HQ 559523 - Applicability of duty exemption under U.S. Note 2(b), subchapter II, Chapter 98, HTSUS, to personalized rubber stamp pads and personalized self-inking stamp machines and pads produced in Haiti; HRL 556205; HRL 555742 - United States International Trade Commision Rulings

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HQ 559523

July 2, 1996

CLA-2 RR:TC:SM 559523 KKV

CATEGORY: CLASSIFICATION

Mr. Bertrand Leon
United Quality Assembly, S.A.
10997 S.W. 113 Pl.
Miami, FL 33176

RE: Applicability of duty exemption under U.S. Note 2(b), subchapter II, Chapter 98, HTSUS, to personalized rubber stamp pads and personalized self-inking stamp machines and pads produced in Haiti; HRL 556205; HRL 555742

Dear Mr. Leon:

This is in reference to your letter dated October 27, 1995, which requests a ruling on the eligibility for duty-free treatment under U.S. Note 2(b), subchapter II, Chapter 98, Harmonized Tariff Schedule of the United States (HTSUS), with regard to personalized rubber pads and personalized self-inking stamp machines and pads produced in Haiti. No samples have been submitted for our review. We regret the delay in responding.

FACTS:

The articles at issue are a personalized rubber stamp pad and two personalized self-inking stamp machines and pads. You state that all the materials used to produce the articles in Haiti are made in the U.S.

With regard to the first item, a computer aided design program is utilized in Haiti to prepare the text and graphic of the stamp for the stamp and a negative is created. Photo-sensitive polymer resin from the U.S. is processed into a rubber stamp and cured prior to shipment to the U.S., where the stamp will be mounted to a self-inking machine.

With regard to the second item, the following materials of U.S. origin are used:

1. Photo-sensitive polymer resin
2. Rubber pad
3. Plastic top
4. Plastic cover
5. Metallic pin
6. Plastic base
7. Plastic slide (2)
8. Plastic protective cover
9. Ring for pin
10. Plastic inking pad
11. Ink pad
12. Ink

A computer aided design program is utilized in Haiti to prepare the text and graphic for the stamp and a negative is created. The polymer resin is processed into a rubber stamp and cured. The remaining U.S. components are assembled to create the self-inking stamp machine upon which the rubber stamp is mounted.

With regard to the third item, the following materials are used:

1. Photo-sensitive polymer resin
2. Rubber pad
3. Plastic top
4. Plastic cover
5. Metallic pin
6. Plastic base
7. Plastic slide (2)
8. Plastic protective cover
9. Ring for pin
10. Plastic inking pad
11. Ink pad
12. Ink

High density plastic resin from the U.S. is injection molded in Haiti to create the plastic top, the plastic cover, the plastic base, the plastic slide and the plastic inking pad, referenced above, which comprise the major components of the self-inking machine. Computer aided design is utilized in Haiti to prepare the text and graphic for the stamp, and a negative is created. The polymer resin is processed into a rubber stamp and cured. The remaining U.S. components are assembled to create the self-inking stamp machine upon which the rubber stamp is mounted.

ISSUE:

Whether the subject personalized stamp and re-inking stamp machine and pads assembled in Haiti are eligible for duty-free treatment under U.S. Note 2(b), subchapter II, Chapter 98, HTSUS.

LAW AND ANALYSIS:

Section 222 of the Customs and Trade Act of 1990 (P.L. 101- 382) amended U.S. Note 2, subchapter II, Chapter 98, HTSUS, ("Note 2(b)") to provide for duty-free treatment of articles, other than certain specified products, which are assembled or processed in a Caribbean Basin Economic Recovery Act (CBERA) beneficiary country (BC) wholly of fabricated components or ingredients (except water) of U.S. origin. This amendment was effective with respect to goods entered on or after October 1, 1990.

Specifically, Note 2(b) provides that:

(b) No article (except a textile article, apparel article, or petroleum, or any product derived from petroleum, provided for in heading 2709 or 2710) may be treated as a foreign article, or as subject to duty, if-

(i) the article is--

(A) assembled or processed in whole of fabricated components that are a product of the United States, or

(B) processed in whole of ingredients
(other than water) that are a product of the United States, in a beneficiary country; and

(ii) neither the fabricated components, materials or ingredients, after exportation from the United States, nor the article itself, before importation in the United States, enters the commerce of any foreign country other than a beneficiary country.

As used in this paragraph, the term "beneficiary country" means a country listed in General Note 7(a), HTSUS. Pursuant to General Note 7(a), HTSUS, Haiti has been designated as a BC for CBERA purposes. Note 2(b) specifies four categories of products which are excluded from duty-free treatment under this provision: textile articles; apparel articles; petroleum; and certain products derived from petroleum. Therefore, the personalized rubber stamp and re-inking stamp machines and pads are eligible for
duty-free treatment under this provision provided that all of the other requirements are satisfied.

Regarding the operations performed in Haiti to create the three products under consideration, we believe that the assembly of various components comprising the self-inking stamp machines clearly is encompassed by subsection (A) of Note 2(b)(i). The remaining operations, including the processing of the polymer resin into a rubber stamp and the injection molding of the plastic components for the self-inking stamp assembly, where applicable, would qualify as "processing of ingredients" under subsection (B) of Note 2(b)(i). See Headquarters ruling letter (HRL) 556205, dated September 19, 1991, and HRL 555742 dated November 5, 1990. Therefore, if all of the materials shipped directly from the U.S. to Haiti are of U.S.-origin and the completed personalized rubber stamps and stamp pads are shipped directly to the U.S. without entering into the commerce of any foreign country other than a BC, these articles will be entitled to duty-free treatment under Note 2(b), assuming all documentation requirements are met.

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the United States the name of the country of origin of the article. Part 134 of the Customs Regulations implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.

Regarding the country of origin marking requirements for articles that are eligible for duty-free treatment under Note 2(b), the Director of the Office of Trade Operations, Headquarters, issued instructions to Customs field offices in Headquarters telex 9264071, dated September 28, 1990, (copy enclosed). The following paragraph on marking appears in the telex:

Since the language of this provision [section 222] prohibits us from treating these articles as foreign, there appears to be no basis for requiring that the article be marked with the Caribbean country of processing or assembly. If so desired, however, they may be marked
"assembled in (name of CBI country) of U.S. components" or other similar wording. Whether or not the articles can be marked as products of the United States must be decided by the Federal Trade
Commission (FTC). Until further instructions are issued, marking requirements should be limited to these guidelines.

HOLDING:

On the basis of the information submitted, we conclude that the described personalized rubber stamp pad and personalized self-inking stamp machine and pads manufactured in Haiti wholly from materials of U.S. origin, may enter the U.S. duty-free pursuant to Note 2(b) provided that the direct shipment requirements and the documentary requirements set forth in telex 9264071 are met.

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer.

Sincerely,

John Durant, Director

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