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HQ 555567


April 19, 1990

CLA-2 CO:R:C:V 555567 KAC

CATEGORY: CLASSIFICATION

TARIFF NO.: 9801.00.10 - 9801.00.25

Mr. Lewis Stein
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, New Jersey 08933-7002

RE: Reconsideration of Ruling concerning classification of suture removal kit

Dear Mr. Stein:

This is in response to your letter dated November 17, 1989, to the Area Director of Customs, New York Seaport, requesting reconsideration of New York Ruling Letter 835822 dated February 2, 1989, which was issued to B.O.S.S., Inc. In NY 835822, it was held that a suture removal kit consisting of a pair of Littauer scissors, forceps and a gauze sponge was classifiable under subheading 9018.90.80, Harmonized Tariff Schedule of the United States (HTSUS), which provides for other medical instruments, dutiable at 7.9 percent ad valorem. You advise that B.O.S.S., Inc. is a contractor which prepares the suture removal kit for your company. Your request was forwarded to this office for the preparation of a response. We regret the delay in responding to your request.

FACTS:

B.O.S.S. will ship Littauer scissors of Israeli origin and forceps and gauze sponges of U.S. origin, in bulk, from the U.S. to Mexico for packaging operations. In Mexico, the scissors, forceps and gauze sponge will be repacked in a molded plastic tray and sealed with a paper cover, after which the kit will be returned to the U.S.

In NY 835822, the Area Director held that the products repackaged in Mexico constituted a set and that the scissors and forceps imparted the "essential character" of the set. It was determined that the entire kit was dutiable at the rate of 7.9 percent ad valorem under HTSUS subheading 9018.90.80 (other medical instruments) "since Customs does not allow constructive segregation of commingled articles for separate tariff treatment in an imported tariff entity."

You state that, prior to being exported to Mexico for packaging operations, the scissors are imported into the U.S. free of duty under the U.S.-Israel Free Trade Area Agreement. Accordingly, you assert that HTSUS subheading 9801.00.25 may apply, thereby entitling the scissors to duty-free entry upon return to the U.S. You further maintain that the U.S. products should be free of duty upon their return under HTSUS subheading 9801.00.10.

ISSUE:

Whether the scissors, forceps and gauze sponge to be exported to Mexico will qualify for the duty exemptions available under HTSUS subheadings 9801.00.10 and 9801.00.25 when returned to the U.S.

LAW AND ANALYSIS:

HTSUS subheading 9801.00.25 provides for the duty-free entry of:

[a]rticles, previously imported, with respect to which the duty was paid upon such previous importation if (1) exported within three years after the date of such previous importation, (2) reimported without having been advanced in value or improved in condition by any process of manufacture or other means while abroad, (3) reimported for the reason that such articles do not conform to sample or specifications, and (4) reimported by or for the account of the person who imported them into, and exported them from, the United States.

Articles satisfying each of the above requirements are entitled to duty-free treatment, assuming compliance with the documentary requirements of section 10.8a, Customs Regulations (19 CFR 10.8a).

In the instant case, we find that the scissors are not entitled to classification under this duty-free provision when returned as part of the suture removal kit. We have consistently held that payment of duty on the merchandise when first imported is a prerequisite to obtaining the benefit of item 801.10, Tariff Schedules of the United States (the precursor provision to HTSUS subheading 9801.00.25). See Headquarters Ruling Letters 555169 dated February 7, 1990 (merchandise initially entered duty free under the Generalized System of Preferences, exported and then returned for failure to meet specifications, determined to be ineligible for TSUS item 801.10 treatment), and 058225 dated June 14, 1978. Moreover, the scissors also fail to meet the require- ment in clause (3) of the statute that they be reimported for the reason that they do not conform to sample or specifications.

HTSUS subheading 9801.00.10 provides for the duty-free entry of U.S. products that are exported and returned without having been advanced in value or improved in condition by any means while abroad, provided the documentary requirements of section 10.1, Customs Regulations (19 CFR 10.1), are met.

Subsequent to the issuance of NY 835822 on February 2, 1989, the U.S. Court of International Trade decided Superscope, Inc. v. United States, 13 CIT , 727 F.Supp. 629 (CIT 1989), which is pertinent to the issue of the applicability of HTSUS subheading 9801.00.10 to the repackaged U.S. forceps and gauze sponge here. The court found that glass panels of U.S. manufacture that were exported, packaged with other components to make unassembled stereo cabinets, and then imported into the U.S. as part of an entirety were not advanced in value or improved in condition while abroad, but were merely repacked. Therefore, the court held that the glass panels were entitled to free entry under item 800.00, Tariff Schedules of the United States (TSUS) (the precursor provision to HTSUS subheading 9801.00.10).

The operations performed abroad in the instant case consist merely of repackaging the U.S. products with the foreign scissors. As the mere packaging of U.S. products with other products does not advance in value or improve in condition the U.S. products, the portion of the kit consisting of the U.S. forceps and gauze sponge will be eligible for the duty exemption under HTSUS subheading 9801.00.10, provided the documentation requirements of 19 CFR 10.1 (copy enclosed) are met.

HOLDING:

For the reasons set forth above, we find that the scissors of Israeli origin are not entitled to the duty exemption available under HTSUS subheading 9801.00.25 when reimported into the U.S. Therefore, the scissors portion of the suture removal kit will be fully dutiable at the rate of 7.9 percent ad valorem under HTSUS subheading 9018.90.80. However, as the forceps and gauze sponge of U.S. origin will not be advanced in value or improved in condition while abroad as a result of the packaging operations, they will be entitled to the duty exemption under HTSUS subheading 9801.00.10, upon compliance with the documentary requirements of 19 CFR 10.1.

Sincerely,

Jerry Laderberg
Acting Director

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