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HQ 562618

May 21, 2003

MAR-2 RR:CR:SM 562618 KSG


Rodney Ralston
UPS Freight Services, Inc.
One Transborder Drive
Champlain, New York 12919

RE: Subheading 9802.00.50; polo shirts; embroidered

Dear Mr. Ralston:

This is in reference to New York Ruling Letter (NY) I87404, issued to you on behalf of Fersten Worldwide, on November 13, 2002, by the Director, National Commodity Specialist Division, concerning the applicability of subheading 9802.00.50, of the Harmonized Tariff Schedule of the United States ("HTSUS"), to embroidered polo shirts. We have had an opportunity to review this ruling and believe it is incorrect.


This case involves men's polo shirts that are manufactured in India and imported into the United States. The polo shirts are then exported to Canada where they will be embroidered on the left chest with company names or logos. The shirts will then be re-imported into the United States.


Whether the embroidered polo shirts are eligible for a duty exemption under subheading 9802.00.50, HTSUS, upon re-importation into the United States.


Subheading 9802.00.50, HTSUS, provides a full or partial duty exemption for articles that are returned after having been exported to be advanced in value or improved in condition by means of repairs or alterations, provided that the documentary requirements of 19 CFR 181.64 (for articles returned from Canada or Mexico) or 19 CFR 10.8 (for articles returned from any other country) are met.

Section 181.64(a), Customs Regulations, (19 CFR 181.64(a)), states that:

'Repairs or alterations' means restoration, addition, renovation, redyeing, cleaning, resterilizing, or other treatment which does not destroy the essential character of, or create a new and commercially different good from, the good exported from the United States.

In circumstances where the operations abroad destroy the identity of the exported article or create a new or commercially different article, entitlement to subheading 9802.00.50, HTSUS, is precluded. 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); and Guardian Industries Corporation v. United States, 3 CIT 9 (1982). Additionally, entitlement to this tariff treatment is not available where the exported articles are incomplete for their intended purposes prior to their foreign processing and the foreign processing is a necessary step in the preparation or manufacture of the finished articles. Dolliff & Company, Inc. v. United States, 455 F. Supp. 618 (Cust. Ct. 1978), aff’d, 599 F.2d 1015 (CCPA 1979).

In a notice published in the Customs Bulletin on October 4, 2000, (34 Cust. Bull. 40), Customs revoked four ruling letters and modified one ruling letter pertaining to the applicability of subheading 9802.00.50, HTSUS, to certain articles which were exported for decorating operations and returned to the U.S. In the notice, Customs stated that in reconsidering the decorating operations, they qualified as acceptable alterations under subheading 9802.00.50, HTSUS, as the merchandise in its condition as exported and returned was marketed and sold to consumers for the same use. Furthermore, Customs found that the operations performed abroad did not result in the loss of the good's identity or create a new article with a different commercial use. The ruling letters concerned: carpet tiles that were dyed abroad and returned; imitation plastic fingernails that were painted with decorative designs abroad; lace fabric "reembroidered" abroad with rope, sequins and beads; and decals and paint bands applied to ceramic dinnerware abroad.

In the instant case, consistent with the prior Customs Bulletin notice described above, we find that the processing of the polo shirts constitutes an acceptable alteration within the meaning of subheading 9802.00.50, HTSUS. The polo shirts are complete for their intended use as wearing apparel prior to being exported to Canada to undergo the above-described operations. The embroidery operations performed in Canada do not have the effect of destroying the identity of the shirts or create a new article with a different commercial use. Accordingly, we find that the polo shirts are eligible for special tariff treatment under subheading 9802.00.50, HTSUS.


On the basis of the information submitted, the embroidery of the polo shirts in Canada constitutes an acceptable alteration within the meaning of subheading 9802.00.50, HTSUS. Therefore, upon re-importation into the United States, the polo shirts are entitled to classification under this tariff provision with duty to be assessed only upon the cost or value of the operations performed in Canada, provided the documentary requirements of 19 CFR 181.64 are satisfied.

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.

Consistent with this ruling, NY I87404 is hereby revoked.

Myles B. Harmon
Commercial Rulings Division

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