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HQ 555542


June 8, 1990

CLA-2 CO:R:C:V 555542 KAC

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80

Mr. Bruce Schiller
Joseph & Schiller Inc.
8725 N.W. 18th Terrace
Suite 301
Miami, Florida 33172

RE: Applicability of partial duty exemption under HTSUS subheading 9802.00.80 to pleated women's skirts created by sewing U.S. components together.Assembly;incidental operations;over-edge stitch;buttonholing;Mast;L'Eggs;Oxford Industries.

Dear Mr. Schiller:

This is in response to your letters of December 4, 1989, and May 10, 1990, on behalf of Rhythm Trading, requesting a ruling on the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to pleated women's skirts to be imported from Costa Rica. Samples of a skirt, before and after assembly, were submitted.

FACTS:

Rhythm Trading intends to ship fabric cut into pattern pieces, zippers, buttons, thread, hem ribbon and interfacing, all of which are of U.S.-origin, to Costa Rica for assembly into pleated women's skirts. The assembly operations consist of:

(1) sewing one side seam;
(2) sewing hem;
(3) marking, pressing and sewing pleats;
(4) setting in zipper and sewing other side seam; (5) sewing waist band which includes the use of an over-edge stitch to secure exposed edge;
(6) attaching button; and
(7) making the button hole.

Upon completion of the assembly the pleated women's skirt will be imported into the U.S.

ISSUE:

Whether the pleated women's skirt will 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 (1981), aff'd, 69 CCPA 47, 668 F.2d 501 (1981), the court, in examining the legislative history of the meaning of "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 required by 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 operation be performed concurrently with assembly.

We are satisfied from the documentation and samples submitted that the U.S. components meet the requirements of HTSUS subheading 9802.00.80, and, therefore, are entitled to the partial duty exemption available under HTSUS subheading 9802.00.80. The foreign operations that entail sewing fabric onto itself using any type of stitch, including the tucking, shirring, pleating, and hemming operations will be considered acceptable assembly operations. See, L'Eggs Products, Inc. v. United States, Slip Op. 89-5, 13 CIT , 704 F.Supp. 1127 (CIT 1989). Attaching two pieces of fabric together by sewing the side seams, and sewing the zipper, waist band, and button to the skirt are considered acceptable assembly operations pursuant to 19 CFR 10.16(a).

Sewing the over-edge stitch onto the edge of the fabric is not an acceptable assembly operation. The thread used in sewing the over-edge stitch 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 over-edge stitch is an operation incidental to the assembly process. 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 one percent of the time and less than one percent of the cost are necessary to sew the over-edge stitch. Although the over-edge stitch may not be necessary to the assembly process, we believe it is sufficiently related to the assembly that it is logically performed concurrently with assembly. Therefore, sewing the over-edge stitch will not preclude an allowance for the cost or value of the fabric under HTSUS subheading 9802.00.80.

Making the button hole by slitting the fabric and stitching the slit edges will also be considered an operation incidental to assembly upon review of the Mast criteria. 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 six and one-half percent of the time and approximately one percent of the cost are necessary to make the button hole. Moreover, the buttonholing operation is so related to the assembly that it is logically performed during the assembly. The operation completes a closure device that allows the garment to fit properly by lining up the button with the button hole. See, United States v. Oxford Industries, Inc., 1 CIT 230, 517 F.Supp. 694 (1981), aff'd, 69 CCPA 55, 668 F.2d 507 (1981), which held that a buttonholing operation constituted a permissible incidental operation. The marking and pressing of the pleats are also considered operations incidental to the assembly pursuant to 19 CFR 10.16(b)(7).

HOLDING:

From the information and samples presented, it is our opinion that the operations performed abroad to create the pleated women's skirts are considered proper assembly operations or operations incidental to the assembly process. Therefore, the imported pleated women's skirts 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 upon compliance with the documentary requirements of 19 CFR 10.24.

Sincerely,

John Durant, Director
Commercial Rulings Division

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