United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 1990 HQ Rulings > HQ 0555519 - HQ 0730935 > HQ 0555525

Previous Ruling Next Ruling


HQ 555525


June 5, 1990

CLA-2 CO:R:C:V 555525 KAC

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80

F. Gordon Lee, Esq.
O'Connor & Hannan
Suite 800
1919 Pennsylvania Avenue, N.W.
Washington, D.C. 20006-3483

RE: Applicability of the partial duty exemption under HTSUS subheading 9802.00.80 to curtains created by sewing U.S. fabric pieces together with various types of stitches. Hand- tying a fabric tube into a bow is not incidental to assembly.Substantial transformation;assembly;incidental operations;trimming;cutting to length;folding;Mast;L'Eggs; General Instrument;555357;555475.

Dear Mr. Lee:

This is in response to your letter dated March 22, 1990, and several letters written in November and December, 1989, from your client, Steven L. Markowitz of Max Kahn Curtain Corporation, requesting rulings on the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to various curtains to be imported from Haiti. Samples of various curtain styles were submitted.

FACTS:

Your client intends to ship U.S.-origin fabric, thread, plastic rings, metal hardware for a shade, and packaging materials, as well as Colombian and Polish fabric from which pattern pieces are cut in the U.S., for assembly into various curtains. Although the foreign operations performed on the various curtain components will vary slightly, the following operations are common to all the components:

(1) sewing two or more pieces of fabric together; (2) folding and sewing a piece of fabric over onto itself to form a curtain rod pocket or a double ruffle; (3) sewing a "close out" or finishing stitch onto a single ply fabric (which keeps the edge of the fabric from unraveling);
(4) folding the curtain for packaging; and (5) packaging the curtain in a plastic bag.

Other operations performed are merchandise specific and include:

(1) shirring fabric to itself (gathering fabric and sewing it to another piece of fabric to give a ruffle design to the fabric);
(2) cutting pieces of fabric to length;
(3) attaching plastic rings to fabric with a tacking stitch;
(4) hemming fabric (handkerchief hem);
(5) tucking/crimping and tacking fabric at established marks;
(6) sewing fabric to itself to create a tube which is then hand-tied into a bow (the bows are not attached to the curtain, but packaged with the curtain);
(7) gluing fabric to the shade hardware and winding fabric onto the shade hardware; and
(8) trimming macrame edges after attachment to the curtain;

After the foreign operations are performed, the various curtains will be imported into the U.S.

ISSUE:

Whether the various curtain styles qualify for the partial duty exemption available under HTSUS subheading 9802.00.80 when returned to the U.S.

LAW AND ANALYSIS:

HTSUS subheading 9802.00.80 provides a partial duty exemption for:

[a]rticles assembled abroad in whole or in part of fabricated components, the product of the United States, which (a) were exported in condition ready for assembly without further fabrication, (b) have not lost their physical identity in such articles by change in form, shape or otherwise, and (c) have not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process such as cleaning, lubrication, and painting....

All three requirements of HTSUS subheading 9802.00.80 must be satisfied before a component may receive a duty allowance. An article entered under this tariff provision is subject to duty upon the full value of the imported assembled article, less the cost or value of such U.S. components, upon compliance with the documentary requirements of section 10.24, Customs Regulations (19 CFR 10.24).

Section 10.16(a), Customs Regulations (19 CFR 10.16(a)), provides that the assembly operation performed abroad may consist of any method used to join or fit together solid components, such as welding, soldering, riveting, force fitting, gluing, laminating, sewing, or the use of fasteners.

Operations incidental to the assembly process are not considered further fabrication operations, as they are of a minor nature and cannot always be provided for in advance of the assembly operations. However, any significant process, operation or treatment whose primary purpose is the fabrication, completion, physical or chemical improvement of a component precludes the application of the exemption under HTSUS subheading 9802.00.80 to that component. See, 19 CFR 10.16(c).

In United States v. Mast Industries, Inc., 515 F.Supp. 43, 1 CIT 188, aff'd, 69 CCPA 47, 668 F.2d 501 (1988), the court, in examining the legislative history of the meaning of the words "incidental to the assembly process," stated that:

[t]he apparent legislative intent was to not preclude operations that provide an "independent utility" or that are not essential to the assembly process; rather, Congress intended a balancing of all relevant factors to ascertain whether an operation of a "minor nature" is incidental to the assembly process.

The court then indicated that relevant factors included:

(1) whether the relative cost and time of the operation are such that the operation may be considered minor; (2) whether the operation is necessary to the assembly process;
(3) whether the operation is so related to the assembly that it is logically performed during assembly; and (4) whether economic or other practical considerations dictate that the operations be performed concurrently with assembly.

According to section 10.14(b), Customs Regulations (19 CFR 10.14(b)), foreign-made articles or materials may become products of the U.S for purposes of subheading 9802.00.80, HTSUS, if they undergo a process of manufacture in the U.S. which results in their substantial transformation. This provision further states that 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.

