The applicability of subheading 9802.00.5060, HTSUS, to UP wrist bands, Bluetooth headsets, and Jamboxes that are exported from the United States to Mexico and returned to the United States

N206391 March 23, 2012 CLA-2-98:OT:RR:NC:N1:109 CATEGORY: Classification TARIFF NO.: 9802.00.5060 Mr. Steven B. Zisser, Esq. Zisser Customs Law Group 9355 Airway Road, Suite 1 San Diego, CA 92154 RE: The applicability of subheading 9802.00.5060, HTSUS, to UP wrist bands, Bluetooth headsets, and Jamboxes that are exported from the United States to Mexico and returned to the United States Dear Mr. Zisser: In your letter dated February 23, 2012, you requested a ruling on behalf of your client AliphCom. Your request pertained to the applicability of subheading 9802.00.5060, Harmonized Tariff Schedule of the United States (HTSUS), to merchandise that your client will export from the United States to be repaired and altered in Mexico and returned to the United States. Your letter did not request the primary classification of the merchandise nor is there sufficient information about the items to provide the primary classification of each. As such, this ruling will only address the eligibility of subheading 9802.00.5060 HTSUS for the subject merchandise upon re-importation into the United States. Your letter states that AliphCom will export UP wrist bands, Bluetooth headsets, and Jamboxes from the United States to Mexico for repair and/or alteration by cleaning, testing, and repairing. Afterwards, the products will be re-packaged for return to the United States. Articles exported from and returned to the U.S., after having been advanced in value or improved in condition by repairs or alterations in Mexico, may qualify for duty exemption under the Harmonized Tariff Schedule of the United States (HTSUS) subheading 9802.00.50 provided the foreign operation does not destroy the identity of the exported articles or create new or commercially different articles through a process of manufacture. The Customs regulations which implement the North American Free Trade Agreement (NAFTA) are contained in title 19 C.F.R. Part 181. Section 181.64(a) defines "repairs or alterations" for purposes of NAFTA as follows: “Repairs or alterations" means restoration, addition, renovation, redyeing, cleaning, resterilizing, 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. On the basis of the information submitted, the Mexican operations enumerated above constitute "repairs or alterations" within the meaning of 19 CFR 181.64(a). The UP wrist bands, Bluetooth headsets, and Jamboxes repaired or altered in Mexico are dutiable only upon the value of the foreign repairs or alterations. However, regarding the duty to be assessed on the value of the foreign repairs or alterations, U.S. Note 3(d) to Subchapter II of Chapter 98, HTSUS, is controlling. It 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. The “special” subcolumn reflects a free rate of duty. Accordingly, the UP wrist bands, Bluetooth headsets, and Jamboxes will qualify for the full duty exemption provided by subheading 9802.00.5060, HTSUS, upon re-importation into the United States. 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/. As noted in 19 C.F.R. § 181.64 (c)(2), the port director may require 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 UP wrist band, Bluetooth headsets, and a Jambox 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 Linda M. Hackett at (646) 733-3015. Sincerely, Thomas J. Russo Director National Commodity Specialist Division