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HQ 555594


May 16, 1990

CLA-2 CO:R:C:V 555594 LS

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80

Ms. Elaine Jacoby
Miles, Hastings, & Joffroy, Inc.
6403 Avenida Costa Norte
Suite 3000
Otay Mesa, California 92073

RE: Applicability of partial duty exemption under subheading 9802.00.80, HTSUS, to twisted twine, braided twine, and various types of nets

Dear Ms. Jacoby:

This is in response to your letter of February 13, 1990, submitted on behalf of Koring Bros., Inc., requesting a ruling on the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to twisted twine, braided twine, and various types of nets imported from Mexico. Samples of both types of twine and a portion of a net were submitted for examination.

FACTS:

Koring Bros., Inc. is planning to import braided or twisted twine, fish nets, sports nets, and safety and industrial use nets from Mexico. You state that U.S. manufactured nylon yarn is exported to Mexico on U.S. manufactured spools where it is either braided or twisted to form twine. A small amount of the twisted or braided twine is then dyed and/or tarred and wound onto spools to be exported to the U.S. for use in repairing nets. The remainder of the twine is used in Mexico to make the various types of nets.

The three types of nets are formed by the following process. First, the twines are guided onto the appropriate net making machinery, also known as a net loom, which ties them together by knotting. In explaining the diagram and photographs of the net loom, you state that there are spools of twine at the back of the machine and bobbins toward the bottom of the machine.

One hundred or more twines run along the top of the machine, while simultaneously another hundred or more run along the bottom. The twines from the top are picked up by some hooks which twist and pull them to form loops. The bobbins then pass the other twines through the loops, thus creating a row of 100 or more knots in one motion. The number of knots in each row depends on the depth of the net. You state that the knotting serves the purpose of tying the twines together and preventing them from unraveling when the nets are cut from the machine. Before being cut from the machine, the nets are inspected and repaired, if flawed. Some nets are stretched on another machine to tighten the knots. Lastly, the nets are dyed and/or tarred. The dyeing serves the purpose of camouflage. It also results in shrinkage of the nets, which serves the purpose of tightening the knots. The tarring is accomplished by submerging the net in an asphalt solution and hanging it up to dry. Tarring is done for purposes of preservation, i.e., to lessen the effects of sunlight and sea water, to prevent abrasion, and to decrease the general wear and tear of the nets.

You state that the smaller nets use twisted twine, whereas the larger nets use braided twine. The large nets are packaged in bales and the smaller nets are packaged in boxes.

ISSUE:

Whether the twisted twines, braided twines, and various types of nets will qualify for the partial duty exemption under subheading 9802.00.80, HTSUS, when returned to the U.S.

LAW AND ANALYSIS:

Subheading 9802.00.80, HTSUS, 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, lubricating and painting.

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

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 operation. See Section 10.16(a), Customs Regulations (19 CFR 10.16(a)). Examples of operations considered incidental to the assembly process are delineated at 19 CFR 10.16(b). However, any significant process, operation, or treatment whose primary purpose is the fabrication, completion, or physical or chemical improvement of a component, or which is not related to the assembly process, precludes the application of the exemption under subheading 9802.00.80, HTSUS. See 19 CFR 10.16(c).

I. Eligibility of twisted twines and braided twines

We must first consider whether the twisting or braiding of the yarns constitutes an acceptable assembly operation under 19 CFR 10.16(a). This section provides, in part, that:

The assembly operations 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, and may be preceded, accompanied, or followed by operations incidental to the assembly as illustrated in paragraph (b) of this section.

Twisting of yarns on a machine to form twines is an acceptable assembly operation because it is a method used to combine or join yarns, which are solid components. See Headquarters Ruling Letters (HRL) 553593, dated May 16, 1985; 554531, dated May 29, 1987; and 555128, dated January 9, 1989. However, passing yarn through braiding machines to produce braided rope or cordage has been found to be analogous to weaving fabrics from spun yarn. This braiding operation is considered a manufacturing process that does not qualify as an assembly operation within the meaning of subheading 9802.00.80, HTSUS. Id.

