The eligibility of table linen for partial duty exemption under subheading 9802.00.50, HTSUS

N030427 June 20, 2008 CLA-2-98:RR:E:NC:TA:349 CATEGORY: Classification TARIFF NO.: 9802.00.50 Mr. Bryan Wolfe Best Textiles international, Ltd. 695 Mansell Rd., Suite 250 Rosewell, GA 30076 RE: The eligibility of table linen for partial duty exemption under subheading 9802.00.50, HTSUS Dear Mr. Wolfe: In your letter dated June 6, 2008, you requested a ruling on whether table linen, particularly tablecloths and napkins, are eligible for partial duty exemption under subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS). The merchandise consists of tablecloths and napkins that were previously imported from various countries including Mexico, Cambodia, Pakistan and India. These items were classified under either subheading 6302.51 or 6302.53, HTSUS, depending on the fiber content and type of weave. The table linens are for use in the institutional market by linen rental companies, hotels, restaurants, etc. You intend to export current and closeout stock of finished tablecloths and napkins to Mexico for further processing and have proposed four alteration scenarios: Tablecloths to be relabeled. Replace current Best Textile sewn in name/logo label with a customer supplied name/logo label. Or replacing a customer’s label with a Best Textile or other firm’s label. Tablecloths to be resized. Cut finished tablecloths and re-hem them to change the size or shape. For example, create a 60 inch square tablecloth out of a 60 x 84 inch tablecloth. Tablecloths to be converted into napkins or placemats. Cut finished tablecloths and re-hem them to create placemats and napkins. For example, create nine 20 inch square napkins from a 60 inch square tablecloth. Napkins and tablecloths to be labeled. An indelible property mark is applied by heat transfer or another method. The mark would contain the company name. 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. 19 C.F.R. § 181.64(a) states that "repairs or alterations" means restoration, addition, renovation, redyeing, cleaning, resterilizing, or other treatment which does not destroy the essential characteristics of, or create a new and commercially different good from, the good exported from the United States. 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. In these scenarios, the tablecloths and napkins are complete for their intended use as table linen prior to being exported to Mexico. The operations performed in Mexico for scenarios 1 and 4 do not create a new or commercially different article. The tablecloths and napkins are shipped to Mexico solely to have labels or property marks added before being returned to the United States. In prior rulings, Customs and Border Protection 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 tablecloths and napkins in scenarios 1 and 4 will qualify for the special tariff treatment of that provision, provided that the documentary requirements of 19 C.F.R. § 181.64 are met. While scenarios 2 and 3 start with finished tablecloths the cutting, resizing or reshaping and hemming create new articles. The process essentially treats the exported tablecloth as a raw material and converts it into a different sized or shaped tablecloth or into multiple napkins or placemats. The operation destroys the identity of the original tablecloth and creates new and commercially different articles. The processing operation in scenarios 2 and 3 do not constitute acceptable repair or alterations within the meaning of subheading 9802.00.50, HTSUS, and the merchandise is ineligible for the duty exemption. 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 John Hansen at 646-733-3043. Sincerely, Robert B. Swierupski Director, National Commodity Specialist Division