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 > 1996 HQ Rulings > HQ 559510 - HQ 559720 > HQ 559611

Previous Ruling Next Ruling
HQ 559611

May 7, 1996

CLA-2 RR:TC:SM 559611 DEC


TARIFF NO.: 9801.00.10 & 9802.00.50

Mr. Ken Crawford
International Herbs, Ltd.
3689 184th Street
Surrey, British Columbia
Canada V4P 1M5

RE: Herbs; 9801.00.10, HTSUS; Border Brokerage Company, Inc. v. United States,
C.D. 4052, 65 Cust. Ct. 50, 314 F.Supp. 788, 792 (1970), appeal dismissed, 58
CCPA 165 (1970); HRL 555148; HRL 555685; Wilbur G. Hallauer v. United
States, 40 CCPA 197, C.A.D. 518 (1953); HRL 556685; HRL 554654; HRL

Dear Mr. Crawford:

This is in response to your two letters dated September 6, 1995, and October 23, 1995, that our office received on December 20, 1995, from our New York office regarding the applicability of heading 9801, Harmonized Tariff Schedule of the United States (HTSUS), to U.S.-grown herbs that are processed and packaged in Canada. In addition, this ruling letter will also address the applicability of heading 9802, HTSUS.


You state that your company, International Herbs Ltd., is a grower, importer, packager, and shipper of fresh cut herbs, gourmet baby lettuces, gourmet baby vegetables, and edible flowers for culinary purposes. Currently, you import herbs grown in the United States into Canada. Once the herbs are in Canada, you clean, trim the bottom of the stems to remove excess field soil, package, and label these herbs into various sized containers for the retail and food service industries. In a telephone conversation on May 1, 1996, with a member of my staff, you indicated that the
packages of herbs that you intend to import vary in size from one ounce to one pound bags. All of the herbs contemplated in your ruling request are to be imported into the United States as fresh herbs. You stated that you do not grind, chop, or slice the herbs, but only trim the stems of the herbs so that they are of uniform size and can be easily packaged. You ask whether the herbs to be imported from Canada after they are processed are eligible for duty-free treatment pursuant to subheading 9801.00.10, HTSUS.


Will herbs of U.S.-origin that are cleaned, trimmed at the bottom to remove soil, trimmed to size, and packed in containers for the retail or food service market be eligible for duty-free treatment under subheading 9801.00.10, HTSUS, when returned to the U.S. or will they be eligible for partial relief from duty under subheading 9802.00.50, HTSUS?


HTSUS subheading 9801.00.10 provides for the duty-free entry of products of the U.S. that are returned after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad, provided there has been compliance with the documentary requirements of section 10.1, Customs Regulations (19 CFR 10.1).

In Border Brokerage Company, Inc. v. United States, C.D. 4052, 65 Cust. Ct. 50, 314 F.Supp. 788, 792 (1970), appeal dismissed, 58 CCPA 165 (1970), tomatoes repacked in 18-pound cartons were imported from Canada. The tomatoes had been exported in 40- pound cartons from the U.S. to Canada where they were unloaded, unpacked, sorted, graded by color and size, repacked in smaller cartons and sold to customers in the U.S. at prices higher than those paid by the exporter. There was no intermixing of sizes in the repacking, but about 4% of the tomatoes were culled out as spoiled or broken down. The court stated that:

...the test to be applied in item 800.00 [Tariff Schedules of the
United States (TSUS), the precursor tariff provision to HTSUS subheading 9801.00.10] cases is whether the merchandise of
American origin has itself (apart from its container) been the object of advancement in value or improvement in condition while abroad.

The court found that nothing more was done to the tomatoes themselves in Canada than that which is entailed in their physical transfer, with selectivity, from one size carton to a carton of a smaller size. In addition, the court found that the mere sorting of the tomatoes as found in their natural condition did not constitute an advancement in value or an improvement in their condition.

Customs has consistently held that the packaging abroad of U.S.-made products will not preclude classification under subheading 9801.00.10, HTSUS, when there is no improvement in condition or advancement in value of the products themselves, apart from their containers. For example, in Headquarters Ruling Letter (HRL) 555685, dated August 15, 1990, we allowed infant formulas that were exported in a finished condition to Canada and packaged into consumer size cans without being subjected to any other operations prior to their return, to be eligible for classification under 9801.00.10, HTSUS, when they were imported into the United States. In HRL 555148, dated March 15, 1990, we found that soybean and corn oil that was shipped to Canada and packaged into consumer size bottles and then labeled did not undergo any further processing, such as blending or mixing, in Canada. Accordingly, Customs allowed the oils to be classified pursuant to subheading 9801.00.10, HTSUS, when the oils were imported into the United States.

