Eligibility of caps for partial duty exemption under subheading 9802.00.50, HTSUS.

NY G85333 January 3, 2001 CLA-2-98:RR:NC:3:353 G85333 CATEGORY: Classification TARIFF NO.: 9802.00.50 Mr. Ralph Saunders Deringer Logistics Consulting Group 1 Lincoln Blvd., Suite 225 Rouses Point, NY 12979 RE: Eligibility of caps for partial duty exemption under subheading 9802.00.50, HTSUS. Dear Mr. Saunders: In your letter dated December 13, 2000, on behalf of Ad-N-Art, you requested a tariff classification ruling. The submitted samples are four baseball-style caps constructed of woven fabric. The caps feature a front peak, and six-panel vented crown with an adjustable self-fabric strap at the rear. The caps are classifiable under heading 6505, HTS. The caps are manufactured in China and imported into the United States. The caps are then shipped to Canada, where a pewter emblem will be added to the front of the crown. The caps will then be reimported into the United States. Both Customs and the inquirer agree that the country of origin of the merchandise remains China. You request a determination regarding the eligibility for treatment under 9802.00.50, HTS, and whether the caps are subject to visa and quota restrictions upon reimportation into the United States. Subheading 9802.00.50, HTSUS, provides a partial or complete duty exemption for articles exported from and returned to the U.S. after having been advanced in value or improved in condition by repairs or alterations, provided the documentary requirements of section 181.64, Customs Regulations (19 C.F.R. §181.64), are satisfied. Section 181.64, which implements Article 307 of NAFTA, provides that goods returned after having been repaired or altered in Canada may qualify for complete or partial duty free treatment, provided that the requirements of this section are met. However, entitlement to this tariff treatment is precluded in circumstances where the operations performed abroad destroy the identity of the exported articles or create new or commercially different articles through a process of manufacture. Subheading 9802.00.50, HTSUS, treatment is also precluded where the exported articles are incomplete for their intended use and the foreign processing operation is a necessary step in the preparation or manufacture of finished articles. “Repairs or alterations” for purposes of 19 C.F.R. §181.64 are defined as: ... restoration, addition, renovation, redying, cleaning, resterilization, or other treatment which does not destroy the essential characteristics of, or create a new or commercially different good from, the good exported from the United States. The cap is complete for its intended use when shipped to Canada. The operation in Canada does not create a new or commercially different article. In this instance, the affixing of the pewter emblem to the crown constitutes an “alteration” within the meaning of subheading 9802.00.50, HTSUS. The caps are entitled to the special tariff treatment under that provision, provided the documentation requirements of 19 CFR 181.64 are met. Goods returned after having been repaired or altered in Canada other than pursuant to a warranty are subject to duty upon the value of the repairs or alterations using the applicable duty rate under the United States-Canada Free-Trade Agreement (see § 10.301 of this chapter), provided that the requirements of this section are met. For this merchandise the rate is Free. A copy of a directive, published in the Federal Register, issued by the Committee for the Implementation of Textile Agreements (CITA), dated December 20, 1993, is enclosed. It states that “…textile and apparel products which are produced or manufactured in various countries and entered into the United States for consumption…under existing visa and quota requirements are no longer subject to visa or quota requirements upon re-entry into the United States under Harmonized Tariff Schedule (HTS) numbers 9802.00.40 or 9802.00.50 after repairs or alterations.” Therefore, the caps undergoing the alteration process outlined in this ruling are not subject to visa and quota requirements. This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177). 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 Kenneth Reidlinger at 212-637-7084. Sincerely, Robert B. Swierupski Director, National Commodity Specialist Division