Applicability of partial duty exemption under HTSUS subheading 9801.00.10 to certain shipments of computer and analytical products

HQ 555551 March 28, 1990 CLA-2 CO:R:C:V 555551 KAC CATEGORY: CLASSIFICATION TARIFF NO.: 9801.00.10 Mr. Allan T. Low Hewlett-Packard Co. P.O. Box 10301 Palo Alto, California 94303-0890 RE: Applicability of partial duty exemption under HTSUS subheading 9801.00.10 to certain shipments of computer and analytical products Dear Mr. Low: This is in response to your letter of June 9, 1989, requesting, inter alia, a ruling on the applicability of subheading 9801.00.10, Harmonized Tariff Schedule of the United States (HTSUS), to certain shipments of computer and analytical products imported into the U.S. from Mexico, West Germany, France and Japan. The portion of your request regarding classification of the computer and analytical products was the subject of a separate response in Headquarters Ruling Letter 085558 dated March 26, 1990. We regret the delay in responding to your request. FACTS: Your company will export U.S.-origin products, consisting of modems, manuals, software, VECTRA personal computers, liquid chromatographs, CPU/drive, and 4-MB memory boards, to Mexico, West Germany, France, and Japan for foreign operations. A VECTRA personal computer is a computer system, consisting of a CPU/drive, monitor, and keyboard, housed separately but presented together. Once abroad, these U.S. products will be packaged with foreign computer and analytical products, as specified by customers' orders, so that the customer will receive his entire order in one shipment. The seven shipments under consideration consist of the following products: A. U.S. products, modem, manuals and software, with Mexican microcomputer. B. Singapore products, dot matrix printer and accessories. C. U.S. product, VECTRA personal computer with West German liquid chromatograph. D. U.S. product, liquid chromatograph, with West German VECTRA personal computer. E. U.S. products, VECTRA CPU/drive, with West German liquid chromatograph and French VECTRA monitor and keyboard. F. U.S. product, liquid chromatograph, with Japanese VECTRA CPU/drive and Korean VECTRA monitor and keyboard. G. U.S. product, 4-MB memory board, with West German memory controller board and Mexican arithmetic logic unit board, control and maintenance controller, and control process store. The repackaged products will then be imported into the U.S. ISSUE: Whether the U.S.-origin products to be exported will qualify for the duty exemption available under HTSUS subheading 9801.00.10 when returned to the U.S. packaged with foreign products. LAW AND ANALYSIS: HTSUS subheading 9801.00.10 provides for the duty free entry of U.S. products that are exported and returned without having been advanced in value or improved in condition by any means while abroad, provided the documentary requirements of section 10.1, Customs Regulations (19 CFR 10.1), are met. In Superscope, Inc. v. United States, 13 CIT , 727 F.Supp. 629 (CIT 1989), the court found that glass panels of U.S. manufacture that were exported, packaged with other components to make unassembled stereo cabinets, and then imported into the U.S. as an entirety were not advanced in value or improved in condition while abroad, but were merely repacked. Therefore, the court held that the glass panels were entitled to duty free entry under item 800.00, Tariff Schedules of the United States (TSUS) (the precursor provision to HTSUS subheading 9801.00.10). With respect to the shipments containing U.S. products, the operations performed abroad consist merely of repackaging the U.S. products with the foreign products. As the mere packaging of U.S. products with other products does not advance in value or improve in condition the U.S. products, the portion of the shipments consisting of U.S. products will be eligible for the duty exemption under HTSUS subheading 9801.00.10. This assumes that the documentation requirements of 19 CFR 10.1 are met and that the district director of Customs at the port of entry is satisfied of the U.S. origin of each product claimed to be entitled to this duty exemption. HOLDING: On the basis of the information provided, as all of the U.S. products in Shipments #A (modem, manuals and software), #C (VECTRA personal computer), #D (liquid chromatograph), #E (CPU/drive), #F (liquid chromatograph) and #G (4-MB memory board) returned with foreign products will not be advanced in value or improved in condition while abroad as a result of the packaging operations, these U.S. products will qualify for the duty exemption under HTSUS subheading 9801.00.10 upon compliance with the documentary requirements of 19 CFR 10.1. However, those products comprising Shipment #B will not be eligible for the duty exemption, as none of the products are of U.S. origin. Sincerely, John Durant, Director Commercial Rulings Division