The applicability of subheading 9802.00.50 to backpacks from China

N303773 May 3, 2019 CLA-2-98:OT:RR:NC:N4:441 CATEGORY: Classification TARIFF NO.: 9802.00.50 Mr. James E. King Delmar International (NY) Inc. 5 Coton Lane Champlain, NY 12919 RE: The applicability of subheading 9802.00.50 to backpacks from China Dear Mr. King: In your letter dated March 29, 2019, you requested a ruling on behalf of your client, Bankers’ Pen Inc. DBA Spector & Company. You have submitted samples, which will be returned to you under separate cover. The submitted samples, style numbers BG104 and BG100, are backpacks constructed with an outer surface of a man-made textile material. They are manufactured in China and imported from China into the United States under subheading 4202.92.3131, Harmonized Tariff Schedule of the United States (HTSUS), with duties and fees paid. After importation into the United States, they are sent to Canada to have a company’s logo, decoration, or inspirational messages printed on the articles. After printing the articles, they will be re-imported to the United States. You inquire as to whether the re-imported backpacks are eligible for special treatment under subheading 9802.00.50, HTSUS, which provides a full or partial duty exemption for articles returned to the United States after having been exported to be advanced in value or improved in condition by means of repairs or alterations. As it applies to merchandise returning from Canada under subheading 9802.00.50, 19 C.F.R. § Section 181.64(a) of the Customs and Broder Protection Regulations states, in pertinent part:‘Repairs or alterations’ means restoration, addition, renovation, redyeing, cleaning, resterilizing, or other treatment which does not destroy the essential character of, or create a new and commercially different good from, the good exported from the United States.Classification under subheading 9802.00.50, HTSUS, is precluded where: (1) the exported articles are not complete for their intended use and the foreign processing operation is a necessary step in the preparation or manufacture of finished articles; or (2) the operations performed abroad destroy the identity of the exported articles or create new or commercially different articles through a process of manufacture. See Guardian Indus. Corp. v. United States, 3 Ct. Int’l Trade 9 (1982), and Dolliff & Co., Inc., v. United States, 81 Cust. Ct. 1, C.D. 4755, 455 F. Supp. 618 (1978), aff’d, 66 C.C.P.A. 77, C.A.D. 1225, 599 F.2d 1015 (1979). In considering all of the factors, it is the opinion of this office that the addition of logos, names, or messages constitutes an “addition” enumerated within the definition of “repairs or alterations.” Additionally, customizing the backpacks with logos, decoration, or inspirational messages does not create a new or commercially different article through a process of manufacture. Thus, we find that the operations performed in Canada constitute alterations within the meaning of subheading 9802.00.50, HTSUS. The backpacks are entitled to reduced duty treatment when returned to the United States, provided the documentary requirements of 19 CFR 181.64 are satisfied. You also inquired whether the articles are eligible for special treatment under subheading 9801.00.10, HTSUS, which provides for the duty-free entry of products of the United States when returned after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad. Regarding the applicability of Heading 9801, HTSUS, sending the backpacks to Canada for printing fails to meet the requirements for treatment under subheading 9801.00.10, HTSUS, as the goods have been advanced in value or improved in condition by virtue of the added company names, logos, or inspirational messages. Thus, the backpacks are not eligible under subheading 9801.00.10. 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 https://hts.usitc.gov/current. Effective July 6, 2018, the Office of the United States Trade Representative (USTR) imposed an additional tariff on certain products of China classified in the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(b), HTSUS.  The USTR imposed additional tariffs, effective August 23, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(d), HTSUS. Subsequently, the USTR imposed further tariffs, effective September 24, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(f) and U.S. Note 20(g), HTSUS. For additional information, please see the relevant Federal Register notices dated June 20, 2018 (83 F.R. 28710), August 16, 2018 (83 F.R. 40823), and September 21, 2018 (83 F.R. 47974). Products of China that are provided for in subheading 9903.88.01, 9903.88.02, 9903.88.03, or 9903.88.04 and classified in one of the subheadings enumerated in U.S. Note 20(b), U.S. Note 20(d), U.S. Note 20(f) or U.S. Note 20(g) to subchapter III shall continue to be subject to antidumping, countervailing, or other duties, fees and charges that apply to such products, as well as to those imposed by the aforementioned Chapter 99 subheadings. Products of China classified under subheading 4202.92.3131, HTSUS, unless specifically excluded, are subject to the additional 10 percent ad valorem rate of duty. When submitting an entry using a Chapter 98 provision that normally requires the reporting of a secondary Chapter 1-97 HTSUS classification, a filer must first report the applicable Chapter 98 provision, then subheading 9903.88.03, followed by the applicable Chapter 1-97 HTSUS classification for the commodity being imported, in this case 4202.92.3131, HTSUS. The additional duties apply to the value of repairs or alterations preformed abroad, as described in the applicable heading. The tariff is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Notice cited above and the applicable Chapter 99 subheading. 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 Vikki Lazaro at vikki.lazaro@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division