Modification of NY L83879; Subheading 9802.00.50, HTSUS; Relabeled computer keyboards

HQ H268757 July 7, 2016 OT:RR:CTF:VS H268757 AJR CATEGORY: CLASSIFICATION Mr. Brian Johnson KeyTronic Corporation 4424 N. Sullivan Road Spokane, WA 99216 RE: Modification of NY L83879; Subheading 9802.00.50, HTSUS; Relabeled computer keyboards Dear Mr. Johnson: This is in reference to New York Ruling Letter (“NY”) L83879, dated May 9, 2005, issued to you on behalf of KeyTronic Corporation of Spokane, Washington. At issue was the applicability of subheading 9802.00.50, Harmonized Tariff Schedule of the United States (“HTSUS”), to computer keyboards and printed circuit board assemblies upon return to the United States from Mexico. In NY L83879, U.S. Customs and Border Protection (“CBP”) determined, in relevant part, that relabeling keyboards with new part numbers and UPC labels was not a repair or alteration eligible for duty free treatment under subheading 9802.00.50, HTSUS. It is now our position that such relabeling of keyboards was a repair or alteration eligible for duty free treatment under subheading 9802.00.50, HTSUS. For the reasons described in this ruling, we hereby modify NY L83879. The applicability of subheading 9802.00.50, HTSUS, to the printed circuit board assemblies upon return to the United States from Mexico is unaffected. FACTS: NY L83879 stated, in relevant part, that computer keyboards were imported into the United States under subheading 8471.60.20, HTSUS, and then exported to Mexico to be relabeled with new part numbers, UPC labels, repacked and reimported to the U.S. for delivery. CBP found that relabeling keyboards with new part numbers and UPC labels was not a repair or alteration eligible for duty free treatment under subheading 9802.00.50, HTSUS, because relabeling did not advance the value or improve the condition of the keyboards. ISSUE: Whether computer keyboards relabeled in Mexico may be entered under subheading 9802.00.50, HTSUS? LAW AND ANALYSIS: Subheading 9802.00.50, HTSUS, provides a full or partial duty exemption for articles returned to the United States after having been exported to be advanced in value or improved in condition by means of repairs or alterations. Articles returned to the United States after having been repaired or altered in Mexico, whether or not pursuant to warranty, may be eligible for duty free treatment, provided the documentary requirements of section 181.64, CBP Regulations, (19 C.F.R. § 181.64), are satisfied. Section 181.64(a) states, in pertinent part: ‘Repairs or alterations’ means restoration, addition, renovation, redyeing, cleaning, resterilizing, or other treatment which does not destroy the essential character of, or create a new and commercially different good from, the good exported from the United States. Classification under subheading 9802.00.50, HTSUS, is precluded where: (1) the exported articles are not complete for their intended use and the foreign processing operation is a necessary step in the preparation or manufacture of finished articles; or (2) the operations performed abroad destroy the identity of the exported articles or create new or commercially different articles through a process of manufacture. See Guardian Indus. Corp. v. United States, 3 Ct. Int’l Trade 9 (1982), and Dolliff & Co., Inc., v. United States, 81 Cust. Ct. 1, C.D. 4755, 455 F. Supp. 618 (1978), aff’d, 66 C.C.P.A. 77, C.A.D. 1225, 599 F.2d 1015 (1979). CBP has previously held that marking or affixing a label to a product constitutes an acceptable alteration for purposes of subheading 9802.00.50, HTSUS. See Headquarters Ruling Letter (“HQ”) W563554, dated November 13, 2006 (t-shirts exported to Mexico for relabeling were entitled to tariff treatment under subheading 9802.00.50, HTSUS); HQ 562952, dated March 29, 2004 (belted jeans and pants exported to Mexico for inspection and tagging were entitled to duty free treatment under subheading 9802.00.50, HTSUS); HQ 559639, dated June 25, 1996 (flashlights exported to Mexico, where a product nameplate or label was affixed and the company’s logo and product name were pad-printed onto the flashlight, were entitled to duty free treatment under subheading 9802.00.50, HTSUS); HQ 557327, dated July 26, 1993 (vendor marking labels, flasher tags, hang tags, size tickets were operations that constituted an acceptable alteration under subheading 9802.00.50, HTSUS); HQ 555724, dated December 17, 1990 (air bag sensors exported to Mexico for relabeling and testing operations were eligible for treatment under subheading 9802.00.50, HTSUS); HQ 554996, dated June 30, 1988 (sunglasses exported for inspection, temple adjustment, and retagging were entitled to partial duty exemption under item 806.20, TSUS, the precursor to subheading 9802.00.50, HTSUS); and HQ 071159, dated March 2, 1983 (diodes exported to Mexico for marking and packaging operations were entitled to treatment under item 806.20, TSUS, as the printing operation had no more significance than a label for identification purposes). After reviewing the above-referenced cases, we find that where labeling was found to be an acceptable alteration for purposes of subheading 9802.00.50, HTSUS, the labeling served an “identification purpose.” Namely, the identification informed anyone using the good that the good conformed to certain specifications. For instance, in HQ 071159 and HQ 559639, the labeling informed that the good conformed to the expectations of the brand identified; in HQ 557327, the labeling informed that the good conformed to the size identified by the label; and, in HQ 555724, the labeling informed that the good conformed to airbag requirements identified by the label. Similarly, the relabeling described in NY L83879 serves an identification purpose, informing that the keyboard conforms to the part and product code identified on the label. Given the foregoing, relabeling the keyboards with new part numbers and UPC labels was a repair or alteration eligible for duty free treatment under subheading 9802.00.50, HTSUS, as the identification purpose of the label advances the value or improves the condition of the keyboards. HOLDING: NY L83879 is modified to reflect that the relabeling of the keyboards with new part numbers and UPC labels was a repair or alteration eligible for duty free treatment under subheading 9802.00.50, HTSUS. The applicability of subheading 9802.00.50, HTSUS, to the printed circuit board assemblies upon return to the United States from Mexico is unaffected. EFFECT ON OTHER RULINGS: NY L83879, dated May 9, 2005, is hereby MODIFIED. In accordance with 19 U.S.C. § 1625(c), this ruling will become effective 60 days after publication in the Customs Bulletin. Sincerely, Myles B. Harmon, Director Commercial and Trade Facilitation Division