Eligibility of caps and t-shirts for partial duty exemption under subheading 9802.00.50, HTSUS.

N043077 November 24, 2008 CLA-2-98:OT:RR:NC:3:353 CATEGORY: Classification TARIFF NO.: 9802.00.50 Mr. James L Sawyer Drinker Biddle & Reath, LLP 191 North Wacker Drive Suite 3700 Chicago, Illinois 60606-1698 RE: Eligibility of caps and t-shirts for partial duty exemption under subheading 9802.00.50, HTSUS. Dear Mr. Sawyer: In your letter dated October 28, 2008, on behalf of VistaPrint Limited (VistaPrint), you requested a tariff classification ruling. The submitted samples are a cap and t-shirt. The baseball-style cap is constructed of woven cotton twill fabric. The t-shirt is constructed of light weight plain cotton knit fabric. The foreign origin caps and t-shirts are purchased by VistaPrint from sources in the United States and exported to its related party facility in Canada. In Canada the caps and t-shirts are printed by means of a high-end jet printer with customer selected text and graphics. Once printed, the hats and t-shirts are reimported into the United States and shipped directly to the customer who ordered them. You request a determination regarding the eligibility for treatment under subheading 9802.00.50, HTSUS. 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. In this instance, the caps and t-shirts are complete for their intended use prior to being exported to Canada for printing with customer selected text and graphics. The operation performed in Canada does not result in the loss of the good’s identity or create a new article with a different commercial use. The printing constitutes an “alteration” within the meaning of subheading 9802.00.50, HTSUS. These caps and t-shirts are entitled to the special tariff treatment under that provision, provided the documentation requirements of 19 CFR 181.64 are met. Chapter 98, Subchapter II, U.S. Note 3 (d) states:"For the purposes of subheadings 9802.00.40 and 9802.00.50, the rates of duty in the “special” subcolumn of column 1 followed by the symbol "CA" or "MX" in parentheses shall apply to any goods which are returned to the United States after having been repaired or altered in Canada or in Mexico, respectively, whether or not such goods are goods of Canada or goods of Mexico under the terms of general note 12 to the tariff schedule." Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at http://www.usitc.gov/tata/hts/. 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 (646) 733-3053, or Mary Ryan at (646) 733-3271. Sincerely, Robert B. Swierupski Director National Commodity Specialist Division