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

December 1, 2009 N083610 CLA-2-98:OT:RR:NC:TA:353 CATEGORY: Classification TARIFF NO.: 9802.00.50 Mr. John F. Cowen Roser & J. Cowen Logistical Services, Ltd. 4695 Towerwood Drive Brownsville, TX 78521 RE: The eligibility of certain used clothing for partial duty exemption under subheading 9802.00.50, HTSUS. Dear Mr. Cowen: In your letter dated November 5, 2009, on behalf of Mid-West Textile Co., you requested a ruling on whether certain used clothing is eligible for partial duty exemption under subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS), and the country of marking requirements for such merchandise. You state that used clothing is sourced by Mid-West Textile Co., from U.S. vendors such as Goodwill, The Salvation Army, Saint Vincent de Paul, and similar resale organizations. The clothing will be exported to Mexico where the garments will be sorted and graded by category, style, brand, quality, and other factors. Other actions, performed as needed, include tagging, sewing of damaged seams, repairing zippers, and restoring missing buttons. All garments will undergo a fumigation process. 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 Mexico 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 Mexico to undergo sorting, grading, and fumigation; the garments may undergo tagging, sewing of damaged seams, repairing of zippers, and restoring of missing buttons. The merchandise in its condition as exported from the United States and as returned from Mexico can be marketed and sold to consumers for the same use. The operations performed in Mexico do not result in the loss of the good’s identity nor create a new article with a different commercial use. To summarize, the sorting, grading, fumigation, tagging, sewing of damaged seams, repairing of zippers, and restoring of missing buttons 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. Regarding country of origin marking requirements, Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. Congressional intent in enacting 19 U.S.C. 1304 was "that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will." United States v. Friedlaender & Co., 27 C.C.P.A. 297 at 302 (1940).Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. In HQ ruling 730174, dated March 31, 1987, Customs addressed the issue of used clothing purchased in the U.S., exported to Mexico for sorting and re-imported for sale in the United States. Customs found that an exception from marking pursuant to 19 CFR 134.32(c), was unnecessary. The used clothing was regarded as of U.S. origin because it was purchased from the Salvation Army, Goodwill Industries stores and similar organizations within the U.S. and therefore, presumed to have been worn and used in the U.S. and is thus regarded as of U.S. origin. The used clothing is considered to be of U.S. origin for country of origin marking purposes, and is excepted from marking pursuant to section 134.32(m), Customs Regulations (19 CFR 134.32(m)), which excepts products of the U.S. exported and returned to the U.S. from marking. 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. Sincerely,
Robert B. Swierupski Director National Commodity Specialist Division