Section 12.130(e)(2)(ii), Customs Regulations (19 CFR 12.130(e)(2)(ii)), provides that a textile article or material usually will not be considered to be a product of a particular country by virtue of merely having undergone "cutting to length or width and hemming or overlocking fabrics which are readily identifiable as being intended for a particular commerical use." In this case, the Colombian and Polish fabric imported into the U.S. is laid out for a curtain body, valance, ruffles and tiebacks (style #ST3-934), and for swags, tiers, and ruffles (style #TS-934), and then slit down the entire length. The edges which will comprise the curtain body and swags are then side hemmed. Finally, the individual curtain pieces are cut for the body, valances, swags and tiers by spreading the fabric on a table and cutting with a knife. It is clear that 19 CFR 12.130(e)(2)(ii) does not disqualify the fabric for style #ST3- 934 and #TS-934 from consideration as products of the U.S. See, Headquarters Ruling Letter 086665 dated March 23, 1990, and 555590 dated May 17, 1990, which held that fabric woven in country A, shipped to country B where it is cut to length and width, and hemmed, is considered a product of country B. Therefore, the foreign fabric which undergoes the above operations will be considered substantially transformed into products of the U.S. for purposes of HTSUS subheading 9802.00.80.

We are satisfied from the documentation and samples submitted that the U.S. components meet the requirements of HTSUS 9802.00.80, and therefore, are entitled to the partial duty exemption available under this tariff provision. The foreign operations that entail sewing fabric onto itself using any type of stitch, including a "close out"/finishing stitch, tucking, shirring, crimping, hemming, and rod pocket and double ruffle formation are considered acceptable assembly operations. See, L'Eggs Products, Inc. v. United States, Slip Op. 89-5, 13 CIT , 704 F.Supp. 1127 (CIT 1989). Sewing two or more pieces of fabric together, gluing and winding the fabric onto the shade hardware, and tacking the plastic rings to the fabric are considered acceptable assembly operations pursuant to 19 CFR 10.16(a). See also, General Instrument Corporation v. United States, 61 CCPA 86, C.A.D. 1128, 499 F.2d 1318 (1974), rev'g, 70 Cust.Ct. 151, C.D. 4421, 359 F.Supp. 1390 (1973), which held that winding of wire around a core is considered an acceptable assembly operation.

Trimming the macrame attached to the curtains is considered an operation incidental to the assembly process pursuant to 19 CFR 10.16(b)(4), which states that trimming or cutting off small amounts of excess materials is an acceptable incidental operation. Pursuant to 19 CFR 10.16(b)(6), cutting the fabric to length is an appropriate operation incidental to the assembly.

Folding the curtains after assembly is also considered an operation incidental to the assembly process pursuant to 19 CFR 10.16(b)(7), which states that final folding operations are incidental to the assembly process.

Sewing the "closing out"/finishing stitches onto the edges of the fabric either before or after the fabric pieces enter into assembly is not an acceptable assembly operation. The thread used in sewing the "closing out"/finishing stitches onto the edge of single ply fabric does not serve as a binding agent, but is merely used to prevent the unraveling of the fabric. See, L'Eggs, Slip Op. 89-5, (CIT 1989). However, upon reviewing the Mast criteria, we find that sewing the "closing out"/finishing stitches is an operation incidental to the assembly process. According to your March 22, 1990 letter, a comparison of the relative cost and time required to perform the operation in question with the cost and time required to perform the entire assembly reveals that two percent of the cost and a few seconds of time are necessary to sew on the "closing out"/finishing stitches. Although the "closing out"/finishing stitches may not be necessary to the assembly process, we believe that the operation is sufficiently related to the assembly so that it logically is performed concurrently with the assembly. The operation normally takes place after the curtain is assembled, because only after the completed assembly are the necessary raw edges exposed for the stitching operation that will keep the fabric from unraveling. However, in a few cases, the "closing out"/finishing stitches will be sewn before the assembly process. In either case, sewing the "closing out"/finishing stitches is an acceptable incidental operation which will not preclude the U.S. fabric pieces from receiving the duty exemption available under HTSUS subheading 9802.00.80.

We have previously held in Headquarters Ruling Letter 555357 dated February 16, 1990, that forming a single length of U.S. ribbon into a bow which is knotted to secure its shape is not an acceptable assembly operation, but rather is a further fabrication of the exported ribbon before it enters the assembly process (the bow later is tacked to footwear). We have also held that ribbon cut to length, wrapped twice around the middle of a coat hanger bar and base of a hanger hook, and knotted into a bow qualified as an assembly operation or operations incidental to assembly since the bow formation process involved the joinder of two components. See, Headquarters Ruling Letter 555475 dated November 3, 1989. In the present case, the U.S. fabric is first assembled into a tube by sewing the fabric over onto itself, and then the tube is hand knotted into a bow. As the hand-tying of the tube into a bow is not itself an assembly operation, it is necessary to consider whether this operation is incidental to the process of assembling the tube. Applying the Mast criteria, we are unable to conclude that this operation is either a minor one or that there are any considerations which dictate that the hand- tying operation be performed concurrently with assembly. Therefore, as we find that this operation is not incidental to the assembly of the tube, no allowance may be made under subheading 9802.00.80, HTSUS, for the cost or value of the fabric used in creating the tube.

Foreign packaging of the curtains is permissible under 19 CFR 10.16(f).

HOLDING:

From the information and samples presented, it is our opinion that, with the exception of the hand-tying of the fabric tube into a bow, the foreign operations performed to the curtains are considered proper assembly operations or operations incidental to the assembly process. Therefore, the imported curtains may be entered under subheading 9802.00.80, HTSUS, with allowances in duty for the cost or value of the U.S. components incorporated therein, except for the fabric tube, upon compliance with the documentary requirements of 19 CFR 10.24. The cutting to length and width and hemming of foreign fabric in the U.S. to create curtain fabric pieces results in the substantial transformation of the fabric into products of the U.S. for purposes of this tariff provision.

Sincerely,

John Durant, Director
Commercial Rulings Division

Previous Ruling Next Ruling

See also: