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HQ 555664


August 8, 1990

CLA-2 CO:R:C:V 555664 KAC

CATEGORY: CLASSIFICATION

TARIFF NO.: 9801.00.10

Mr. William J. LeClair
Trans-Border Customs Services, Inc.
One Trans-Border Drive
P.O. Box 800
Champlain, New York 12919

RE: Applicability of duty exemption in HTSUS subheading 9801.00.10 to cardboard containers.Advance in value;improve in condition;folding;GRI 5(b);731806

Dear Mr. LeClair:

This is in response to your letter dated May 11, 1990, on behalf of Dorel Manufacturing, requesting a ruling on the applicability of subheading 9801.00.10, Harmonized Tariff Schedule of the United States (HTSUS), to cardboard containers imported from Canada.

FACTS:

Dorel plans on purchasing "knock-down" cardboard containers from a U.S. box manufacturer and shipping them to Canada. The "knock-down" cardboard containers are completed, unformed cardboard boxes in a flat condition. In Canada, the containers will be formed by folding the appropriate pieces to form a box. The containers will then be filled with baby strollers, presumably of foreign origin, and sealed with tape for shipment to the U.S. The containers are not reusable, but designed for one time use only.

ISSUE:

Whether the cardboard containers will be entitled to the duty exemption available under subheading 9801.00.10, HTSUS, when imported into the U.S.

LAW AND ANALYSIS:

With respect to containers, General Rule of Interpretation 5(b), HTSUS, provides that "packing materials and packing containers entered with the goods therein shall be classified with the goods if they are of a kind normally used for packing such goods. However, this provision does not apply when such packing materials or packing containers are clearly suitable for repetitive use." Therefore, the value of a non-reusable container normally used for packing such goods is considered a part of the value of its contents and is dutiable at the rate of its contents. However, we have held that upon submission of satisfactory proof that a container is of U.S. origin and that it is returned without having been advanced in value or improved in condition while abroad, it is entitled to duty-free treatment under subheading 9801.00.10, HTSUS. The act of being filled with its contents is not considered to constitute such an advancement or improvement. See, Headquarters Ruling Letter (HRL) 731806 dated November 18, 1988.

HTSUS subheading 9801.00.10 provides for the free entry of U.S. products that are exported and returned without having been advanced in value or improved in condition by any means while abroad, provided the documentary requirements of section 10.1, Customs Regulations (19 CFR 10.1), are met. 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. See, Border Brokerage Company Inc. v. United States, 65 Cust.Ct. 50, C.D. 4052, 314 F.Supp. 788, appeal dismissed, 58 CCPA 165 (1970).

In this case, we are of the opinion that the U.S. origin cardboard containers are entitled to the duty exemption available under subheading 9801.00.10, HTSUS. Forming the box by folding is a change in the condition of the box, but it is not an advancement in value or improvement in condition. The boxes are shipped to Canada in their flat condition for ease of transportation and their value is no greater upon return to the U.S. than when exported to Canada.

HOLDING:

On the basis of the information submitted, as the cardboard containers will not be advanced in value or improved in condition abroad as a result of the foreign operations, they will qualify for the duty exemption under HTSUS subheading 9801.00.10, upon compliance with the documentary requirements of 19 CFR 10.1.

Sincerely,

John Durant, Director
Commercial Rulings Division

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