Duty Exemption Allowed for Goods Cleaned, Labeled in Mexico

Goods imported to the U.S., sent to Mexico for labeling and/or cleaning and then entered back into the U.S. are eligible for duty-free treatment, CBP said in a Sept. 17 ruling (here). Four Seasons Design, the importer, sought CBP's input on whether a variety of items could be considered eligible for classification under subheading 9802.00.50. That subheading covers items that are "exported to be advanced in value or improved in condition by means of repairs or alterations," said CBP. The agency found that both the cleaning and labeling of the goods meets the standards for "repairs or alterations."

Four Seasons is a garment manufacturer that includes small gifts with purchases of its goods to customers. Such gifts include headphones, portable FM radios, MP3 players, and small toys, from different vendors, said CBP. The various gifts, already packaged and sealed, enter the U.S, and are sent to the company's facility in Mexico, said CBP. There, "the gifts are cleaned, labeled, and/or re-labeled," it said. The gifts are "then attached to a t-shirt or other garment by means of a hanger and plastic ties, and shipped back to the U.S.," said CBP.

CBP previously ruled that cleaning is considered to be an alternation, it said. Consistent with that ruling, the cleaning described by Four Seasons is also "an alteration, thereby entitling those packaged gifts to the duty exemption under subheading 9802.00.50," the agency said. CBP also previously ruled that labeling is considered to be an acceptable alteration when for an "identification purpose," said CBP. "Namely, the identification informed anyone using the good that the good conformed to certain specifications," said the agency.

The labeling in the scenario provided by Four Seasons either identifies the brand or identifies the good as a promotional product, said CBP. Such labeling either informs that the good meets the expectations of that brand or that it "conforms to the expectations of a good that is provided to promote something else," CBP found. Notably, CBP's ruling "applies to the gifts only, and not to the garments to which the gifts are attached," CBP said.