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NY N023779

March 27, 2008



TARIFF NO.: 9802.00.50

Mr. Gerald B. Horn
Sandler, Travis & Rosenberg, P.A.
551 Fifth Avenue
New York, NY 10176

RE: The eligibility of wearing apparel for partial duty exemption under subheading 9802.00.50, HTSUS.

Dear Mr. Horn:

In your letter dated February 19, 2008, on behalf of SGS Sports Inc., you requested a ruling on whether wearing apparel, particularly swimwear, cover-ups, tops and the like are eligible for partial duty exemption under subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS).

The imported merchandise consists of wearing apparel imported into the United States by SGS Sports Inc. (SGS), who will pay the appropriate duties upon entry. Following importation, SGS will send the wearing apparel to Montreal, Canada. The merchandise is being sent by SGS to Canada for the purpose of inspection and minor repair. In Canada:

Goods are unpacked and stored in bins on warehouse shelves by style/size/color. Goods are picked based on picking tickets. Once picked, the goods go to the inspection department. The inspection department opens the poly bags in which the goods are packed, removes the garments, and carries out a quality assurance inspection. Goods are inspected for stains and hanging threads. Any hanging threads are trimmed.
Goods with stains are rejected.
Once the goods pass quality inspection, an inspection sticker is affixed inside the garment. The goods may or may not be returned to a poly bag; depending on the customers’ requirements. The goods are then packed per customer order.

The merchandise will then be returned to the U.S. for shipment by SGS Sports Inc., to its customers in the United States.

You request a determination regarding the eligibility for treatment under subheading 9802.00.50, HTSUS.

Subheading 9802.00.50, HTSUS, provides a partial or complete duty exemption for articles exported from and returned to the United States after having been advanced in value or improved in condition by repairs or alterations, provided that the documentary requirements of Section 181.64, Customs Regulations (19 C.F.R. § 181.64), are satisfied Section 181.64, C.R., which implements Article 307 of NAFTA, provides that goods returned after having been repaired or altered in Canada may qualify for complete or partial duty free treatment, provided that the requirements of this section are met. However, entitlement to this tariff treatment is precluded in circumstances where the operations performed abroad destroy the identity of the exported articles or create new or commercially different articles through a process of manufacture. Subheading 9802.00.50, HTSUS, treatment is also precluded where the exported articles are incomplete for their intended use and the foreign processing operation is a necessary step in the preparation or manufacture of finished articles.

In this instance, the garments are complete for their intended use as wearing apparel prior to being exported to Canada to undergo the quality inspection and affixing of inspection stickers, and possible trimming of hanging threads. The merchandise in its condition as exported from the United States and as returned from Canada can be marketed and sold to consumers for the same use. The operations performed in Canada do not result in the loss of the good’s identity nor create a new article with a different commercial use.

The affixing of the sticker is only done for inspection purposes and is not a “labelling” procedure; it does not constitute an acceptable alteration within the meaning of subheading 9802.00.50, HTSUS. However, the cutting of stray threads does constitute an acceptable alteration within the meaning of subheading 9802.00.50; those garments that undergo such a process qualify for the special tariff treatment of that provision, provided that the documentary requirements of 19 C.F.R. § 181.64 are met.

To summarize, the affixing of an inspection sticker does not make the garments eligible for treatment under subheading 9802.00.50; only those garments that undergo the cutting of stray threads will be eligible for treatment under subheading 9802.00.50.

As noted in 19 C.F.R. § 181.64 (c)(2), the port director may require such additional information as is deemed necessary to prove actual exportation of the goods from the United States and subsequent re-importation of the same goods after alteration. The documentation must clearly follow the garments through exportation, alteration, and re-importation. For information as to the documentation that will satisfy Section 181.64, C.R., you should contact the port director at the anticipated U.S. port of entry.

Based on directives issued by the Committee for the Implementation of Textile Agreements (CITA), those goods that qualify for classification under subheading 9802.00.50 are exempt from quota/visa requirements. We assume that you will supply required visas for any merchandise subject to quota when the merchandise is initially entered into the United States.

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 Kenneth Reidlinger at 646-733-3053.


Robert B. Swierupski

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