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HQ 559547




July 14, 1997

CLA-2 RR:TC:SM 559547 KBR

CATEGORY: CLASSIFICATION

TARIFF NO: 9801.00.10; 9801.00.60

Port Director
U.S. Customs Service
San Francisco, CA 94105

RE: Application for Further Review of Protest No. 2809-95-100864; applicability of duty exemption under HTSUS subheading 9801.00.60, or HTSUS subheading 9801.00.10, to articles of jewelry exported to Hong Kong and Taiwan; HQ 067426; HQ 559492; HQ 559008; HQ 557731; HQ 221961; C.S.D. 92-23

Dear Sir:

The above-referenced protest, timely filed on behalf of Sue Trading Co., concerns your classification and duty assessment for articles of jewelry exported to Hong Kong and Taiwan and then returned. Protestant claims that the articles at issue are eligible for a complete duty exemption under subheading 9801.00.60, Harmonized Tariff Schedule of the United States (HTSUS), or 9801.00.10, HTSUS.

FACTS:

The protest involves Sue Trading Co. importing jewelry from Hong Kong and Taiwan which was originally exported from the U.S. According to Sue Trading Co., the intent with respect to the merchandise subject to the protest was to bring jewelry from the U.S. to exhibit at jewelry shows in Hong Kong and Taiwan. Sue Trading Co. submitted letters from various companies from which Sue Trading Co. purchased the jewelry. These letters indicate that the jewelry is used or estate jewelry. Some of the jewelry may have been of U.S. origin and some of the jewelry was of foreign or unknown origin.

Sue Trading stated that the intention was to exhibit jewelry at three trade shows: "Hong Kong Jewelry and Watch Fair 94", "Jewelry Taipei 94", and "Hwa Fua Exhibition". The brochures relating to the "Hong Kong Jewelry and Watch Fair 94" state that the fair is open to trade buyers only and that badges are non-transferrable. The brochure from "Jewelry Taipei 94" states that the admission policy is "Strictly for professional and trade visitors only. General Public and persons under 18 will not be admitted." Another brochure from the show states that admission is "By Invitation Only". The record does not contain information as to the admittance policy of "Hwa Fua Exhibition".

The jewelry was returned to the U.S., except for a small portion which was sold at each of the three trade shows. In the three importations, three of 212, twenty-seven of 423, and seven of 476, pieces were sold. The exportation documentation states that the jewelry is being exported for "show & possible sale & return to U.S.A."

Counsel for Sue Trading also argues that Customs should be estopped from denying duty-free treatment for these importations because Customs did not deny similar importations duty-free treatment, and a Customs agent may have misinformed Sue Trading about the ability to receive duty-free treatment.

Counsel for Sue Trading believes that certain precious or semi-precious stones (in particular, item PS #1, carved jade stone, and PS #2, alexandrite stone) were incorrectly classified under subheading 7116.20.10, HTSUS, dutiable at 6.5 percent. Instead, the stones should have been classified under subheading 7103.99.10, HTSUS, dutiable at 2.1 percent. Further, counsel for Sue Trading states that an error was made as to the value of an estate watch valued at $22,667 which should have been valued at $2,667.

Duty-free treatment was denied by your office for the jewelry subject to the protest.

ISSUE:

Whether jewelry exported from the U.S. to Taiwan under the circumstances described above and returned are eligible for duty-free treatment under subheading 9801.00.60, HTSUS, or 9801.00.10, HTSUS.

LAW AND ANALYSIS:

9801.00.60, HTSUS

Subheading 9801.00.60, HTSUS, (formerly item 802.30, Tariff Schedules of the United States (TSUS)), provides for the free entry of articles which are returned after having been exported for temporary use abroad solely for exhibition or use in connection with any public exposition, fair, or conference, provided such articles are returned by or for the account of the person who exported them.

The Customs Service has addressed the requirements of subheading 9801.00.60, HTSUS, in a number of rulings. In HQ 067426, dated December 8, 1981, medical equipment was exported to Canada for exhibition and demonstration at a joint meeting of the International Society of Hematology and the International Society of Blood Transfusion. The meeting or conference was open only to members of these two societies, and not to the public at large. Therefore, it was found not to be a "public" conference, within the meaning of item 802.30, Tariff Schedules (TSUS)(now subheading 9801.00.60 HTSUS), and entry of the equipment under that provision was precluded.

In HQ 221961 dated May 15, 1990, which was a response to an internal advice request, a corporation exhibited jewelry and semi-precious and precious gemstones at the Hong Kong Watch and Jewelry Fair, and subsequently returned the articles to the U.S. We held that because the primary intention of the importer was to exhibit the goods at the trade fair and return them to the U.S., entry of the goods under subheading 9801.00.60, HTSUS, was not precluded. The fact that a secondary objective of the importer was the acquisition of future orders at the fair did not negate the primary intention of the company at the time of exportation to exhibit its wares. We found that the sole act of taking future orders, without delivery of any goods at the show, was not a sale of goods so as to preclude classification under subheading 9801.00.60, HTSUS. This finding was affirmed in HQ 222792 dated January 10, 1991, which was a reconsideration of HQ 221961. We noted in HQ 222792 that the trade fair's own rules prohibiting sales buttressed the importer's argument that its intent was not to sell goods at the fair.

