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NY M85607




August 8, 2006

CLA-2-98:RR:NC:3:353 M85607

CATEGORY: CLASSIFICATION

TARIFF NO.: 9801.00.2000

Ms. Cindy Taber-Korenberg
Sandler, Travis & Rosenberg, P.A.
551 Fifth Avenue
New York, NY 10176

RE: The applicability of tariff classification in subheading 9801.00.2000, HTS, to socks from China, warehoused and packed in Canada. 

Dear Ms. Taber-Korenberg:

In your letter dated July 17, 2006, on behalf of American Essentials, Inc., you requested a ruling on whether socks were eligible for treatment in subheading 9801.00.2000, Harmonized Tariff Schedule of the United States (HTSUS).

The imported product consists of socks. The socks are made in China and imported into the United States by American Essentials, Inc., who will pay the appropriate duties upon entry and supply required visas for any merchandise subject to quota. Following importation, American Essentials, Inc. will export the socks to a related company in Canada, McGregor Industries Inc., who under terms of an agreement will warehouse the merchandise and provide pick-and-pack services on some or all of the merchandise; there will be no other manipulation of the goods in Canada. American Essentials, Inc. will then re-import the merchandise as needed into the United States.

A warehousing agreement will be executed between the parties. You state that the legal relationship between American Essentials, Inc. and McGregor Industries Inc. is one of bailor to bailee.

Section 141.2 of the Customs Regulations (19 CFR 141.2) states that "Dutiable merchandise imported and afterwards exported even though duty thereon may have been paid on the first importation, is liable to duty on every subsequent importation into the Customs territory of the United States" unless specifically exempted. Subheading 9801.00.2000, HTS, provides for duty-free treatment for "articles previously imported, with respect to which the duty was paid upon such previous importation or which were previously free of duty pursuant to the Caribbean Basin Economic Recovery Act of Title V of the Trade Act of 1974 if (1) reimported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad, after having been exported under lease or similar use agreements, and (2) reimported by or for the account of the same person who imported it into, and exported it from, the United States.”

Customs does not consider the mere packaging of a good for retail sale as an advancement in value or improvement in condition. See John v. Carr & Sons, Inc., 69 Cust.Ct. 78, C.D. 4377 (1972), aff'd, 61 CCPA 52, C.A.D. 1118 (1974). See also Headquarters Ruling Letter ("HRL") 555624, dated May 1, 1990, which ruled that perfumes packaged into sample pouches abroad were not advanced in value or improved in condition for purposes of subheading 9801.00.10, HTS, treatment.

Section 10.108, Customs Regulations (19 CFR 10.108), provides, in relevant part, that free entry shall be accorded under subheading 9801.00.20, HTS, whenever it is established to the satisfaction of the district director that the article for which free entry is claimed was exported from the United States under a lease or similar use agreement. According to Black's Law Dictionary 179 (5th ed. 1979), a bailment is "a delivery of goods of personal property, by one person to another, in trust for the execution of a special object upon or in relation to such goods, beneficial to either the bailor or bailee or both, and upon a contract, express or implied, to perform the trust and carry out such object, and thereupon either to redeliver the goods to the bailor or otherwise dispose of the same in conformity with purpose of the trust.” Headquarters ruled, in HRL 560511, dated November 18, 1997, that "bailment" is a "similar use agreement" for the purposes of subheading 9801.00.2000, HTS.

You assert that your client’s transaction meets all the requirements for consideration of duty free entry under subheading 9801.00.2000, HTS. Specifically, you indicate that the some or all of the socks, being previously imported and duty paid where applicable, would be subject solely to repackaging operations and would not be otherwise advanced in value or improved in condition by any process or manufacture while in Canada. Further, the subject socks would be exported under conditions that would constitute exportation pursuant to a lease or similar use agreement and that your client, American Essentials, Inc., would be the importer, exporter and reimporter of the merchandise.

Based on the information submitted, the socks that are manufactured in China and packaged in Canada will be eligible for duty-free treatment under subheading 9801.00.2000, HTS, when returned to the United States, provided that the district director at the port of entry is satisfied that American Essentials, Inc. previously imported the socks and paid duty thereon; they are reimported by or for the account of American Essentials, Inc.; American Essentials, Inc. exported the socks from the U.S. under a lease or a similar use agreement; and the documentary requirements of section 10.108, Customs Regulations, are satisfied.

Based on directives from the Committee for the Implementation of Textile Agreements (CITA), if entered under subheading 9801.00.2000, HTSUS, the socks are exempt from quota/visa requirements.

This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Kenneth Reidlinger at 646-733-3053.

Sincerely,

Robert B. Swierupski
Director,

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