United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 1991 HQ Rulings > HQ 0555185 - HQ 0555425 > HQ 0555241

Previous Ruling Next Ruling

HQ 555241

July 3, 1989

CLA-2:CO:R:C 555241 RA


TARIFF NO.: 9802.00.80, HTSUS

John J. Scanlon, Jr., Esq.
Kemp, Smith, Duncan & Hammond
2000 MBank Plaza
P.O. Drawer 2800
El Paso, Texas 79999-2800

RE: Applicability of subheading 9801.00.10 or subheading 9802.00.50, HTSUS, to backing paper containing labels which is cut abroad to length and width

Dear Mr. Scanlon:

This is in response to your letter of December 30, 1988, requesting a ruling on behalf of Avery Commercial Products Division, Inc., concerning the tariff treatment of various types of office labels exported in bulk on backing paper and processed into small packaged rolls of labels abroad. You also request advice on the country of origin marking requirements applicable to the returned product.


Self-adhesive office labels or colored dots affixed to backing paper, all of U.S. origin, are sent to Mexico in large rolls which are then fed into an automatic cutting machine which cuts the backing paper containing the labels or dots into specified widths and lengths. The resulting small rolls of paper with the labels or dots attached are inserted into cardboard boxes of U.S. manufacture. The boxes are exported to Mexico in finished condition ready to be folded manually and closed after the rolls have been inserted.


Will the packaged rolls of labels or dots qualify for tariff treatment as American goods returned or as altered articles under the provisions of subheading 9801.00.10, Harmonized Tariff Schedule of the United States (HTSUS) or subheading 9802.00.50, HTSUS?


Subheading 9801.00.10, HTSUS, provides that products of the U.S. may be admitted free of duty if they have not been advanced in value or improved in condition by any process of manufacture or other means while abroad. It is your contention that this provision should be applicable to the labels or dots attached to the backing paper as they are the identical items exported from the U.S. and have undergone no change while abroad. However, the backing paper has been cut to both length and width which processing abroad constitutes an advancement in value and an improvement in condition. The returned rolls of paper strips with labels or dots attached are not the same articles which were exported from the U.S. They have been advanced into a usable, easily dispensed tape with removable labels or dots which cannot be constructively segregated from the paper backing. The cutting of the exported rolls to shorter lengths and specific widths for retail sale results in a marketable product in an improved condition. The court decisions cited in your letter did not involve cutting to length or width. In Headquarters Ruling Letter 555174, dated April 25, 1989, copy enclosed, we held that plastic decorated banners cut to shorter lengths and packaged in Mexico were not eligible for the duty exemption in subheading 9801.00.10, HTSUS, or the partial exemption for altered articles in subheading 9802.00.50, HTSUS.

To be eligible for treatment under subheading 9802.00.50, HTSUS, as articles returned after alterations performed abroad, the articles must have been completed and finished products when exported from the U.S., and intermediate processing operations performed to manufacture finished articles are considered to exceed alterations. Dolliff & Company, Inc. v. U.S., 66 CCPA 77, C.A.D. 1225, 599 F. 2d 1015 (1979). The cutting of the exported rolls of labels or dots in order to obtain smaller widths and lengths constitutes a finishing step in the manufacture of the completed imported product.

The boxes of U.S. origin into which the finished product will be packaged in Mexico will be entitled to duty-free treatment as American goods returned under subheading 9801.00.10, HTSUS. See Headquarters ruling letter dated November 18, 1988 (HQ 731420).

Regarding country of origin marking requirements, section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), generally provides that all articles of foreign origin (or their containers) imported into the United States are required to be legibly, conspicuously, and permanently marked to indicate the country of origin to an ultimate purchaser in the United States. For purposes of this statute, "country of origin" means the country of manufacture, product or growth of any article of foreign origin entering the United States. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the "country of origin" (19 CFR 134.1). In Upjohn Co. v. United States, 623 F. Supp. 1281 (CIT 1985), the U.S. Court of International Trade stated that:

[e]xported American products retain their identity as American products, provided they are not transformed into new products while abroad.

In the instant case, we believe that for purposes of marking, the imported rolls of labels are products of the U.S. Although the exported product is advanced in value and improved in condition in Mexico by the cutting operation, it is our opinion that this processing does not substantially transform the article into a product of Mexico. Accordingly, the returned labels will remain products of the U.S. for country of origin marking purposes and are excepted from the marking requirements of 19 U.S.C. 1304.


The cutting to width and length of backing paper containing self-adhesive labels to produce smaller rolls in tape dimensions constitutes an advancement in value and improvement in condition exceeding an alteration, and precludes classification under subheading 9801.00.10 or subheading 9802.00.50, HTSUS. However, the U.S. boxes will be entitled to duty-free treatment under subheading 9801.00.10, HTSUS. The returned product is excepted from the marking requirements of 19 U.S.C. 1304.


John Durant, Director
Commercial Rulings Division

Previous Ruling Next Ruling

See also: