The tariff classification of ballpoint pens from Japan, re-packaged in Mexico

N333136 June 20, 2023 CLA-2-98:OT:RR:NC:N4 462 CATEGORY: Classification TARIFF NO.: 9801.00.2000 Amanda Ribstein Kuehne-Nagel, Inc. 4100 N Commerce DriveEast Point, GA 30344 RE:  The tariff classification of ballpoint pens from Japan, re-packaged in Mexico Dear Ms. Ribstein: In your letter dated May 25, 2023, you requested a tariff classification ruling on the applicability of subheading 9801.00.2000, Harmonized Tariff Schedule of the United States (HTSUS), to ball point pens previously imported from Japan, on behalf of your client, Pentel of America Ltd. You state that Pentel of America, Ltd imports ball point pens, which are manufactured in Japan, and shipped by their related supplier to the United States. After arrival, the appropriate duties and taxes are paid upon importation by Pentel America, Ltd. to Customs and Border Protection (CBP). Following importation, Pentel of America Ltd. will export the ball point pens to a related party in Mexico, Pentel Industrial de Mexico, who will pack them in retail packaging. Once complete, Pentel of America Ltd. will reimport the packaged ball point pens into the United States. You assert that the legal relationship between Pentel of America, Ltd. and Pentel Industrial de Mexico is one of bailment, which stipulates that “at all times the title and property of the goods will belong to Pentel, in spite of that whatever commercial invoice could be issued for going through Customs.” Section 141.2 of the CBP Regulations (19 CFR 141.2) states that "Dutiable merchandise imported and afterwards exported even though duty thereon may have been paid on the first importation, is liable to duty on every subsequent importation into the Customs territory of the United States" unless specifically exempted. However, subheading 9801.00.2000, HTS, provides for duty-free treatment for "articles previously imported, with respect to which the duty was paid upon such previous importation or which were previously free of duty pursuant to the Caribbean Basin Economic Recovery Act of Title V of the Trade Act of 1974 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 same person who imported it into, and exported it from, the United States.” Section 10.108, CBP Regulations (19 CFR 10.108), provides, in relevant part, that free entry shall be accorded under subheading 9801.00.20, HTS, whenever it is established to the satisfaction of the district director that the article for which free entry is claimed was exported from the United States under a lease or similar use agreement. According to Black's Law Dictionary 179 (5th ed. 1979), a bailment is "a delivery of goods of personal property, by one person to another, in trust for the execution of a special object upon or in relation to such goods, beneficial to either the bailor or bailee or both, and upon a contract, express or implied, to perform the trust and carry out such object, and thereupon either to redeliver the goods to the bailor or otherwise dispose of the same in conformity with purpose of the trust.” CBP Headquarters ruled, in HRL 560511, dated November 18, 1997, that "bailment" is a "similar use agreement" for the purposes of subheading 9801.00.2000, HTS. CBP does not consider the mere packaging of a good for retail sale as an advancement in value or improvement in condition. See John v. Carr & Sons, Inc., 69 Cust. Ct. 78, C.D. 4377 (1972), aff'd, 61 CCPA 52, C.A.D. 1118 (1974). See also Headquarters Ruling Letter ("HRL") 555624, dated May 1, 1990, which ruled that perfumes packaged into sample pouches abroad were not advanced in value or improved in condition for purposes of subheading 9801.00.10, HTS, treatment. Provided that the legal relationship between Pentel of America, Ltd. and Pentel Industrial de Mexico is one of bailment as claimed, and the documentary requirements of section 10.108, Customs Regulations, are satisfied, the ballpoint pens, manufactured in Japan and re-packaged in Mexico, will be eligible for duty-free treatment under subheading 9801.00.2000, HTSUS. Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided at https://hts.usitc.gov/current This ruling is being issued under the provisions of Part 177 of the Customs and Border Protection 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, please contact National Import Specialist Sandra Sary at [email protected]. Sincerely, Steven A. Mack Director National Commodity Specialist Division