Eligibility of woven garments for partial duty exemption under subheading 9802.00.50, HTSUS.

NY H81469 June 18, 2001 CLA-2-98:RR:NC:3:360 H81469 CATEGORY: Classification TARIFF NO.: 9802.00.50 Ms. Sara Gradilla R.L. Jones Customhouse Brokers, Inc. P.O. Box 472 Calexico, CA 92231 RE: Eligibility of woven garments for partial duty exemption under subheading 9802.00.50, HTSUS. Dear Ms. Gradilla: In your letter dated May 16, 2001, on behalf of R.S.V. Sports, Inc., you requested a tariff classification ruling. No samples were submitted with your inquiry. Your request concerns the applicability of the partial duty exemption available under subheading 9802.00.50, Harmonized Tariff Schedule of the United States for men’s and women’s jackets, jeans, shorts and skirts from Mexico, when returned to the U.S. You also question whether the garments are subject to visa and quota restrictions upon reimportation into the United States. The garments are manufactured in China and imported into the United States. The garments are then shipped to Mexico, where the garments are inspected, vendor hang tags and price tags are affixed, some of the goods are placed on hangers and then packed into boxes. The garments then re-imported into the US for distribution. The country of origin of the merchandise remains China. Subheading 9802.00.50, HTSUS, provides a partial or complete duty exemption for articles exported from and returned to the U.S. after having been advanced in value or improved in condition by repairs or alterations, provided the documentary requirements of section 181.64, Customs Regulations (19 C.F.R. §181.64), are satisfied. Section 181.64, which implements Article 307 of NAFTA, provides that goods returned after having been repaired or altered in Mexico may qualify for complete or partial duty free treatment, provided that the requirements of this section are met. However, entitlement to this tariff treatment is precluded in circumstances where the operations performed abroad destroy the identity of the exported articles or create new or commercially different articles through a process of manufacture. Subheading 9802.00.50, HTSUS, treatment is also precluded where the exported articles are incomplete for their intended use and the foreign processing operation is a necessary step in the preparation or manufacture of finished articles. “Repairs or alterations” for purposes of 19 C.F.R. §181.64 are defined as: ... restoration, addition, renovation, redying, cleaning, resterilization, 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 United States. The garments are complete for their intended use when shipped to Mexico. The operations in Mexico do not create a new or commercially different article. With regard to the labeling operation you intend to conduct in Mexico, Customs has held that marking or affixing a label to a product constitutes an alteration. Consistent with Customs rulings, the labeling of the garments with vendor hang tags and price tickets to the garments are operations that constitute acceptable “alterations” within the meaning of subheading 9802.00.50, HTSUS. The garments are entitled to the special tariff treatment under that provision, provided the documentation requirements of 19 CFR 181.64 are met. Goods returned after having been repaired or altered in Mexico, whether or not pursuant to a warranty are eligible for duty-free treatment, provided the requirements of this section are met. A copy of a directive, published in the Federal Register, issued by the Committee for the Implementation of Textile Agreements (CITA), dated December 20, 1993, is enclosed. It states that “…textile and apparel products which are produced or manufactured in various countries and entered into the United States for consumption…under existing visa and quota requirements are no longer subject to visa or quota requirements upon re-entry into the United States under Harmonized Tariff Schedule (HTS) numbers 9802.00.40 or 9802.00.50 after repairs or alterations.” Therefore, the garments undergoing the alteration process outlined in this ruling are not subject to visa and quota requirements. 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 Patricia Schiazzano at 212-637-7080. Sincerely, Robert B. Swierupski Director, National Commodity Specialist Division