We must next determine whether the processes of dyeing and tarring the twisted twine constitute operations incidental to the assembly process. Among the examples of operations incidental to the assembly operation listed in 19 CFR 10.16(b) is the "application of preservative paint or coating, including preservative metallic coating, lubricants, or protective encapsulation." An example of an operation not incidental to the assembly process which is enumerated in 19 CFR 10.16(c) is "chemical treatment of components or assembled articles to impart new characteristics, such as . . . dyeing . . . of textiles."

Applying 19 CFR 10.16(c), we find that the dyeing of the twisted twine is not an operation incidental to the assembly process because it imparts a new characteristic, i.e., color, and constitutes a chemical treatment of the fibers of the yarn. This finding precludes the application of the exemption under subheading 9802.00.80, HTSUS, to the twisted twine which is dyed.

The tarring of the twisted twine, on the other hand, does constitute an operation incidental to the assembly process because it involves the application of a preservative coating, i.e., asphalt solution. See 19 CFR 10.16(b). Since the twisted twine will be used to repair nets, the tarring serves the primary purpose of preservation, i.e., it lessens the effects of sunlight and sea water, prevents abrasion, and decreases the general wear and tear of the twine when attached to the net. The tarring, unlike the dyeing, does not constitute a chemical treatment. In HRL 553593, dated May 16, 1985, we found that tarring of fishnetting for stiffness is not considered an operation incidental to the assembly process. That ruling can be distinguished from the facts of the instant case where the primary purpose of tarring is for preservation.

The winding of the dyed and/or tarred twine onto spools is a type of packaging operation which readies the twine for retail sale. An assembled article which otherwise qualifies for the exemption under subheading 9802.00.80, HTSUS, will not be disqualified by reason of having been packaged abroad. See 19 CFR 10.16(f).

The yarn which comprises the dyed twisted twine is eligible for the duty allowance under subheading 9802.00.80, HTSUS, because it is exported in a condition ready for assembly without further fabrication, does not lose its physical identity in the assembly operation, and is not otherwise advanced in value or improved in condition except by an assembly operation and an operation incidental thereto.

II. Eligibility of nets

As provided in 19 CFR 10.16(e), "[a]n assembly operation may involve the joining or fitting of American-made components into a part or subassembly of an article, followed by the installation of the part or subassembly into the complete article." In the instant case, the twisted twine is an acceptable subassembly. For the reasons discussed in Part I above, the braided twine is not an acceptable subassembly. Therefore, we need only consider whether the knotting process performed on the twisted twine by means of a net loom constitutes an acceptable assembly within the meaning of subheading 9802.00.80, HTSUS.

While the knotting operation serves to join the twines together where they cross one another, it also forms a network of knots in a pattern to create an openwork fabric known as a net. We find that the primary purpose of the knotting operation is to manufacture a net. See I. Wingate, Textile Fabrics 41-42 (1952). The term "net" is defined in Webster's Third New International Dictionary, 1519 (1971) as follows:
a meshed arrangement of threads, cords, or ropes that have been twisted, knotted, or woven together at regular intervals.

The Encyclopedia Americana, Vol 20, at 117 (1980) states, with regard to nets:
the open spaces are called meshes, and in order that they may retain their size and shape, the fibers of which the net is made must be knotted at the intersections.

In the sense that the netting operation forms a fabric or an article made of such fabric, it is analogous to a weaving operation. See HRL 553593, dated May 16, 1985. Weaving is defined as the "production of fabric by interlacing two sets of yarns so that they cross each other, normally at right angles, usually accomplished with a hand- or power-operated loom." The New Encyclopaedia Britannica, Micropaedia Vol. X, 591 (1975). See HRL 555116, dated October 16, 1989. The twines involved in the netting operation are interlaced in that they cross one another and are tied together at the intersections by a knotting operation on a net loom.

