HQ 554950: The treatment of used clothes imported into the U.S. pursuant to item 806.20, Tariff Schedules of the United States (TSUS) (9802.00.40, Harmonized Tariff Schedule of the United States (HTS)) as a product of Mexico.

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                                    HQ 554950

                                   April 12, 1988


          CLA-2 CO:R:C:V  554950DJG

          CATEGORY: Classification

          TARIFF NO: 9802.00.40 (806.20, TSUS)

          Daniel E. Waltz, Esq.
          Patton, Boggs & Blow
          2550 M Street, N.W.
          Washington, D.C. 20037

          RE: The treatment of used clothes imported into the U.S.
              pursuant to item 806.20, Tariff Schedules of the
              United States (TSUS) (9802.00.40, Harmonized Tariff
              Schedule of the United States (HTS)) as a product of
              Mexico.

          Dear Mr. Waltz:

               In your letter of March 7, 1988, you asked whether used
          clothing, sorted and fumigated in Mexico, and reimported under
          item 806.20, TSUS, should be treated as clothing of Mexico for
          quota purposes.

          FACTS:

               Used clothing (20% domestic, 30% foreign and 50% unknown
          origin) is exported to Mexico for fumigation and sorting, then
          reimported to the U.S.  In Headquarters ruling, 554802, dated
          December 9, 1987, we held that these articles may be imported
          under the repairs and alterations provision of item 806.20, TSUS,
          upon compliance with the regulations.  We further held, in HQ
          554802, that pursuant to headnote 2, part 1 of schedule 8, TSUS,
          these articles may not, upon their return to the U.S., be treated
          as products of the U.S., but must be considered foreign.

               You seek clarification on whether these articles should be
          treated as articles of Mexican origin, in accordance with the
          provisions of item 806.20, TSUS.


















                                       -2-


          ISSUE:

               Whether used clothing, exported from the U.S. to Mexico for
          repairs or alterations, may upon reimportation pursuant to
          headnote 2, part 1 of schedule 8, TSUS, be treated as articles of
          Mexican origin.

          LAW AND ANALYSIS:

               Although, used clothing, subjected to the kind of process
          you describe, would, for marking purposes, be considered articles
          of the U.S., under the provisions of item 806.20, TSUS, the
          merchandise would, upon reimportation, be treated as foreign.  It
          would not be inconsistent to consider the subject merchandise to
          be a product of the U.S. for marking purposes while treating the
          same merchandise upon reimportation as a product of Mexico, since
          Customs makes country-of-origin determinations within the context
          of the area in which its being applied. See National Juce
          Products Ass'n V. United States, 10 CIT  , 628 F. Supp.978
          (1986).  However, we need not rely on this principle in the
          present case since headnote 2, part 1 of schedule 8, TSUS,
          creates, in effect, a legal fiction by stating that, "any product
          of the United States which is returned after having been advanced
          in value or improved incondition ... shall be treated for the
          purposes of this act as a foreign article ...".   Therefore, for
          purposes of item 806.20, TSUS, we are directed to "treat" the
          merchandise, which has an established country-of-origin for
          marking purposes, as a foreign article.  The question remains,
          however, should the merchandise be treated as a product of
          Mexico, thus narrowing, for quota and duty purposes, the term
          "foreign".

                Generally, when dealing with item 806.20, TSUS, the mention
          of country-of-origin is incidental to determinations of the
          degree of the repairs or alterations performed on the
          merchandise.  If, for example, we discover that, as a result of
          the process a new article is created, we will find that the
          process went beyond the contemplated operations allowed under the
          item.  Further, we may determine that the process was so
          substantial that it effected a change of the merchandise and
          altered its country-of-origin.

                Similarly, in the present case we must determine, in the
          context of item 806.20, TSUS, what is incidentally a country-of-
          origin question, that is, whether the merchandise should properly
          be considered to be (or be treated as) a product of the country
          in which the repairs or alterations were done, to enable us to
          apply proper duty and quota within the fiction created by the













                                       -3-


          headnote.  However, the rather unspecific "foreign" designation
          proscribed by the headnote does not, as a practical matter assist
          us in this end.  We must know the "country" of origin of the
          merchandise before we can establish the duty or quota.
          Designating the merchandise as "foreign" is too broad.

                Therefore, although Customs is required by the headnote to
          treat the subject merchandise as foreign, a determination that
          the articles are of Mexican origin may, in our opinion, be made,
          provided, a nexus between that country and the merchandise is
          demonstrated.  We are also of the opinion that a sufficient nexus
          is created by the process performed in the present case to
          support such a finding for item 806.20, TSUS, purposes.

               Under the auspices of item 806.20, TSUS, the repairs or
          alterations form the basis for determining duty and quota, for
          otherwise products of U.S. origin, that is, the duty to be paid
          is based on the value of the repairs or alterations performed on
          the merchandise.  It must logically follow that when the
          merchandise is reimported, under item 806.20, TSUS, it be
          treated, for duty and quota purposes, as a product of Mexico, the
          country in which the repairs or alterations took place.

          HOLDING:

               Pending implementation of the HTS, under which used clothing
          may be entered under a separate tariff provision, customs will
          treat the subject used clothing as articles of Mexican origin for
          duty and quota purposes upon their reimportation under item
          806.20, TSUS.

                                       Sincerely,




                                       John Durant
                                       Acting Director, Commercial
                                       Rulings Division