The tariff classification and status under the North American Free Trade Agreement (NAFTA) of flashlights which are exported to Mexico for labeling/pad printing and packaging.

NY 818462 February 20, 1996 CLA-2-98:RR:NC:GI:227 818462 CATEGORY: Classification TARIFF NO.: 9802.00.50 Mr. James Taylor, Jr. Ablondi, Foster, Sobin & Davidow, P.C. Attorneys and Counsellors 1130 Connecticut Ave., N.W. Ste. 500 Washington, DC 20036 RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA) of flashlights which are exported to Mexico for labeling/pad printing and packaging. Dear Mr. Taylor: In your letter dated January 15, 1996, on behalf of Black & Decker (U.S.), Inc., you requested a ruling on the status of flashlights which are exported to Mexico for labeling/pad printing and packaging and then reimported into the United States, within the subheading of 9802.00.50, Harmonized Tariff Schedule of the United States (HTS),under the NAFTA. The merchandise at issue is certain flashlights, originally imported from the Philippines, which are exported in bulk to Mexico where either one or both of the following operations will be performed: a) a product nameplate or label will be affixed to the underside of the flashlight which incorporates the product catalog number, the UL symbol, and a product warning statement; b) the Black & Decker logo and product name will be pad printed on the flashlight adjacent to the on/off switch. After the process(es) of labeling and/or pad printing, the subject flashlights will be repackaged in individual blister packaging, placed in master cartons, palletized and reimported into the United States. You claim that these flashlights, that have undergone the above foreign operations, should be properly classified under subheading 9802.00.50, HTS, which provides for partial duty exemption for articles returned to the United States after having been exported to be advanced in value or improved in condition by repairs or alterations (under NAFTA the rate of duty on the value of the foreign processing will be free). This assertion is supported in stating that Customs has previously ruled that the printing of a part number on diodes (noting HRL 071159 dated March 2, 1993) and the affixing of vendor marking labels, size stickers and the like (HRL 557327 dated July 26, 1993 noted) in Mexico constitute alterations within the meaning of subheading 9802.00.50, HTS. Similarly, you conclude that the affixing of product nameplates or labels as well as pad printing the logos and product names on the subject flashlights are also alterations within the meaning of the above subheading. While the repackaging is not considered to be an alteration (see HRL 555806 dated January 14, 1991), it is stated in reference to the General Rule of Interpretation 5(b) of the HTS, that the blister-packing materials are not suitable for reuse, and, therefore, are dutiable at the rate of duty of the instant flashlights, noting HRL 556555 dated April 15, 1992. You claim, in this instance, that the duty assessment on the packaging should be free also under NAFTA since the blister packaging is coming from Mexico. However, since the flashlights originate from the Philippines, the value of the subject non-reusable packing materials, that are normally used for packing such goods, is considered a part of the value of its contents, and, therefore, dutiable at the rate of its contents coming from the Philippines (HRL 556555 as noted above). The applicable subheading for the labeling and/or pad printing of these flashlights will be 9802.00.50, HTS, which provides for articles returned to the United States after having been exported to be advanced in value or improved in condition by any process of manufacture or other means: articles exported for repairs or alterations: other, with the general duty rate of 20 percent ad valorem (the rate that would apply to the flashlights) upon the value of the repairs or alterations. The cited alterations (labeling and/or pad printing), that you imply to be wholly obtained or produced entirely in the territory of Mexico, will meet the requirements of HTSUSA General Note 12(b)(i), and will therefore be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements. The applicable rate of duty for the blister packaging (dutiable at the rate of its contents, flashlights) will be 8513.10.2000, HTS, which provides for portable electric lamps designed to function by their own source of energy...flashlights, and dutiable at the rate of 20 percent ad valorem. Articles classifiable under subheading 8513.10.2000, HTS, which are products of the Philippines, are entitled to duty-free treatment under the Generalized System of Preferences (GSP) upon compliance with all applicable regulations, if the GSP is renewed. With respect to the country of origin of these flashlights, this office has determined that the subject merchandise should be properly marked to indicate "Made in the Philippines," in accordance with all applicable regulations. This ruling is being issued under the provisions of Parts 181 and 177 of the Customs Regulations (19 C.F.R. 181 and 19 C.F.R. 177 respectively). This ruling letter is binding only as to the party to whom it is issued and may be relied on only by that party. A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist George Kalkines at 212-466-5794. Sincerely, Roger J. Silvestri Director, National Commodity Specialist Division