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HQ 557668


March 3, 1994

CLA-2 CO:R:C:S 557668 MLR

CATEGORY: CLASSIFICATION

TARIFF NO.: 9801.00.10

Mr. Robert Habgood
Allders International (Ships) Limited
1510 S.E. 17th Street, Suite 450
Fort Lauderdale, Florida 33316

RE: Applicability of duty exemption under HTSUS subheading 9801.00.10 to jewelry; consignment; documentary requirements; 19 CFR 10.1

Dear Mr. Habgood:

This is in reference to your letter of October 29, 1993, requesting a ruling on the applicability of subheading 9801.00.10, Harmonized Tariff Schedule of the United States (HTSUS), to jewelry returned to the U.S.

FACTS:

Allders International (Allders) operates gift shops on board cruise ships sailing from U.S. ports. The shops sell a variety of merchandise to passengers while the ship is sailing in international waters. The passengers declare the value of their purchases on board as part of their allowance when they leave the ship at a U.S. port. Some of the merchandise offered for sale is jewelry consigned to Allders by Amsterdam Sauer of New York, who owns the jewelry until it is sold. The jewelry is all made in the U.S., is stamped with "AS" (Amsterdam Sauer), and is stated to be fully described on the consignment forms so that easy identification is possible.

Sometimes it is necessary to return certain pieces to Amsterdam Sauer. In the past, each piece was registered with U.S. Customs officials at the port at which the merchandise was placed on board the ship, and the original documents were kept to prove that the merchandise originated in the U.S. in case it needed to be returned to Amsterdam Sauer. You state that you have followed this practice for many years, but have experienced some difficulties at Port Everglades where you have been denied the opportunity to register further merchandise until you receive a ruling.

ISSUE:

What documentation is required for the U.S. merchandise to receive duty-free treatment under subheading 9801.00.10, HTSUS, if it is returned to the U.S.

LAW AND ANALYSIS:

Subheading 9801.00.10, HTSUS, provides for the free entry of products of the U.S. that have been exported and returned without having been advanced in value or improved in condition by any process of manufacture or other means while abroad, provided the documentary requirements of section 10.1, Customs Regulations are satisfied. While some change in the condition of the product while it is abroad is permissible, operations which either advance the value or improve the condition of the exported product render it ineligible for duty-free entry upon return to the U.S. Border Brokerage Company, Inc. v. United States, 314 F. Supp. 788 (1970), appeal dismissed, 58 CCPA 165 (1970).

Section 10.1(a), Customs Regulations {19 CFR 10.1(a)}, outlines the necessary documentation required for duty-free entry under subheading 9801.00.10, HTSUS. The first documentary requirement is a declaration by the foreign shipper (if the value of the returned articles exceed $1,000), which includes the quantity, description and value of the returned articles, the U.S. port of export, and the date of exportation from the U.S. 19 CFR 10.1(a)(1). A certificate from the master of a vessel stating that products of the U.S. are returned without having been unladen from the exporting vessel may be accepted in lieu of the declaration of the foreign shipper. 19 CFR 10.1(c).

The second documentary requirement is a certification of exportation on the bottom portion of Customs Form (CF) 3311 executed by the district director at the port from which the merchandise was exported, which similarly provides for a description of the articles and their value, the reason for the return, whether drawback was claimed on the articles, and whether the articles were previously imported under subheading 9813.00.05, HTSUS. 19 CFR 10.1(a)(3). Pursuant to 19 CFR 10.1(a)(3), the certificate of exportation on CF 3311 shall be issued on application of the importer; however, it is not required if the merchandise has been exported from the port at which entry is made and the fact of exportation appears on the records of the customhouse.

The third documentary requirement is a declaration for free entry by the owner, importer, consignee, or agent on the top portion of CF 3311 that the information provided is true and correct and that the articles meet the statutory requirements for duty-free entry under subheading 9801.00.10, HTSUS. 19 CFR

Consequently, if you plan to return the merchandise to the U.S. under subheading 9801.00.10, HTSUS, you should file a declaration by the foreign shipper if the value of the merchandise exceeds $1,000, or a certificate from the master of the vessel if the U.S. products are returned to the U.S. without having been unladen from the exporting vessel. You should also file the certificate of exportation executed by the district director at the port of exportation; however, it is possible that it was not required at Port Everglades if the merchandise was exported from and will be returned to that port, and the fact of exportation appears on the records of the customhouse. Lastly, as the consignee, you should file a declaration for free entry attesting that the information submitted is correct to claim 9801.00.10 treatment.

You should also be aware that in 58 Fed. Reg. 4615, January 15, 1993 (copy enclosed), we published a notice of a proposed rulemaking to amend 19 CFR 10.1 to remove the requirement of executing and filing the certificate of exportation as long as the other documents or evidence that are required substantiate the claim for duty-free entry under subheading 9801.00.10, HTSUS. In particular, Customs is proposing to eliminate the basic requirement in sections 10.1(a)(2) and (3) that the owner, importer, consignee or agent file CF 3311 (including the certificate of exportation) because some of the information provided on CF 3311 already appears on the declaration of the foreign shipper. However, it is proposed to amend section 10.1(a) further by requiring submission of a declaration by the owner, importer, consignee or agent setting forth those essential elements presently incorporated on CF 3311 which do not duplicate information required on the foreign shipper's declaration (such as whether drawback was previously claimed on the articles, whether the merchandise was previously imported under subheading 9813.00.05, HTSUS, and the signed declaration of the owner or ultimate consignee). This new declaration, which would refer to the foreign shipper's declaration, could either be included as an addendum to that declaration or submitted separately and would have to substantially follow the format set forth in the proposed regulatory text. We expect that a final rule concerning these proposals will be published in the near future.

HOLDING:

On the basis of the information submitted, the U.S.-origin merchandise exported from a port of the U.S. is eligible for duty- free treatment under subheading 9801.00.10, HTSUS, upon its return to the U.S., provided you submit a declaration by the
foreign shipper or a certificate from the master of the vessel if the merchandise is not unladen from the exporting vessel, a certificate of exportation (bottom portion of CF 3311), and a declaration for free entry by the owner, importer, consignee, or agent (top portion of CF 3311) attesting that the information submitted is true and correct and that the articles meet the statutory requirements for duty-free entry under subheading 9801.00.10, HTSUS.

Sincerely,

John Durant, Director

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