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NY N004153




December 26, 2006

CLA-2-98:RR:NC:N3:341

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, HTSUS, to cases for MP3 players from the Far East, warehoused and packed in Canada.

Dear Ms. Taber-Korenberg:

In your letter dated December 1, 2006, on behalf of The Nut Case, you requested a ruling on whether cases for MP3 players were eligible for treatment under subheading 9801.00.2000, Harmonized Tariff Schedule of the United States (HTSUS).

The imported product consists of cases for iPods and similar MP3 players. The cases are made in the Far East, primarily from China, and imported into the United States by The Nut Case, who will pay the appropriate duties upon entry and supply required visas for any merchandise subject to quota. Following importation, The Nut Case will export the MP3 cases to a related company in Canada, Mark Edwards Apparel, Inc., who under terms of an agreement will warehouse the merchandise and repackage some or all of the merchandise in individual cartons to fill U.S. resale orders. The Nut Case will then re-import the merchandise as needed into the United States.

You state that the legal relationship between The Nut Case and Mark Edwards Apparel, Inc. is one of bailor to bailee. The Nut Case retains legal ownership of the MP3 cases throughout the warehouse and any repackaging process.

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, HTSUS, 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 (HQ) 560511, dated November 18, 1997, which ruled that Chinese origin bibs packaged for retail sale in the Dominican Republic were not advanced in value or improved in condition for purposes of subheading 9801.00.10, HTSUS.

Section 10.108, Customs Regulations (19 CFR 10.108), provides, in relevant part, that free entry shall be accorded under subheading 9801.00.20, HTSUS, 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 HQ 222863, dated July 1, 1991, that "bailment" is a "similar use agreement" for the purposes of subheading 9801.00.2000, HTSUS.

You assert that your client’s transaction meets all the requirements for consideration of duty free entry under subheading 9801.00.2000, HTSUS. Specifically, you indicate that the some or all of the cases for MP3 players, being previously imported and duty paid where applicable, would be subject solely to repackaging operations (pick and pack) and would not be otherwise advanced in value or improved in condition by any process or manufacture while in Canada. Further, the subject cases would be exported under conditions that would constitute exportation pursuant to a lease or similar use agreement and that your client, The Nut Case, would be the importer, exporter and reimporter of the merchandise.

Based on the information submitted, the cases for the MP3 players that are manufactured in the Far East and packaged in Canada will be eligible for duty-free treatment under subheading 9801.00.2000, HTSUS, when returned to the United States, provided that the district director at the port of entry is satisfied that The Nut Case previously imported the cases and paid duty thereon; that The Nut Case exported the cases from the U.S. under a lease or a similar use agreement; that they are reimported by or for the account of The Nut Case; and the documentary requirements of section 10.108, Customs Regulations, are satisfied.

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 Vikki Lazaro at 646-733-3041.

Sincerely,

Robert B. Swierupski
Director,

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