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HQ 087339


October 2, 1990

CLA-2 CO:R:C:G 087339 KWM

CATEGORY: CLASSIFICATION

TARIFF NO.: 5603.00.90

Ms. Ann M. Williams
A.N. Deringer, Inc.
30 West Service Road
Champlain, New York 12919-9703

RE: Labels; Clothing labels; Paper; man-made fiber; non-woven material; parts of clothing; American goods returned; Substantial transformation.

Dear Ms. Williams:

This will acknowledge receipt of your correspondence dated May 24, 1990, requesting a binding classification ruling of "'Econo' paper labels" under the Harmonized Tariff Schedule of the United States Annotated. After considering your request, we find that the proper classification is as described below.

FACTS:

The merchandise presented for classification is as "paper labels made in Canada with fabric of U.S. origin." Although your letter describes the merchandise as "paper", a laboratory analysis of the sample supplied indicates that the composition is less than 25 percent chemical wood pulp fibers, more than 50 percent man-made fibers (rayon and polyester), and less than 25 percent cotton fibers.

The label material is of U.S. origin. The merchandise is sent to Canada, presumably in sheet form, without marking or other working. In Canada the material is perforated and holes are punched along the edges of the material. The samples provided indicate that the holes provide a pin-feed capability for printing. The punched and perforated sheets are then shipped back to the U.S. where they are printed. Your letter emphasizes that no printing is performed in Canada.

Your first request is for classification of the punched and perforated merchandise under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA). Secondly, you have inquired as to whether heading 9802, HTSUSA, regarding articles exported and returned, advanced or improved abroad, may be applicable to the importation of the goods.

ISSUES:

How is this merchandise classified under the Harmonized Tariff Schedule of the United States Annotated?

Is heading 9802 of the Harmonized Tariff Schedule of the United States Annotated applicable in this case?

LAW AND ANALYSIS:

Classification under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA) is made in accordance with the General Rules of Interpretation (GRI's). The systematic detail of the harmonized system is such that virtually all goods are classified by application of GRI 1, that is, according to the terms of the headings of the tariff schedule and any relevant Section or Chapter Notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs may be applied, taken in order.

In reviewing the HTSUSA, we note the following headings, the terms of which indicate that they may be eligible for classification of these goods:

5603 Nonwovens, whether or not impregnated, coated, covered or laminated: or:

5807 Labels, badges and similar articles of textile materials, in the piece, in strips or cut to shape or size, not embroidered: or:

6217 Other made up clothing accessories; parts of garments or of clothing accessories, other than those of heading 6212:

Your submission of May 24, 1990 suggested classification under heading 4823, HTSUSA. However, since we have determined that the merchandise is more properly considered a textile, rather than a paper product, we do not believe that heading 4823 is eligible for classification in this case. After reviewing the terms of the headings and accompanying Explanatory Notes, we find that the instant goods are also not provided for under either heading 5807 or 6217, HTSUSA, but rather should be classified as textile materials based on their composition.

Heading 5807, HTSUSA, Labels of Textile Material

Although your submission refers to both products as "labels", they are essentially perforated sheets of textile material, they have not acquired the characteristics of clothing labels, and are not yet of a size or description suitable for use as clothing labels. Also, your submission points out that no printing is performed prior to importation. Clothing labels are intended primarily, if not solely, to convey printed information to a purchaser. Without such printing, we cannot say here that the instant merchandise is either a label or has acquired the essential character of a label.

Heading 6217, HTSUSA, Parts and Made Up Accessories of Garments

Both parts and accessories must be suitable for use solely or principally with their primary good. Parts must be essential or integral to the use of the good, while accessories are intended to facilitate or improve the use. Neither characterization is applicable here. Labels are not integral to the use of a garment, nor do they facilitate its' use. In addition, without printing which would be tailored specifically to the garment in which the label was sewn, these goods are not suited solely or principally with that garment. Lastly, these goods are not "made up" as that term is used in the nomenclature.

Legal Note 7 to Section XI, HTSUSA, indicates that a made up article may be cut otherwise than into squares or rectangles, or produced in the finished state, or cut to size having undergone a process of drawn thread work. The instant merchandise meets none of these criteria. It is not in a finished state, nor has it been 'cut' in the common sense, merely perforated for separation at a later stage.

Classification as Textile Materials

Having found that these goods are not made up, are not parts or accessories, or that they have the essential character of labels, the remaining eligible headings provide for classification as a textile material.

The item described as "Econo", constructed of more than 50 percent non-woven man-made polyester and rayon fibers is provided for in subheading 5603.00.90, HTSUSA. The description of the goods classified in each of these headings is set out above.

Applicability of Heading 9802.00.5040, HTSUSA

Your letter also requested a ruling on the applicability of the partial duty exemption under subheading 9802.00.50, HTSUSA, to the returned merchandise. This tariff provision provides for the assessment of duty on the value of repairs or alterations performed on articles sent abroad for that purpose. However, such treatment is precluded where the exported articles are incomplete for their intended use and the foreign processing is a necessary step in the preparation or manufacture of finished articles. Dolliff & Company, Inc. v. United States, 81 Cust. Ct. 1, C.D. 4755, 455 F.Supp. 618 (1978), aff'd, 66 CCPA 77 , C.A.D. 1225, 599 F.2d 1015 (1979).

As the merchandise in this case clearly is not complete for its intended use when exported to Canada, it is our opinion that the perforating and punching operations exceed the meaning of the terms "repairs" and "alterations." Therefore, the returned labels will not be eligible for reduced duty treatment under subheading 9802.00.50, HTSUSA.

HOLDING:

The labels referred to as "Econo" labels are classified as nonwoven textile material of subheading 5603.00.90, HTSUSA, dutiable at the rate of 12.5 percent ad valorem. The applicable textile category is 223.

The designated textile and apparel category may be subdivided into parts. If so, the visa and quota category requirements applicable to the subject merchandise may be affected. Since part categories are the result of international bilateral agreements which are subject to frequent renegotiations and changes, to obtain the most current information available, we suggest you check, close to the time of shipment, the Status Report on Current Import Quotas (Restraint Levels), an issuance of the U.S. Customs Service, which is updated weekly and is available at your local Customs office.

Due to the changeable nature of the statistical annotation (the ninth and tenth digits of the classification) and the restraint (quota/visa) categories, you should contact your local Customs office prior to the importation of this merchandise to determine the current status of any import restraints or requirements.

Articles that meet the definition of "goods originating in the territory of Canada" (see General Note 3(c)(vii)(B), HTSUSA) are subject to reduced rates of duty under the United States- Canada Free Trade Agreement Implementation Act of 1988. If the merchandise constitutes "goods originating in the territory of Canada," the applicable rate of duty for the Econo labels would be 10 percent ad valorem.

Sincerely,

John A. Durant
Director,
Commercial Rulings Division


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