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HQ 563374




October 11, 2006

CLA RR:CTF:VS 563374 KSG

CATEGORY: CLASSIFICATION

Port Director
Bureau of Customs and Border Protection
1901 Cross Beam Drive
Charlotte, NC 28217

RE: Request for Internal Advice; subheading 9801.00.10 treatment for socks boarded overseas

Dear Director:

This is in response to your request for Internal Advice dated September 14, 2005, initiated by counsel for Sara Lee Sock Company by letter of June 24, 2005, concerning the eligibility of certain socks for subheading 9801.00.10, Harmonized Tariff of the United States (“HTSUS”) treatment. At the request of counsel, a conference was held on this matter at Headquarters on December 6, 2005.

FACTS:

The imported socks are in chief weight of cotton or of man-made fibers, that are knitted from various blends of cotton and man-made fibers. The socks include styles for men, women and children, and may be ankle length, over-the calf tube, crew, active, cushion, etc., which the importer classified in subheadings 6115.92.90 or 6115.93.90, HTSUS. The socks may be imported in single or multiple unit sets, sealed in a polybag, or banded.

The socks are knit-to-shape, completely formed and the toe closed, and bleached in the United States. The socks are then waded up in bales and exported to various countries to be boarded and packaged for retail sale.

Boarding is a process whereby a sock is stretched over heated metal foot-shaped forms of specified shapes and sizes to flatten and enhance its appearance while setting the layout for packaging. No chemicals are added to the socks during this operation. After being boarded, the socks are paired and inspected. The paired socks are then folded together and packaged into the retail product. The importer contends that the boarding operation aids in the efficiency and speed of the packaging and in the identification of defects during inspection.

ISSUE:

Whether the socks are eligible for subheading 9801.00.10 after being processed abroad as described above.

LAW AND ANALYSIS:

Subheading 9801.00.10, HTSUS, provides that 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 can be entered duty free provided the documentary requirements of 19 CFR 10.1 are satisfied.

In Border Brokerage Company, Inc. v. United States, 314 F. Supp. 788 (1970), the court held that tomatoes of American origin were entitled to duty free entry under item 800.00, Tariff Schedules of the United States (TSUS) (the predecessor to subheading 9801.00.10, HTSUS). The tomatoes were shipped to Canada where they were unloaded, unpacked, sorted, graded by color and size, and repacked. The court stated that the test to be applied in item 800.00 cases is whether the merchandise of American origin has itself (apart from its container) been the object of advancement in value or improvement in condition while abroad. In John V. Carr & Son, Inc. v. United States, 69 Cust. Ct. 78 (1972), the court held that U.S.-origin fish hooks sent to Hong Kong to be sorted and packaged into tin containers were eligible for subheading 9801.00.10, HTSUS treatment. The court emphasized that there was no alteration or change in the fish hooks; they were merely sorted and packaged.

CBP ruled in Headquarters Ruling Letter (“HRL”) 561490, dated November 22, 1999, that steam setting socks in Mexico was an advancement in value and improvement in condition and therefore, the socks were not eligible for subheading 9801.00.10, HTSUS treatment. This ruling revoked a prior New York (“NY”) ruling that had found that steam setting was part of the packaging operation and not an advancement in value or improvement in condition. In connection with a comment received concerning the wetting and boarding of socks abroad, Customs stated in the modification notice, Cust. Bull. Vol. 33 No. 48, dated December 1, 1999, that while the heat-setting operation at issue was performed to flatten the socks so as to remove the “hollow tube” look and also to fix the size of the socks, in general “Customs believes that operations which serve to remove wrinkles, flatten and/or set the size of the socks are performed to enhance the appearance of the merchandise, and hence their marketability, which clearly results in an improvement in the condition of the articles and an advancement in their value, contrary to the specific wording of subheading 9801.00.10, HTSUS.” Further, CBP stated that steam setting was similar to pressing which has been held to constitute an advancement in value and improvement in condition.

In HRL 557600, dated February 24, 1994, Customs determined that jeans subjected to various packaging and labeling operations and washed and pressed were eligible for subheading 9802.00.50, HTSUS. Customs concluded that washing or pressing the jeans abroad would preclude eligibility under subheading 9801.00.10, HTSUS.

Counsel for the importer argues that HRL 561490 is incorrect and should be revoked or in the alternative, that the packaging involved in this case is distinguishable from HRL 561490. Counsel contends that the boarding process does “nothing to change the condition of the socks or enhance their value beyond the cost of packaging.” It is argued that the processing is part of the packaging operation in that it enables the packaging process to be accelerated. Counsel does acknowledge that the process “has been likened to ironing or pressing.” In the alternative, counsel argues that because the processing involved in this case does not size the sock, this case is distinguishable from HRL 561490.

It is our opinion that boarding socks is akin to pressing and would constitute an advancement in value and improvement in condition of the socks. In both HRL 561490 and HRL 557600, Customs clearly concluded that pressing abroad would preclude eligibility for goods under subheading 9801.00.10, HTSUS. Further, the wetting and boarding of socks was considered and determined to go beyond the scope of subheading 9801.00.10, HTSUS. Therefore, we conclude that whether or not the processing includes sizing the socks, the primary processing involved in this case is the pressing or flattening of the socks. Accordingly, the socks in this case would not be eligible for subheading 9801.00.10, HTSUS treatment.

HOLDING:

Boarding of socks constitutes an advancement in value and improvement in condition of the socks. The socks, processed abroad as described above, would not be eligible for subheading 9801.00.10, HTSUS treatment.

This decision should be mailed by your office to the party requesting Internal Advice no later than 60 days from the date of this letter. On that date, the Office of Regulations and Rulings will make the decision available to CPB
personnel, and to the public on the CPB Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

Monika R. Brenner, Chief
Valuation & Special Programs Branch

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