Customs has consistently held that the weaving process used to manufacture fabrics is not regarded as an assembly operation. See HRL 038196, dated January 20, 1975; see also HRL 039351, dated April 16, 1975. We have extended this finding to processes which are similar to weaving. For example, in HRL 058110, dated March 2, 1978, we found that a needlework process, involving the joining of U.S. manufactured canvas and yarn "is of a manufacturing nature and constitutes further fabrication which exceeds the scope of `assembly` for the purposes of item 807.00, TSUS [precursor of subheading 9802.00.80, HTSUS]." Another example is HRL 555344 dated May 19, 1989, in which we found that the combining of backing cloth and yarn to create a loop tufted floor covering fabric "is similar to a weaving operation and constitutes a process of manufacture rather than an assembly." HRL 555344 further states "[w]e have consistently treated the manufacture of fabrics as an operation beyond mere assembly." This ruling cites to example 3 set forth in 19 CFR 10.16(a), which states, in part:

The manufacture abroad of cloth on a loom using thread or yarn exported from the United States on spools, cops, or
pirns is not considered an assembly but a weaving opera- ation, and the thread or yarn does not qualify for the exemption.

In applying these rulings to the instant case, we find that the creation of the net from the twisted twine on a net loom is a manufacturing process rather than a mere assembly. Cf. Zwicker Knitting Mills v. United States, C.D. 4786, 82 Cust. Ct. 34, 41- 44, 469 F. Supp. 727 (1979), aff'd, C.A.D. 1240, 67 CCPA 37, 613 F.2d 295 (1980) (knitting glove shells on a knitting machine is a manufacturing process; "assembly does not include the manufacture, production, or fabrication of the essential parts to be used in the assembly process").

Clause (c) of subheading 9802.00.80, HTSUS, provides that the U.S. fabricated components cannot have "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, lubricating and painting." Therefore, the next step is to determine whether the process of creating the net on the net loom constitutes an operation incidental to the assembly process of twisting the yarns to form twisted twine.

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 considered the legislative history of the phrase "incidental to the assembly process," and found that Congress intended a balancing of all relevant factors to ascertain whether an operation of a "minor nature" was incidental to the assembly process. The court stated that relevant factors included:

(1) whether the cost of the operation relative to the cost of the affected component and the time required by the operation relative to the time required for assembly of the whole article were 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.

None of these factors appear to be present here. The netting operation is a process separate from the assembly of the yarns to form twisted twine. This is demonstrated by the fact that the netting is performed on a different machine and some of the twine is exported on spools as a finished product without entering into the netting process. Thus, the netting operation is neither necessary to the assembly process nor so related to the assembly
that it is logically performed concurrently with it. We assume that the cost and time required to create the net on the net loom is greater than that required in the assembly of the yarns to form twine. Thus, the netting operation is not of a minor nature and, therefore, not incidental to twisting the yarns to form twine.

Based upon our finding that the netting process has advanced the twines in value or improved them in condition by an operation which is neither an assembly in itself, nor incidental to the assembly of the yarns to form twine, we conclude that the nets formed from the twisted twine are not eligible for the partial duty exemption under subheading 9802.00.80, HTSUS. We, therefore, need not address the question of whether the stretching of the nets on a machine constitutes an operation incidental to assembly.

HOLDING:

The braided twine will not be eligible for the partial duty exemption under subheading 9802.00.80, HTSUS, when returned to the U.S., because the braiding operation is not an acceptable assembly within the meaning of the statute. However, the process of twisting the twines is an acceptable assembly operation. The twisted twine which is dyed is not eligible for the allowance under subheading 9802.00.80, HTSUS, because the dyeing is an operation which is not incidental to the assembly process. The twisted twine which is tarred will be eligible for the allowance when returned to the U.S., upon compliance with the documentary requirements of 19 CFR 10.24, because tarring twine for purposes of preservation qualifies as an operation incidental to the assembly.

The nets made of braided twines will not be eligible for the partial duty exemption under subheading 9802.00.80, HTSUS, because the braiding operation is not an acceptable subassembly. The nets made of twisted twines are also not eligible because the netting operation by which the twines are knotted on a net loom constitutes a manufacturing process rather than a mere assembly. Further, the netting operation does not constitute an operation incidental to the assembly process of twisting the yarns to form twine.

Sincerely,

Jerry Laderberg
Acting Director

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