Eligibility of display box and shipping carton for duty-free treatment as American Goods Returned; 9801.00.10; HRL 731806; HRL 555664

HQ 561449 July 27, 1999 CLA-2 RR:CR:SM 561449 CW CATEGORY: Classification TARIFF NO.: 9801.00.10 John Pellegrini, Esq. Ross & Hardies Park Avenue Tower 65 East 55th Street New York, NY 10022-3219 RE: Eligibility of display box and shipping carton for duty-free treatment as American Goods Returned; 9801.00.10; HRL 731806; HRL 555664 Dear Mr. Pellegrini: This is in reference to your letter of March 30, 1999, on behalf of Paris Accessories, Inc., requesting a ruling on the dutiable status of display boxes (and components thereof) and shipping cartons which are exported to be filled with foreign-made merchandise and returned to the U.S. By letter dated July 8, 1999, the Value Branch responded to the valuation issue raised in your letter. A memorandum of the same date from the Value Branch asked that we respond directly to you regarding the eligibility of the display boxes and shipping cartons for duty-free treatment under subheading 9801.00.10, Harmonized Tariff Schedule of the United States (HTSUS). Photographs were submitted with your request. FACTS: You state that the display article consists of an oblong paperboard box, a paperboard stand, plastic hooks, and two paperboard supports. In use, the oblong box is placed on the stand to create a retail display case. The back of the box has holes to accommodate plastic hooks. The displays are exported to various countries in the Far East, where the display boxes are formed by folding along predetermined lines and fastening with self tabs. The display boxes are then filled with various foreign-made apparel and apparel accessories (e.g., mittens, gloves, knit hats and scarves) suspended on the plastic hooks. During shipment, the apparel and accessories are protected by a cardboard support for the rear of the display box and a support for the front of the box. The supports are secured to the box by washers which are placed on the hooks. The filled display case is shipped to the U.S. inside a cardboard shipping carton. You advise that all of the display case components and the shipping carton are manufactured in the U.S.  ISSUE: Whether the display case components and shipping carton are entitled to duty-free treatment under subheading 9801.00.10, HTSUS, when returned to the U.S. under the circumstances described above. LAW AND ANALYSIS: Subheading 9801.00.10, HTSUS, provides for the duty-free entry of products of the U.S. which are exported and returned without having been advanced in value or improved in condition by any process of manufacture or other means while abroad. Articles satisfying the above statutory conditions are entitled to duty-free treatment, assuming compliance with the documentation requirements of section 10.1, Customs Regulations (19 CFR 10.1). While some change in the condition of the product while it is abroad is permissible, operations which either advance the value or improve the condition of the exported product render it ineligible for duty-free entry upon return to the U.S. See Border Brokerage Co. V. United States, 65 Cust.Ct. 50, C.D. 4052, 314 F.Supp. 788 (1970), appeal dismissed, 58 CCPA 165 (1970). With respect to containers, General Rule of Interpretation 5(b), HTSUS, provides that "packing 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. However, this provision does not apply when such packing materials or packing containers are clearly suitable for repetitive use." Therefore, the value of a nonreusable container normally used for packing such goods is considered a part of the value of its contents and is dutiable at the rate of its contents. However, Customs has held that upon submission of satisfactory proof that a container is of U.S. origin and that it is returned without having been advanced in value or improved in condition while abroad, it is entitled to dutyfree treatment under subheading 9801.00.10, HTSUS. The act of being filled with its contents is not considered to constitute such an advancement or improvement. See, Headquarters Ruling Letter (HRL) 731806 dated November 18, 1988. In HRL 555664 dated August 8, 1990, “knock-down” cardboard containers (completed, unformed boxes in flat condition) were shipped to Canada where they were formed into a box shape by folding the appropriate pieces, filled with foreign baby strollers, and sealed with tape for shipment to the U.S. In holding that the returned boxes were entitled to duty-free treatment under subheading 9801.00.10, HTSUS, we stated the following: Forming the box by folding is a change in the condition of the box, but is not an advancement in value or improvement in condition. The boxes are shipped to Canada in their flat condition for ease of transportation and their value is no greater upon return to the U.S. than when exported to Canada. Similarly, Customs held in HRL 067938 dated August 31, 1982, that forming U.S.-origin shoe boxes abroad by folding and gluing the flaps did not result in an advancement in value or improvement in condition of the boxes for purposes of General Headnote 6(b)(i), Tariff Schedules of the United States (TSUS). See also, HRL 556679 dated August 20, 1992 (filling U.S.-made cans with various fruit and vegetable products abroad and sealing the lids to the cans by a vacuum sealing process will not preclude subheading 9801.00.10, HTSUS, treatment for the cans and lids when returned to the U.S.) Consistent with the foregoing, we find in this case that forming the display box abroad by folding along predetermined lines and fastening with self tabs, inserting hooks in holes in the box, filling the box with foreign apparel and accessories, and adding cardboard supports to the front and rear of the display box to protect the apparel and accessories during shipment does not advance the value or improve the condition of the U.S.-made display case components. Therefore, the U.S.-origin display case components and shipping cartons will be entitled to duty-free treatment under subheading 9801.00.10, HTSUS, when returned to the U.S., upon compliance with the documentation requirements of 19 CFR 10.1. HOLDING: On the basis of the information submitted, the U.S.-origin display case components and shipping cartons will not be advanced in value or improved in condition by the operations performed abroad. Therefore, the display case components and shipping cartons will be entitled to duty-free treatment under subheading 9801.00.10, HTSUS, when returned to the U.S., assuming the documentation requirements of 19 CFR 10.1 are met. A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction. Sincerely, John Durant, Director Commercial Rulings Division