The applicability of duty exemption to ball point pens, wooden pencils, memo pads, address books, ceramic mugs and plastic rulers imported into the U.S. from China, personalized in Mexico and then returned to the U.S.

N022271 February 14, 2008 CLA-2-98:OT:RR:E:NC:N2:222 CATEGORY: Classification TARIFF NO.: 9802.00.50 Mr. Ray Reel National Pen Tennessee LLC 342 Shelbyville Mills Road Shelbyville, TN 37160 RE: The applicability of duty exemption to ball point pens, wooden pencils, memo pads, address books, ceramic mugs and plastic rulers imported into the U.S. from China, personalized in Mexico and then returned to the U.S. Dear Mr. Reel: In your letter dated January 22, 2008 you requested a ruling on whether various items are eligible for duty exemption under subheading 9802.00.50, Harmonized Tariff Schedule of the Untied States (HTSUS). The subject merchandise consists of ball point pens, wooden pencils, memo pads, address books, ceramic mugs and plastic rulers which will be imported into the United States. The appropriate duties will be paid at time of entry. Following importation, the merchandise will be sent to Mexico for personalization, according to your customer’s specific requirement. This process involves applying the customer’s name and address and sometimes a company logo or catch phrase to the item by means of silk screening, pad printing, hot stamping, laser engraving or similar methods. These items will then be returned to the United States to be sold as promotional items in the United States, Canada, Europe and Australia. Subheading 9802.00.50, HTSUS, provides a partial or complete duty exemption for articles exported from and returned to the United States after having been advanced in value or improved in condition by repairs or alterations. Articles returned to the United States after having been repaired or altered in Mexico, whether or not pursuant to a warranty, may be eligible for duty-free treatment provided that the documentary requirements of Section 181.64, Customs Regulations (19 C.F.R. § 181.64), which implements Article 307 of NAFTA, are satisfied. However, entitlement to the special tariff treatment of subheading 9802.00.50, HTSUS, 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. Entitlement to this special tariff treatment is also precluded when 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. In this instance, the subject articles are complete for their intended use prior to being exported to Mexico. The merchandise in its condition as exported from the United States and as returned from Mexico can be marketed and sold to consumers for the same use. The operations performed in Mexico do not create new or commercially different articles. In prior rulings, Customs has held that marking or affixing a label to a product constitutes an alteration within the meaning of subheading 9802.00.50, HTSUS. Consequently, the personalization in Mexico of these ball point pens, wooden pencils, memo pads, address books, ceramic mugs and plastic rulers, in the manner so described, will qualify as alterations within the meaning of subheading 9802.00.50, HTSUS. Therefore these items will be entitled to duty-free treatment when returned to the United States, provided that the documentary requirements of 19 C.F.R. § 181.64 are satisfied. You have also asked for a determination as to the applicability of 9802.00.50 in situations where other merchandise is imported into the United States from countries other than China, exported to Mexico for personalization and then returned to the United States. In order to issue a ruling on this other set of circumstances, the specific details would have to be submitted in the context of a new ruling request. 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 Gary Kalus at 646-733-3055. Sincerely, Robert B. Swierupski Director, National Commodity Specialist Division