Applicability of duty exemption under HTSUS subheading 9801.00.10 to condoms packaged in Venezuela

HQ 557405 October 26, 1993 CLA-2 CO:R:C:S 557405 MLR CATEGORY: Classification TARIFF NO.: 9801.00.10 Mr. William Santos The Silver Bullet Condom Corp. One East River Place 525 East 72nd Street Suite 15-C New York, New York 10021-9606 RE: Applicability of duty exemption under HTSUS subheading 9801.00.10 to condoms packaged in Venezuela Dear Mr. Santos: This is in reference to your letter of June 2, 1993, forwarded to our office by the Director, Office of International Policy, requesting a ruling regarding the applicability of subheading 9801.00.10, Harmonized Tariff Schedule of the United States (HTSUS), to condoms packaged in Venezuela. FACTS: In your letter, you state that you manufacture a private label condom in the U.S. These condoms are shipped to Venezuela where they are packaged. Some of the packaged condoms will be returned to the U.S. ISSUE: Whether the U.S.-origin condoms exported to Venezuela for packaging will qualify for the duty exemption available under subheading 9801.00.10, HTSUS, when returned to the U.S. 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), 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 the purpose of resale to the ultimate consumer, is not sufficient to preclude the merchandise from being classified under item 800.00, Tariff Schedules of the Untied States (TSUS) (now subheading 9801.00.10, HTSUS). In Headquarters Ruling Letter (HRL) 555624 dated May 1, 1990, we held that U.S. toiletry articles which were exported to France and merely packaged in sample pouches, consisting of either polyethylene sheets (or paper and polyethylene sheets) laminated to aluminum foil, were not considered to have been advanced in value or improved in condition for purposes of subheading 9801.00.10, HTSUS. As a result, they were exempt from duty when they were returned to the U.S., provided the documentary requirements of 19 CFR 10.1 were satisfied. The sample pouches were also determined to be duty-free according to General Rule of Interpretation 5(b), HTSUS, which provides that "packaging materials and packing containers entered with the goods therein shall be classified with the goods if they are of a kind normally used for packing such goods." Similarly, in this case, the condoms will be packaged in Venezuela. Consequently, we find that the condoms and their packaging are entitled to duty-free treatment under subheading 9801.00.10, HTSUS. You also questioned whether you will need an ATA carnet to avoid the payment of duty. On the basis of your letter, we are unable to determine whether the condoms may be imported under cover of an ATA carnet. However, because the condoms are entitled to duty-free treatment under subheading 9801.00.10, HTSUS, you will not need an ATA carnet to avoid the payment of duty. For your information, enclosed please find a brochure which discusses ATA carnets. HOLDING: On the basis of the information submitted, as the U.S.- origin condoms will not be advanced in value or improved in condition abroad as a result of the packaging operation, these items will qualify for the duty exemption under subheading 9801.00.10, HTSUS, when returned to the U.S., provided the documentary requirements of 19 CFR 10.1 (copy enclosed) are satisfied. Sincerely, John Durant, Director Commercial Rulings Division Enclosures