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HQ 555400


August 15, 1990

LA-2 CO:R:C 555400 RA

CATEGORY: CLASSIFICATION

TARIFF NO.: 4819.10.00

Mr. Juan Lans c/o Intergrafica, S.A. De C.V.
Rio Nilo No. 6
Col. Cuauhtemoc
Mexico, D.F. 06500

RE: Tariff treatment of corrugated boxes from Mexico imported filled with foreign merchandise.GSP;GRI 5(b), HTSUS

Dear Mr. Lans:

This is in response to your undated letter, received in this office on May 24, 1989, requesting information regarding the tariff status of corrugated cardboard boxes made in Mexico from U.S. materials and exported to this country containing foreign merchandise. We regret the delay in responding to your request.

FACTS:

You indicate that the boxes are made from raw material (liner and medium papers) of U.S. origin and will be used to ship Mexican products such as ceramic tiles to the U.S. You advise that the boxes are suitable for repetitive use and ask whether they would be free of duty, dutiable only on the value added abroad, or dutiable on their full value.

ISSUE:

What is the tariff status of cardboard boxes made in Mexico from U.S.-made materials when imported into the U.S. filled with Mexican products?

LAW AND ANALYSIS:

General Rule of Interpretation 5(b), Harmonized Tariff Schedule of the United States (HTSUS), provides that packing containers entered with the goods therein will be classified with the goods unless the containers are clearly suitable for repetitive use, in which case they would be separately
classifiable from their contents. We will assume for purposes of this ruling that the boxes in question are clearly suitable for repetitive use.

The fact that U.S.-made materials are used in making the boxes in Mexico will not be the basis for according a partial or complete exemption from duty to the boxes upon their importation into the U.S. Cartons, boxes, or cases of corrugated paper or paperboard are classifiable under subheading 4819.10.00, HTSUS, which provides for a duty rate of 2.8 percent ad valorem.

However, the boxes may be eligible for duty-free treatment under the Generalized System of Preferences (GSP). Under this program, eligible articles imported directly from a designated beneficiary developing country (BDC) into the U.S. qualify for free entry if the sum of the cost or value of the materials produced in the BDC, plus the direct costs involved in processing the article in the BDC, is at least 35% of the article's appraised value at the time it is entered into the U.S. See section 10.176(a), Customs Regulations (19 CFR 10.176(a)).

Mexico is a BDC and subheading 4819.10.00, HTSUS, is a GSP-eligible provision. Therefore, assuming that the boxes are imported directly to the U.S. from Mexico, they will receive duty-free treatment if the GSP 35% value-content requirement is met.

The cost or value of materials which are imported into the BDC and used in the production of the GSP eligible article (as in this case) may be included in the 35% value-content computation only if the materials undergo a double substantial transformation in Mexico. That is, the U.S. liner and medium papers must be substantially transformed in Mexico into a new and different intermediate article of commerce, which is itself substantially transformed in the production of the final article. Without more detailed information concerning the processing of the boxes in this case, we are unable to determine whether the U.S. materials are subjected to the above-described double substantial transformation. However, regardless of whether the cost of the U.S. materials may be counted toward the 35% requirement, if the direct costs of processing performed in Mexico equal or exceed 35% of the appraised value of the boxes, they will be entitled to free entry under the GSP.

For your information, we are enclosing a copy of the Customs Regulations relating to the GSP (19 CFR 10.171- 10.178).

HOLDING:

Corrugated paper boxes made in Mexico from U.S. materials and imported containing Mexican products would be dutiable at the rate applicable to boxes' contents unless it is determined that they are clearly suitable for repetitive use. If clearly suitable for repetitive use, the boxes would be separately classifiable and dutiable at the rate of 2.8 % ad valorem, or, if the GSP country of origin requirements are satisfied, they would be entitled to free entry under this program.

Sincerely,

John Durant, Director

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