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NY J86655

July 24, 2003

CLA-2-33:RR:NC:2:240 J86655


TARIFF NO.: 3304.10.0000; 3304.99.5000

Ms. Stacy Bauman
American Shipping Company Inc
140 Sylvan Avenue
Englewood Cliffs, NJ 07632

RE: The tariff classification of bulk lipstick and cheek stick blush of US origin molded and packaged in China

Dear Ms. Bauman:

In your letter dated July 1, 2003 you requested a tariff classification ruling on behalf of your client Topline Products Company.

Bulk lipstick mass and cheek blush of US origin are sent to China for processing and retail packaging. The lipstick mass and cheek blush mass are warmed to obtain a consistency that can be poured. The mass is poured into tubular molds and cooled to its original consistency to form the “stick” or “bullet” shape of the individual cosmetic. Each lipstick bullet or cheek blush stick is inserted into the base of the retail tube applicator, which is manufactured in China. A plastic cap is placed over the applicator. Two alternative types of packaging are used to prepare the cosmetic for sale; the product is either placed in a folded carton or on a blister card. There is no alteration or addition to the ingredients or formula.

Subheading 9801.00.10, HTSUS, provides for the free entry of products of the U.S. that are exported and returned without having been advanced in value or improved in condition by any process of manufacture or other 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 that 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. The mere repackaging of the item, even for the purpose of resale to the ultimate consumer, is not sufficient to preclude the merchandise from being classified under to subheading 9801.00.10, HTSUS. Based upon the foregoing facts, we find that the processes performed in China constitute more than mere repackaging of the bulk lipstick.

Subheading 9802.00.50, HTSUS, provides a partial duty exemption for articles returned to the U.S. after having been exported to be advanced in value or improved in condition by means of repairs or alterations. Such articles are dutiable only upon the value of the foreign repairs or alterations, provided the documentary requirements of section 10.8, Customs Regulations (19 CFR 10.8 are satisfied. However, entitlement to this tariff treatment is precluded in circumstances where the operations performed abroad destroy the identity of the articles or create new or commercially different articles. Tariff treatment under subheading 9802.00.50, HTSUS, is also precluded where the exported articles are incomplete for their intended use prior to the foreign processing. Repairs and alterations are made to completed articles and do not include intermediate processing operations that are performed as a matter of course in the preparation or the manufacture of finished articles.

Since the cosmetic mass formulations exported from the U.S. can only be used to make cosmetics in tube applicators for retail sale, there is no viable commercial use of the exported article until it undergoes the further processing operations in China. In order for this cosmetic mass to be put into a form suitable for its intended use as lipstick or cheek blush by consumers, it must first be shaped into "bullet" or stick configurations, and then inserted into applicators. Not until these processes occur can a consumer effectively apply this lipstick or cheek blush product

We find that the lipstick mass and cheek blush mass exported to China are not completed articles because they are not in a condition suitable for the intended use prior to the foreign processing operations. The foreign operations consisting of heating the mass until it can be poured, forming it into stick or bullet shapes in molds, cooling the stick shapes, and inserting the sticks into individual applicator tubes are more than mere packaging operations. Instead, these operations constitute necessary finishing steps in the total manufacturing process of the finished article, which is begun in the U.S. Since these operations are not alterations, within the meaning of subheading 9802.00.50, HTSUS, the packaged lipstick and cheek blush products imported into the U.S. are not eligible for a partial duty exemption under that tariff provision.

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C.1304), provides that, unless excepted, every article of foreign origin imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit, in such a manner as to indicate to the ultimate purchaser in the United States the English name of the country of origin of the article.

Merchandise that is "of foreign origin," i.e., of a country of origin other than that of the U.S., is subject to the requirements of 19 U.S.C. 1304). 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." Customs has ruled that products of the U.S. which are exported for further processing and subsequently returned, are not subject to country of origin marking upon importation to the U.S. unless the further processing in the foreign country constituted a substantial transformation of the product.

It is our determination that the foreign processes do not constitute a substantial transformation and the lipstick and cheek blush remain products of the United States. Accordingly, the imported cosmetic powders are not subject to the country of origin marking requirements of 19 U.S.C. 1304. If a good is determined to be an article of U.S. origin, it is not subject to the country of origin marking requirements of 19 U.S.C. §1304. Whether an article may be marked with the phrase "Made in the USA" or similar words denoting U.S. origin, is an issue under the authority of the Federal Trade Commission (FTC). We suggest that you contact the FTC Division of Enforcement, 6th and Pennsylvania Avenue, N.W., Washington, D.C. 20508 on the propriety of proposed markings indicating that an article is made in the U.S.

The applicable subheading for the lipstick will be 3304.10.000, Harmonized Tariff Schedule of the United States (HTS), which provides for Beauty or make-up preparations and preparations for the care of the skin (other than medicaments), including sunscreen or suntan preparations; manicure or pedicure preparations: Lip make-up preparations. The rate of duty will be free.

The applicable subheading for the cheek blush stick will be 3304.99.5000, Harmonized Tariff Schedule of the United States (HTS), which provides for Beauty or make-up preparations and preparations for the care of the skin (other than medicaments), including sunscreen or suntan preparations; manicure or pedicure preparations: Other. The rate of duty will be free.

Perfumery, cosmetic and toiletry products are subject to the requirements of the Federal Food, Drug and Cosmetic Act, which is administered by the U.S. Food and Drug Administration. You may contact them at U.S. Food and Drug Administration, Office of Cosmetics and Colors 5100 Paint Branch Parkway, College Park, MD 20740-3835 (202) 418 3412.

This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Stephanie Joseph at 646-733-3268.


Robert B. Swierupski

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