CBP Finds Labeling Doesn't Change Condition of Promotional Items Under NAFTA Drawback Rules
Various promotional items imported by Bic Graphic that are labeled in the U.S. before export to NAFTA countries are considered as in the "same condition” for purposes of the NAFTA limitation on drawback, CBP said in an Aug. 12 ruling. CBP said in HQ H292472 the multiple labeling methods involved don't result in a change in condition and also may still be considered "unused." Mallory Alexander International Logistics requested the ruling on behalf of Bic Graphic.
The promotional items include pens, key chains, mugs, pocket lighters, hats and bags, among other things. The company uses screen printing, laser engraving, inkjet printing, pad printing and other methods to label the items before export. When those methods are used "to add decoration, names, trademarks, and company logos onto the promotional items for their customers -- we determine that such operations" don't mean the goods are considered "used" afterwards, it said.
Bic Graphic also "asserts that the goods are in the same condition for purposes of NAFTA drawback and that they are not subject to the limitations of the NAFTA 'lesser of' drawback rule," the agency said. "Goods imported into the U.S. and subsequently exported to Canada or Mexico are subject to special rules under NAFTA," but Bic Graphic argued that the goods can be considered "in the same condition when exported" and can therefore avoid the NAFTA requirements.
The promotional items remain "unchanged by the process of putting the names or logos on them and, the use of the items remains unchanged," CBP said. "That is, a pen imprinted with a logo still fulfills the function of a pen, it applies ink to paper; a key chain or a cap fulfills its original purpose after being labeled with a trademark or a name, that of holding keys or fitting on the head, respectively." Because the character of the promotional products remains after processing, "the goods described, when exported to Canada or Mexico, are in the same condition and thus, not subject to the NAFTA limitation on drawback," CBP said.