returned without having been advanced in value or improved in condition by any process of manufacture or other means while abroad. We find that any U.S.-origin merchandise exported, exhibited abroad, and returned to the U.S. may, in the alternative, be entered under subheading 9801.00.10, HTSUS, provided the documentary requirements of 19 CFR 10.1 are satisfied. HOLDING: Based on the information submitted, we find that the apparel, accessories, and shoes shipped by LCI to LC-UK for exhibition purposes will be eligible for the duty exemption under subheading 9801.00.20, HTSUS, when returned to the U.S. provided they are reimported by or for the account of LCI, LCI previously imported the merchandise and paid duty thereon, and the documentary requirements of 19 CFR 10.108 are satisfied. In the alternative, any articles which are of U.S. origin and exported for exhibition and returned, will be eligible for duty-free treatment under subheading 9801.00.10, HTSUS, provided the documentary requirements of 19 CFR 10.1 are satisfied. A copy of this ruling letter should be attached to the entry documents filed at the time the goods are 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 Tariff Classification Appeals Division