In HQ 222792, Customs tangentially addressed the "public" requirement of subheading 9801.00.60, HTSUS. Even though the Hong Kong Watch and Jewelry Fair was allegedly open only to members of the watch and jewelry trades, Customs found no indication that the fair excluded the general public. More specifically, we stated that no evidence was presented, by way of brochures or other tangible proof, that "if the general public showed up at the fair and offered to pay admission (assuming one was needed) they would be excluded." We stated that the general public can be distinguished from those who belong to a private club or association where admission is restricted to members only. However, although the present case concerns a show by similar name, it is a later year, 1994, and the admission policy is specifically limited as stated in the brochure.

In HQ 092277 dated December 9, 1968, machinery and equipment was to be displayed by sales representatives at an exposition held in conjunction with a nonprofit professional association's convention in Canada, and subsequently was to be returned to the U.S. A registration fee was charged for the convention, and the association targeted its advertising at its members and their guests. However, the association stated that if any person interested in the displayed equipment wished to attend the convention, he or she could do so. Therefore, Customs ruled that the convention was open to the "public" and was not a private sales exposition. Provided the documentary requirements were met, i.e., section 10.66, Customs Regulations (19 CFR 10.66), the equipment would be eligible for duty-free treatment under item 802.30, TSUS, upon its return to the U.S.

In C.S.D. 92-23 (HQ 556092 dated October 22, 1991) fur goods were exported to Canada from the U.S. for display at an annual "fur show", for the purpose of soliciting sale orders from attendees. Admission to the show was not restricted to members of a private trade association; however, only someone with a reasonable business interest in attending the show was permitted to attend. The show was advertised through trade or professional journals, and through invitations or letters sent to prospective attendees. Preregistration was required because of space limitations, and no items were actually sold and delivered at the show. It was held that a fair or conference may be considered "public" so long as it does not deny admission, for reasons other than space limitation, to persons who have a reasonable business interest in attending the event. Therefore, the returned fur goods were determined to be eligible for duty-free treatment under subheading 9801.00.60, HTSUS.

With respect to the instant case, the record before us reveals that the Jewelry Taipei 94 show was not open to the public. Brochures stated that it was "Invitation only" and "Strictly for professionals and trade visitors only. General Public and persons under 18 will not be admitted." With regard to Hong Kong Jewelry and Watch Fair 94, the brochures also showed a restricted admission policy, "open to trade buyers only" and "badges ... are non-transferrable...." No information was submitted to establish that the Hwa Fua Exhibition was open to the public, and Customs will not assume this requirement to be met. Therefore, the jewelry returned from these shows does not qualify for duty-free treatment under subheading 9801.00.60, HTSUS.

9801.00.10, HTSUS

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 (19 CFR 10.1), 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). See HQ 557668 (March 3, 1994).

In the instant protest, Sue Trading has not fully complied with the documentary requirements of 19 CFR 10.1. Further, Sue Trading has not adequately established that the jewelry is of U.S. origin. No manufacturers' affidavits were supplied. The letters which were submitted indicate that the country of origin of much of the jewelry is unknown, of foreign origin, or simply "used " in the U.S. but not necessarily made in the U.S. Therefore, we find that the jewelry is ineligible for duty-free treatment under subheading 9801.00.10, HTSUS.

Classification and Value

Your office states that you agree with counsel for Sue Trading that certain precious or semi-precious stones (described above) were incorrectly classified under subheading 7116.20.10, HTSUS. You agree that the stones should correctly be classified under subheading 7103.99.10, HTSUS. You also agreed with counsel for Sue Trading that the value of the estate watch was incorrectly listed as $22,667 when it should have been listed as $2,667. We accept your conclusions and grant the protest for the classification of the precious or semi-precious stones and the incorrectly listed value of the estate watch.

HOLDING:

The evidence submitted does not establish that this merchandise is entitled to duty- free treatment under subheading 9801.00.60, HTSUS, or subheading 9801.00.10, HTSUS. We agree with your conclusions that the classification and duty rate for the precious or semi-precious stones, as discussed above, was incorrectly determined to be within subheading 7116.20.10, HTSUS, but instead should correctly be classified under subheading 7103.99.10, HTSUS. We also agree with your conclusion that the value of an estate watch was incorrectly listed as $22,667 when it should have been listed as $2,667. Accordingly, this protest should be denied in part and granted in part.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision, together with the Customs Form 19, should be mailed by your office to the Protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, Freedom of Information Act, and other public access channels.

Sincerely,

John Durant, Director
Tariff Classification Appeals
Division

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