The applicability of Special Classification Provision, 9801.00.2000, of the Harmonized Tariff Schedule of the United States (HTSUS), to jewelry subject to repackaging operations abroad.

N245546 September 13, 2013 CLA-2-98:OT:RR:NC:N4:433 CATEGORY: Classification TARIFF NO.: 9801.00.2000 C.J. Erickson Cowan, Liebowitz & Latman, P.C. 1133 Avenue of the Americas New York, NY 10036 RE: The applicability of Special Classification Provision, 9801.00.2000, of the Harmonized Tariff Schedule of the United States (HTSUS), to jewelry subject to repackaging operations abroad. Dear Mr. Erickson: In your letter dated August 21, 2013, on behalf of Jacmel Jewelry Inc. (Jacmel), you requested a ruling on whether foreign origin jewelry exported abroad for repackaging operations and then returned to the United States after repackaging was eligible for duty-free treatment in subheading 9801.00.2000, HTSUS. The subject merchandise is finished articles of jewelry manufactured from precious metals, which may contain precious and/or semiprecious gemstones. The jewelry pieces, for example rings, bracelets, pins, pendants, charms, necklaces and earrings are manufactured in various countries throughout the world, of which, Jacmel will pay duty upon import into the United States prior to exporting the jewelry abroad for repackaging operations. After repackaging operations are complete, the jewelry packaged in boxes for retail sales will be returned to the United States. Due to the high cost of international transportation, the jewelry is shipped in polybags without being boxed. Repackaging operations abroad will be limited to receiving the articles of jewelry, placing the articles of jewelry into individual retail boxes, and placing multiple boxes in a shipping carton for return to the United States. Section 141.2 of the Customs Regulations (19 CFR 141.2) states that “Dutiable merchandise imported and afterwards exported, even though duty thereon may have been paid on the first importation, is liable to duty on every subsequent importation into the Customs territory of the United States,” unless specifically exempted. Subheading 9801.00.2000, HTSUS, provides for such an exception. Subheading 9801.00.20, HTSUS, provides duty-free treatment for: Articles, previously imported, with respect to which the duty was paid upon such previous importation . . . if (1) reimported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad, after having been exported under lease or similar use agreements, and (2) reimported by or for the account of the person who imported it into, and exported it from, the United States. Customs (CBP) does not consider the mere packaging of goods for retail sales as being advanced in value or improved in condition. See: John v. Carr & Sons, Inc., 69 Cust.Ct. 78, C.D. 4377 (1972), aff'd, 61 CCPA 52, C.A.D. 1118 (1974); Headquarters Ruling Letter (“HRL”) 555624, dated May 1, 1990 (perfumes packaged into sample pouches abroad not advanced in value or improved in condition for purposes of subheading 9801.00.10 treatment); and HRL 560511 dated November 18, 1997 and HQ H090975 dated June 7, 2011, both of which support the position that the repackaging of goods for retail sales is not an advancement in value or improvement in condition of those goods. Section 10.108, Customs Regulations (19 CFR 10.108), provides in relevant part, that free entry shall be accorded under subheading 9801.00.2000, HTSUS, whenever it is established to the satisfaction of the port director that the article for which free entry is claimed was exported from the United States under a lease or similar use agreement. According to Black’s Law Dictionary 179 (5th ed. 1979), a bailment is “a delivery of goods of personal property, by one person to another, in trust for the execution of a special object upon or in relation to such goods, beneficial to either the bailor or bailee or both, and upon a contract, express or implied, to perform the trust and carry out such object, and thereupon either to redeliver the goods to the bailor or otherwise dispose of the same in conformity with purpose of the trust.” Headquarters ruled, in HRL 560511 that “bailment” is a “similar use agreement” for the purposes of subheading 9801.00.2000, HTS. See also HRL 222863 dated July 1, 1991. A review of the unsigned and undated “use agreement” between Jacmel and its re-packer indicates a bailor to bailee relationship between the parties. In pertinent part, it is expressed within the use agreement that Jacmel will export to the re-packer property {jewelry} on a temporary basis for the sole purpose of packaging the merchandise into retail boxes for return to Jacmel, and that title to all merchandise covered by the agreement shall at all times remain with Jacmel. As such, we are of the opinion, that execution of the terms and conditions of Jacmel’s use agreement satisfies the language of a similar use agreement as stipulated in subheading 9801.00.2000. You assert that Jacmel’s business transactions with its re-packer meet all the requirements for consideration in subheading 9801.00.2000, HTSUS. Further, Jacmel will provide documentation upon request to the port director’s office, demonstrating that the proposed transactions satisfy the requirements of 19 CFR 10.108. This documentation is said to include: commercial invoices, packing lists, CBP Forms 3461 and 7501, and air waybills demonstrating the original importations and duty payments for the jewelry; export air waybills, AES filing receipts, commercial invoices, and packing lists confirming Jacmel’s exportation of the jewelry; and commercial invoices, packing lists, CBP forms 3461 and 7501, and air waybills demonstrating the re-importation of the repackaged jewelry ready for retail sales. Accordingly, when the port director is satisfied as to the fulfillment of the requirements of 19 CFR 10.108, the repackaged jewelry into individual retail boxes will be eligible for duty-free treatment in subheading 9801.00.2000, HTSUS, upon reimportation into the United States. Based on the information provided, we find that the jewelry repackaged abroad into individual retail boxes will be eligibile for duty-free treatment in subheading 9801.00.2000, HTSUS, provided that Jacmel previously imported the jewelry and paid duty thereon; the jewelry is reimported by or for the account of; and the documentary requirements of 19 CFR 10.108 are satisfied. 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 Neil H. Levy at (646) 733-.3036 Sincerely, Myles B. Harmon Acting Director National Commodity Specialist Division