Christmas stockings packaged in Mexico; Carr, Superscope

HQ 555857 March 20, 1991 CLA-2 CO:R:C:S 555857 DSN CATEGORY: Classification TARIFF NO.: 9801.00.10, HTSUS Mr. Richard G. Seley Rudolph Miles & Sons 4950 Gateway East P.O. Box 144 El Paso, Texas 79942 RE: Christmas stockings packaged in Mexico; Carr, Superscope Dear Mr. Seley: This is in response to your letter of January 22, 1991, on behalf of Holiday Products, Inc., requesting a ruling on the applicability of subheading 9801.00.10, Harmonized Tariff Schedule of the United States, (HTSUS) to U.S.-made Christmas stockings packaged in Mexico and returned to the U.S. Samples were submitted with your request. FACTS: Your client intends to manufacture finished Christmas stockings in the U.S. and send the stockings to Mexico for packaging. Upon leaving the U.S. the Christmas stockings will be turned inside out. In Mexico, as part of the packaging operation the stockings will be turned right side out. ISSUE: Whether the "turning right side out" of the stockings in Mexico advances the value or improves the condition of the stockings within the meaning of subheading 9801.00.10, HTSUS. LAW AND ANALYSIS: Subheading 9801.00.10, HTSUS, provides for the free entry of products of the U.S. that have been exported and returned without having been advanced in value or improved in condition by any process of manufacture or other means while abroad, provided the documentary requirements of section 10.1, Customs Regulations (19 CFR 10.1), are met. In United States v. John V. Carr & Sons, Inc., 69 Cust. Ct. 78, C.D. 4377, 347 F.Supp. 1390 (1972), aff'd 61 CCPA 52, C.A.D. 1118, 496 F.2d 1225 (1974), the court stated that absent some alteration or change in the item itself, the mere repackaging of the item, even for retail sale, will not preclude free entry of the merchandise under item 800.00, Tariff Schedules of the United States (TSUS) (the precursor provision to subheading 9801.00.10, HTSUS). Moreover, in Superscope, Inc. v. United States, 13 CIT ____, 727 F.Supp. 629 (CIT 1989), the court held that certain glass panels of U.S. origin that were exported, repacked abroad with certain foreign components, and returned to the U.S. as part of unassembled audio cabinets, were entitled to free entry under item 800.00, TSUS, since the U.S. panel portion of the imported article was "not advanced in value or improved in condition ... while abroad, but (was) merely repacked." The turning of the stockings to the right side in Mexico does not change the fact that when the stockings leave the U.S. they are finished products of U.S.-origin. The turning procedure is merely a step in the packaging operation which does not improve the condition or advance in value the stockings. Thus, in view of the Carr and Superscope cases, we believe that the Christmas stockings are entitled to free entry under subheading 9801.00.10, HTSUS, when returned to the U.S., since they are products of the U.S. which are merely packaged abroad. HOLDING: The U.S.-origin Christmas stockings are entitled to duty- free treatment under subheading 9801.00.10, HTSUS, upon compliance with the documentary requirements of 19 CFR 10.1. Sincerely, John Durant, Director Commercial Rulings Division