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HQ 554878


March 7, 1988

CLA-2 CO:R:C:V 554878 CW

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80, HTS (807.00, TSUS)

Leslie A. Glick, Esq.
Duncan, Allen and Mitchell
1575 Eye Street, NW.
Washington, D.C. 20005

RE: Applicability of partial duty exemption tariff provision to certain bags for cameras and audio cassettes

Dear Mr. Glick:

This is in response to your letter of December 17, 1987, in which you request a ruling on behalf of Service Manufacturing Corporation concerning the applicability of item 807.00, Tariff Schedules of the United States (TSUS), to certain plastic bags for cameras and audio cassettes that will be imported by your client from Mexico. Samples have been submitted for examination.

FACTS:

You state that the two basic styles of bags or carrying cases to be imported by your client, a camera bag and an audio cassette bag, will be assembled in Mexico from U.S. fabricated components. According to your letter, the camera bag will consist of eleven basic components which will be shipped by your client to Mexico ready for assembly by sewing. Five of the components, referred to as the gusset, front piece, front pocket, side pockets and back piece, will be manufactured in the United States from fabric of foreign or United States origin and from foam backing or lining of United States origin. The manufacture will be accomplished by taking fabric from large rolls, die cutting it to length and width and into patterns, and then laminating the fabric pieces by heat treatment to foam backing or lining.

The binding for the cassette bag also will be made from foreign or domestic fabric by cutting the fabric to width in the United States. We understand that the remaining components, referred to as the shoulder strap and buckle, side strap and
buckle, front strap and snap hook, velcro pieces, and welting, will be made exclusively from U.S. materials. The straps, velcro and welting will be shipped to Mexico in bulk rolls where they will be cut to appropriate lengths prior to being sewn onto the bags in Mexico.

The cassette carrying case will consist of five components, referred to as the cover, zipper piece, handle, decorative webbing and binding, which will be sewn together in Mexico. The cover will be manufactured in the United States by die cutting domestic or foreign fabric to length and width and into patterns, and by laminating the resulting fabric pieces by heat treatment to foam backing of U.S. origin.

The three components making up the zipper piece (two strips of material and a zipper) will be shipped to Mexico in rolls, assembled, cut to length, and then sewn together to form the completed zipper piece. The two strips of material will be made in the U.S. by cutting to width foreign or domestic material, and then laminating the strips to foam backing of U.S. origin.

We understand that the zipper, the decorative webbing, and the handle will be made from domestic materials only. As with the camera bag, the binding for the cassette bag will be produced in the United States by cutting domestic or foreign fabric to width prior to being shipped to Mexico for sewing onto the bags.

ISSUE:

Whether the described bags will be eligible for the partial exemption from duty provided for in item 807.00, TSUS (subheading 9802.00.80, Harmonized Tariff Schedule of the United States

LAW AND ANALYSIS:

Item 807.00, TSUS, applies to articles assembled abroad in whole or in part of fabricated components, the product of the United States, with no operations performed thereon except the attachment of the components to form the imported merchandise and operations incidental thereto. An article classified under item 807.00, TSUS, is subject to duty upon the full appraised value of the imported article, less the cost or value of such products of the U.S.

Section 10.14(b) of the Customs Regulations (19 CFR 10.14(b)), provides that foreign-made articles or materials may become products of the U.S. for purposes of item 807.00, TSUS, if they undergo a process of manufacture in the U.S. which results
in their substantial transformation. According to this provision, a substantial transformation occurs when, as a result of manufacturing processes, a new and different article emerges, having a distinctive name, character, or use which is different from that originally possessed by the article or material. The process of die cutting foreign-made fabric to size and patterns and laminating the resulting pieces to foam backing or lining clearly results in a substantial transformation of the imported fabric into domestic products within the contemplation of item 807.00, TSUS. A substantial transformation in the U.S. also occurs when foreign-made fabric is cut to widths and the resulting strips are laminated to foam backing or lining. However, in regard to the binding for both types of bags, the mere cutting of foreign fabric to width does not substantially transform the imported fabric into a product of the U.S. for purposes of item 807.00, TSUS.

The cutting to length in Mexico of the straps, welting, velcro, and zipper pieces are operations considered incidental to the foreign assembly process (see section 10.14(a), Customs Regulations (19 CFR 10.14(a))).

HOLDING:

On the basis of the samples and information submitted, allowances in duty may be made under item 807.00, TSUS, for the cost or value of the described U.S. fabricated components that are exported to Mexico and assembled into the imported camera and cassette bags, upon compliance with the applicable Customs Regulations (19 CFR 10.11-10.24). No allowance may be made under item 807.00, TSUS, for the cost or value of the binding that is made in the U.S. from foreign-made fabric.

Sincerely,

John Durant

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