The eligibility of certain garments for partial duty exemption under subheading 9802.00.50, HTSUS.

N045556 December 24, 2008 CLA-2-98:OT:RR:NC:WA:356 CATEGORY: Classification TARIFF NO.: 9802.00.50 Ms. Laura Siegel Rabinowitz Sandler, Travis & Rosenberg, P.A. 551 Fifth Avenue New York, NY 10176 RE: The eligibility of certain garments for partial duty exemption under subheading 9802.00.50, HTSUS. Dear Ms. Rabinowitz: In your letter dated November 20, 2008, you requested a ruling on behalf of Inaria International, Inc., on whether certain sports apparel, particularly sports jerseys, shorts and socks are eligible for partial duty exemption under subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS). You state that the imported merchandise consists of sports jerseys, shorts and socks that are used by men, women, and children for various active wear or sports including but not limited to soccer, softball, volleyball and basketball. The jerseys and shorts are constructed from 100% polyester and the socks are constructed from 95% nylon, and 5% spandex. All garments are made in China. The sports apparel is imported into the United States by Inaria International, Inc. who will pay the appropriate duties upon entry. Following importation, the merchandise will be exported to Canada for the purpose of inspection and minor repair. The processes in Canada will include the following: The shipments will come into the Canadian warehouse. The goods will be unpacked and stored in bins on warehouse shelves by product code. The goods will be picked based on customer orders. Once picked, the goods will go to the inspection department. The inspection department will open the poly bags in which goods are packed, remove the garments, and carry out a quality assurance inspection. The goods will be inspected for stains and hanging threads. Any hanging threads will be trimmed. Any stains will be cleaned with stain removers. The goods will be checked for proper labeling. New woven or heat transfer labels will be affixed to the garments. The goods will be examined for torn seams. Garments may be sent to the sewing department for repair. Per customer request, heat transfers or silk screening will be applied to the garments. The goods will be packed per customer order. The merchandise will be returned to the U.S. for shipment by Inaria International, Inc. to customers in the United States. Subheading 9802.00.50, HTSUS, provides a partial or complete duty exemption for articles exported from and returned to the United States after having been advanced in value or improved in condition by repairs or alterations, provided that the documentary requirements of Section 181.64, Customs Regulations (19 C.F.R. § 181.64), are satisfied. Section 181.64, C.R., 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 garments are complete for their intended use as wearing apparel prior to being exported to Canada to undergo the removal of stains; the affixing of woven labels, heat transfers or screen printing; the sewing of seams; and the trimming of hanging threads. The merchandise in its condition as exported from the United States and as returned from Canada can be marketed and sold to consumers for the same use. The operations performed in Canada do not result in the loss of the good’s identity nor create a new article with a different commercial use. To summarize, the removal of stains; the affixing of woven labels, heat transfers or screen printing; the sewing of seams; and the trimming of hanging threads constitute acceptable alterations within the meaning of subheading 9802.00.50. Garments that undergo such processes qualify for the special tariff treatment of that provision, provided that the documentary requirements of 19 C.F.R. § 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." As noted in 19 C.F.R. § 181.64 (c)(2), the port director may require such additional information as is deemed necessary to prove actual exportation of the goods from the United States and subsequent re-importation of the same goods after alteration. The documentation must clearly follow the garments through exportation, alteration, and re-importation. For information as to the documentation that will satisfy Section 181.64, C.R., you should contact the port director at the anticipated U.S. port of entry. 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 Mary Ryan at 646-733-3271. Sincerely, Robert B. Swierupski Director National Commodity Specialist Division