In this case, however, the herbs that will be sent abroad will undergo various additional processes before they are returned to the United States. You describe the processing as involving cleaning, trimming of the stems, packaging, and labeling of the herbs in various retail containers. We find that this case is substantially different from the precedents that are cited above. In fact, the court in Border Brokerage, in support of its finding that the subject tomatoes were not advanced in value or improved in condition abroad, indicated that the tomatoes were not cleaned, wiped, or individually wrapped while abroad. The absence of these processes weighed in favor of the court's conclusion that the mere repackaging of the tomatoes did not disqualify the duty-free treatment accorded to American goods returned. In this case, the combination of cleaning and trimming serve to advance in value and improve the condition of the herbs that are to be exported to Canada. Accordingly, the herbs are not entitled to classification under subheading 9801.00.10, HTSUS.

Alternatively, articles returned to the United States after having been exported to be advanced in value or improved in condition by repairs or alterations may qualify for the partial duty exemption under subheading 9802.00.50, HTSUS, provided the foreign operation does not destroy the identity of the exported articles or create new or commercially different articles through a process of manufacture. See, A.F. Burstrom
v. United States, 44 CCPA 27, C.A.D. 631 (1956), aff'd, C.D. 1752, 36 Cust. Ct. 46 (1956); Guardian Industries Corp. v. United States, 3 CIT 9 (1982). Accordingly, entitlement to this tariff treatment is precluded where the exported articles are incomplete for their intended purpose prior to the foreign processing and the foreign processing operation is a necessary step in the preparation or manufacture of finished articles. Dolliff & Company, Inc. v. United States, 455 F. Supp. 618 (CIT 1978), aff'd, 559 F.2d 1015 (Fed. Cir. 1979). Articles entitled to this partial duty exemption are dutiable only upon the cost or value of the foreign repairs or alterations when returned to the United States, provided the documentary requirements of section 181.64, Customs Regulations (19 CFR 181.64), are satisfied.

In HRL 556685, dated June 26, 1992, Customs concluded that the removal of stems from jalapeno peppers would not preclude the peppers from receiving the benefits of subheading 9802.00.50, HTSUS, since stemmed peppers are not commercially different articles from unstemmed peppers. In addition, Customs has ruled that certain cleaning operations constitute alterations. See HRL 555180, dated December 26, 1989 (carrots exported to Mexico for washing, cooling, sorting by size, grading for quality, and packaging for retail sale were entitled to the partial duty exemption provided for under subheading 9802.00.50, HTSUS). In addition, the Court of Customs and Patent Appeals concluded that certain operations performed in Canada to U.S.-origin apples, including cleaning, grading, wrapping, and packing, were deemed to be alterations. Wilbur G. Hallauer v. United States, 40 CCPA 197, C.A.D. 518 (1953). You describe the operations to be performed as involving the trimming of the herbs' stems to remove excess soil and "conform to eye appeal." The fresh herbs will be trimmed in order to make the herbs more uniform in size for ease of packaging in fresh bunches. We note that in a case involving slicing of fruit abroad, we held that the slicing of peaches exceeded the scope of the term "alteration" under item 806.20, TSUS (the precursor to subheading 9802.00.50, HTSUS). See HRL 554654, dated July 28, 1987. In HRL 554654, we determined that the slicing of exported whole peaches, including removal of the pits and skins, not only destroyed the identity of the exported peaches, but resulted in new articles of commerce, more suitable and better adapted not only for ice cream but other industries as well. In addition, we held in HRL 555462, dated September 11, 1989, that dicing and individually quick-freezing apples abroad did not constitute an acceptable alteration for purposes of subheading 9802.00.50, HTSUS. In that case, we stated that the dicing of apples resulted in new and different commercial articles having uses different from those of whole apples. In contrast, the fresh herbs that will be trimmed to make their sizes more uniform for shipping and eye appeal will not result in a new and different product. Consequently, since the herbs are not chopped, ground, or sliced, they will be eligible for a partial duty exemption under subheading 9802.00.50, HTSUS.


On the basis of the information submitted, we find that herbs that will be subject to cleaning, trimming the stems to remove excess field soil and to make them more uniform in size, packaging, and labeling of the herbs into various sized containers for the retail and food service industries in Canada are precluded from classification under subheading 9801.00.10, HTSUS. However, the Canadian processing constitutes an "alteration" entitling the imported herbs to a partial duty exemption within the meaning of subheading 9802.00.50, HTSUS, assuming compliance with the documentary requirements of 19 CFR 181.64 (copy enclosed).

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.


John Durant, Director
Tariff Classification Appeals

Previous Ruling Next Ruling

See also: