HQ 0555674 - Applicability of duty exemption under subheading 9802.00.80, HTSUS, to polyester and polypropylene ropes created abroad by twisting polyester yarn together and by twisting yarn made out of polypropylene resin pellets together.Further fabrication;assembly;10.14(a);10.16(a); 555221;555128;847184 - United States International Trade Commision Rulings

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HQ 555674

June 27, 1990

CLA-2 CO:R:C:V 555674 KAC

CATEGORY: CLASSIFICATION

TARIFF NO.: 5607.49.2500 - 5607.50.2000 - 9802.00.80

Mr. Chris R. LeConte
A.N. Deringer, Inc.
15 River Street
Calais, Maine 04619-1894

RE: Applicability of duty exemption under subheading 9802.00.80, HTSUS, to polyester and polypropylene ropes created abroad by twisting polyester yarn together and by twisting yarn made out of polypropylene resin pellets together.Further fabrication;assembly;10.14(a);10.16(a); 555221;555128;847184

Dear Mr. LeConte:

This is in response to your letter of April 20, 1990, on behalf of Scotia Ropes, requesting a ruling on the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to polyester and polypropylene ropes imported from Canada. Samples of the raw materials and finished ropes were submitted for examination.

FACTS:

Scotia plans on sending polyester yarn and polypropylene resin pellets to Canada for foreign operations. The polyester yarn is used in the production of rope which ranges from 1/4 inch to 1 inch in diameter. The polyester rope is formed by twisting three strands of polyester yarn on a rope laying machine. The polypropylene rope is made from the polypropylene resin pellets. In Canada, the pellets are melted and extruded into strands of yarn. The polypropylene strands are then twisted on a rope laying machine into rope.

The finished rope is then coiled, weighed and palletized for importation into the U.S.

ISSUE:

Whether the polyester and polypropylene ropes will be eligible for the duty exemption available under subheading 9802.00.80, HTSUS, when imported into 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 the U.S. components assembled therein, upon compliance with the documentary requirements of section 10.24, Customs Regulations (19 CFR 10.24).

Section 10.14(a), Customs Regulations (19 CFR 10.14(a)), states in part that:

[t]he components must be in condition ready for assembly without further fabrication at the time of their exportation from the United States to qualify for the exemption. Components will not loose their entitlement to the exemption by being subjected to operations incidental to the assembly either before, during, or after their assembly with other components.

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.

The polypropylene rope will not qualify for the duty exemption available under subheading 9802.00.80, HTSUS. The rope is made from the polypropylene resin pellets which are not
exported from the U.S. in condition ready for assembly without further fabrication. The pellets must be extruded to manufacture the yarn which is then used in producing the rope. Extruding the polypropylene resin pellets into yarn clearly is a significant process whose primary purpose is the fabrication of a component.

However, the polyester yarn which is exported to Canada and twisted to form rope will qualify for the duty exemption under this tariff provision. We have previously held that twisting components together to create a rope constitutes an assembly pursuant to 19 CFR 10.16(a). See, Headquarters Ruling Letter (HRL) 555221 dated October 24, 1989, (twisting individual strands and then three skeins of strands into a rope configuration constitutes an acceptable assembly operation); and HRL 555128 dated January 9, 1989, (twisting of 3-ply nylon rope yarn constituted an acceptable assembly of the three nylon strands).

The imported twisted polyester rope is classified under HTSUS subheading 5607.50.2000, which provides for twine, cordage, ropes and cable, ...., of other synthetic fibers, not braided or plaited. The imported twisted polypropylene rope is classified under HTSUS subheading 5607.49.2500, which provides for twine, cordage, ropes and cables, of polyethylene or polypropylene, other, other, not braided or plaited, other. The rate of duty for both polyester and polypropylene rope is 15 percent ad valorem plus 27.6 cents per kilogram. See, New York Ruling Letter 847184. Goods classified under subheadings 5607.50.2000 and 5607.49.2500, HTSUS, which originate in the Territory of Canada or the U.S., will be entitled to a 13.5 percent ad valorem, plus 24.8 cents per kilogram rate of duty under the United States-Canada Free Trade Agreement (FTA) upon compliance with all applicable regulations. See, sections 10.301-10.311, Customs Regulations (19 CFR 10.301-10.311).

U.S. Note 4(b), subchapter II, Chapter 98, HTSUS, provides in regard to HTSUS subheading 9802.00.80 that if the imported assembled article is subject to a specific or compound rate of duty, the total duties shall be reduced in such proportion as the cost or value of the U.S. components bears to the full value of the imported article.

HOLDING:

From the information and samples submitted, it is our opinion that the polyester rope will qualify for the duty exemption available under subheading 9802.00.80, HTSUS. Therefore, allowances in duty may be made for the cost or value
of the U.S. polyester yarn upon importation of the polyester rope, provided the documentary requirements of 19 CFR 10.24 are satisfied. However, the polypropylene rope will not qualify for the duty exemption under this tariff provision, as the polypropylene resin was not exported in a condition ready for assembly without further fabrication. Polyester rope is classified under HTSUS subheading 5607.50.2000 and polypropylene rope is classified under HTSUS subheading 5607.49.2500.

Sincerely,

John Durant, Director
Commercial Rulings Division

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