HQ 555202: Applicability of partial duty exemption under HTSUS subhead- ing 9802.00.50 to previously imported merchandise exported for conformity country of origin marking and reimported

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 555202

                          July 3, 1989

CLA-2 CO:R:C:V 555202 GRV

CATEGORY:  CLASSIFICATION

TARIFF NO.:  9802.00.50

Mr. Richard G. Seley
Rudolph Miles & Sons, Inc.
Customhouse Brokers
4950 Gateway East
P.O. Box 144
El Paso, Texas  79942

RE:  Applicability of partial duty exemption under HTSUS subhead-
     ing 9802.00.50 to previously imported merchandise exported
     for conformity country of origin marking and reimported

Dear Mr. Seley:

     This is in response to your letters of November 15, 1988,
and March 17, 1989, on behalf of Hallmark Marketing Corporation,
requesting a ruling on the applicability of subheading
9802.00.50, Harmonized Tariff Schedule of the United States
(HTSUS), to previously imported merchandise which is exported for
country of origin conformity marking operations and reimported
from Mexico.

FACTS:

     You state that various merchandise, imported from different
countries, is entered into the U.S. and duty is paid.  However,
occasionally the merchandise does not conform to the country of
origin marking requirements of section 304, Tariff Act of 1930,
as amended (19 U.S.C. 1304) and Part 134, Customs Regulations (19
CFR Part 134).  The example given is a small stuffed animal,
which is marked with both a sewn-on tag, which meets all the
marking requirements, and a hang tag that states "HALLMARK,
KANSAS CITY, MISSOURI," which you state violates 19 CFR 134.46.
Accordingly, a Notice of Redelivery/Marking (Customs Form 4647)
is issued, pursuant to 19 CFR 141.113, on such merchandise as is
determined by the district director to be not legally marked.
When this occurs, your client would like to export the merchan-
dise to its facility in Mexico for purposes of performing country
of origin conformity marking operations, either by additional
printing on the same hang tag or by adding a gummed label to the
hang tag.

     Although you agree that this operation merely puts the
merchandise in the condition it should have been in at the time
of original entry, you state that this conformity marking
operation constitutes an alteration to the exported article, as
previously unmarketable merchandise, i.e., illegally marked
merchandise, is worthless in its condition as originally
imported.  Therefore, the marking operation renders the articles
marketable and is tantamount to an advancement in value of the
returned merchandise.  You reference C.I.E. N-36/75, dated April
16, 1981 (067208), and Headquarters Ruling Letter 039872 (May 6,
1975) in support of this position.

ISSUE:

     Whether the foreign country of origin conformity marking
operation constitutes an acceptable "alteration," for purposes of
HTSUS subheading 9802.00.50.

LAW & ANALYSIS:

     Articles returned to the U.S. after having been exported to
be advanced in value or improved in condition by repairs or
alterations may qualify for the partial duty exemption under
HTSUS subheading 9802.00.50 (formerly item 806.20, Tariff
Schedules of the United States (TSUS)), provided the foreign
operation does not destroy the identity of the exported articles
or create new or different articles.  Such articles are dutiable
only upon the value of the foreign repairs or alterations when
returned to the U.S., provided the documentary requirements of
section 10.8, Customs Regulations (19 CFR 10.8), are satisfied.

     The referenced C.I.E. N-36/75, involved defective retail
packaging of "ten pack" magnetic tape cassettes.  Blank magnetic
tape cassettes were entered under TSUS item 807.00, but the car-
tons containing the cassettes were found to be damaged.  Thus,
the merchandise was not considered to be in a marketable condi-
tion.  The merchandise was exported for repackaging operations
utilizing American-made packaging materials, which included
shrink wrapping for added protection.  We stated that the
appropriate tariff provision for articles exported for repairing
damage or defects in material or workmanship was TSUS item
806.20, and held that the repackaged merchandise, as an entirety,
appeared to be eligible for this tariff treatment when returned.

     Regarding Headquarters Ruling Letter 039872 (May 6, 1975),
the regulatory definition of "repairs and alterations" cited (19
CFR 10.8) was deleted from the Customs Regulations on May 2,
1972, by T.D. 72-119 (6 Cust. Bull. 209).

     In Headquarter Ruling Letter 071159 (March 2, 1983), Customs
held that diodes exported for marking or branding, and packaging
operations abroad may be entered under the alterations provision
of TSUS item 806.20.  Although we noted that TSUS item 806.20 was
generally inapplicable to most printing operations, we found that
merely printing a part number on the diode had no more
significance than a label for identification purposes.  Further,
in Headquarters Ruling Letter 554996 (June 30, 1988), we held
that sunglasses, exported for inspection, temple adjustment and
retagging operations, were entitled to tariff treatment under
TSUS item 806.20, as the foreign operations would not destroy the
identity of the sunglasses, create a new or commercially differ-
ent article, or constitute a necessary step in the manufacture of
finished sunglasses.

     In this case, various merchandise is entered and duty is
paid.  However, it cannot be sold in the U.S. in its imported
condition.  When the district director issues a Notice of Rede-
livery/Marking (Customs Form 4647) because he has determined that
the merchandise is not legally marked, the importer would like to
export the merchandise to be remarked to bring it into conformity
with the marking law and regulations and return the merchandise
to the U.S.  Consistant with our prior rulings in this regard, we
find that the foreign country of origin conformity marking opera-
tion does not destroy the identity of the exported merchandise or
create a new or different article.  Further, the article to be
exported is a finished, complete article, and the foreign con-
formity marking operation improves in condition the merchandise
exported by rendering it fully admissible into the stream of U.S.
commerce.  Accordingly, the merchandise to be returned will be
eligible for the partial duty exemption under HTSUS subheading
9802.00.50, as the foreign conformity marking operation consti-
tutes a mere alteration of the exported article.

     We wish to make it clear that this ruling is specifically
limited to the fact situation presented to us, i.e., where
merchandise imported by your client occasionally is found to be
incorrectly marked for country of origin marking purposes and is
exported to be remarked to bring it into conformity with the
marking law and regulations.

HOLDING:

     On the basis of the information presented, as the foreign
conformity marking operation does not destroy the identity of the
complete articles exported or create new or different articles,
but, rather, merely alters the articles, the merchandise to be
returned to the U.S. will be eligible for the partial duty
exemption available under HTSUS subheading 9802.00.50, upon
compliance with the documentary requirements of 19 CFR 10.8.

                         Sincerely,




                         John Durant, Director
                         Commercial Rulings Division