Applicability of duty exemption under HTSUS subheading 9801.00.10 to contraceptive tablets packaged in the Dominican Republic

HQ 557932 June 2, 1994 CLA-2 CO:R:C:S 557932 MLR CATEGORY: Classification TARIFF NO.: 9801.00.10 Robert F. Preston, Esq. American Home Products Corp. P.O. Box 8616 Philadelphia, PA 19101 RE: Applicability of duty exemption under HTSUS subheading 9801.00.10 to contraceptive tablets packaged in the Dominican Republic Dear Mr. Preston: This is in reference to your letter of May 20, 1994, requesting a ruling on behalf of Ayerst-Wyeth Pharmaceuticals Caribe, Inc. ("Ayerst"), a subsidiary of American Home Products Corp., regarding the applicability of subheading 9801.00.10, Harmonized Tariff Schedule of the United States (HTSUS), to contraceptive tablets packaged in the Dominican Republic. FACTS: Ayerst plans to ship contraceptive tablets marketed under the trade names OVRAL-21 and 28, LO-OVRAL-21 and 28 and NORDETTE- 21 and 28 to the Dominican Republic for packaging. You state that the contemplated packaging operations are identical to the scenario addressed in Headquarters Ruling Letter (HRL) 555559 which was issued to Ayerst on April 20, 1990. You indicate that the following articles are exported from the U.S. and are of U.S. origin: 1. contraceptive tablets in blister packs; 2. platforms and plastic cases; 3. literature inserts for the platforms and plastic cases; 4. printed cartons; 5. physician instructions; 6. carton packers; 7. display cartons; and 8. shipping cartons. Samples of items 1-5 are submitted with the ruling request. Four types of packaging materials will be used to pack the tablets depending on the quantity of tablets and the manner of distribution: (1) dispenser carton containing five PILPAK dispensers for 21 and 28 tablet presentations; (2) carton packer containing three PILPAK dispensers individually packed in cartons for 21 and 28 tablet presentations; (3) carton packer containing six PILPAK dispensers individually packed in cartons for 21 and 28 tablet presentations; and (4) clinic use carton containing 12 PILPAK dispensers for 28 tablet presentation only. A description of the packaging operation for OVRAL-21 tablets (six PILPAK carton), which is representative of all of the packaging operations, is as follows: 1. place the platforms onto the conveyor belt; 2. insert the blister packs into the platforms; 3. assemble the Patient Instruction Briefs (PIB) over the platform and place the platforms into the plastic case; 4. inspect the HIV caution label; 5. form the printed cartons and insert six Patient Instruction Details (PID), a Circular Physician (CI), and six plastic cases into a printed carton; 6. label and form the shipper carton and place the printed cartons into the shipping cartons; 7. bundle six PID's and a CI with a rubber band; and 8. place the HIV caution label onto the plastic cases. Similar operations as above are performed for all of the four types of packaging used, except that sometimes the printed cartons are inserted into carton packers which are packed into shipping cartons. ISSUE: Whether the contraceptive tablets and packaging materials 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. See 59 Fed. Reg. 25563 (May 17, 1994), for recent amendments to 19 CFR 10.1. In United States v. John V. Carr & Sons, Inc., 347 F. Supp. 1390 (Cust. Ct. 1972), 496 F.2d 1225 (CCPA 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 United States (TSUS) (now subheading 9801.00.10, HTSUS). In HRL 555559, contraceptive tablets were inserted into plastic compacts or envelopes, various quantities of which were then placed into printed cartons, which, in turn, were placed into carton packers and shipping cartons for shipment to the U.S. All of these items were of U.S.-origin. It was held that no aspect of the foreign packaging operations effected an alteration or change in the contraceptive tablets; therefore, as they were not advanced in value or improved in condition, they were eligible for the duty exemption under subheading 9801.00.10, HTSUS. Furthermore, with respect to the dutiability of the U.S. packaging materials, General Rule of Interpretation (GRI) 5(b), HTSUS, was applicable, 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." Therefore, since the envelopes and various types of cartons in which the contraceptive tablets were packed were found to be of a kind normally used for packing such goods and were unsuitable for repetitive use, they were entitled to duty-free under subheading 9801.00.10, HTSUS, as well. The U.S.- origin plastic compacts were also found to be classifiable under subheading 9801.00.10, HTSUS. Similarly, in this case, the contraceptive tablets in blister packs are stated to be of U.S. origin, and the only operations performed abroad are to insert the blister packs into platforms and plastic cases which are placed into printed cartons which, in turn, are either inserted into carton packers and shipping cartons or just shipping cartons. Consequently, we find that the contraceptive tablets are entitled to duty-free treatment under subheading 9801.00.10, HTSUS. The literature inserts are classifiable under subheading 9801.00.10, HTSUS, as well. Furthermore, the platforms, plastic cases, printed cartons, carton packers, display cartons, and shipping cartons, are of the kind normally used for packaging the contraceptive tablets, and it is stated that they are not intended for repetitive use. Therefore, these packaging materials and packing containers are classifiable in the same subheading as the tablets, which is subheading 9801.00.10, HTSUS. HOLDING: On the basis of the information submitted, as the contraceptive tablets and literature inserts will not be advanced in value or improved in condition abroad by the packaging operations performed abroad, these articles, assuming they are of U.S.-origin, 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 are satisfied. The packaging materials and packing containers are also entitled to duty-free treatment under this provision pursuant to GRI 5(b), HTSUS. Sincerely, John Durant, Director