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HQ 555014


June 13, 1989

CLA-2-CO:R:C:V 555014 RA

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80, HTSUS

Leslie Alan Glick, Esq.
Duncan, Allen and Mitchell
1575 Eye Street, N.W.
Washington, D.C. 20005

RE: Application of Subheading 9802.00.80, HTSUS, to binding fabric of foreign origin cut to width in the U.S.

Dear Mr. Glick:

This is in response to your letter of May 5, 1988, on behalf of Service Manufacturing Corporation, requesting reconsideration of our ruling of March 7, 1988 (554878), which held that binding fabric cut to width from material of foreign origin was not transformed into a product of the U.S. and so was not eligible for tariff treatment under subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS)(formerly item 807.00, Tariff Schedules of the United States (TSUS)). We regret the delay in responding to your letter.

FACTS:

Fabric used as binding material for camera and cassette bags in Mexico is cut to width in the U.S. from foreign-made fabric. The fabric is imported in bulk rolls having a width of 60 inches. It is die cut to width in the U.S. into 30 pieces each having a width of two inches. In Mexico, the binding material is sewn to various other components in the assembly process.

ISSUE:

Does the die cutting to width of foreign-made fabric in the U.S. to form strips of binding material constitute a substantial transformation of the fabric into a U.S.-fabricated component which is eligible for tariff allowance under subheading 9802.00.80, HTSUS?

LAW AND ANALYSIS:

Subheading 9802.00.80, HTSUS, applies to fabricated components of U.S. origin assembled abroad. Section 10.14(b), Customs Regulations (19 CFR 10.14(b)), states that foreign-made articles or materials may become products of the U.S. if they undergo a process of manufacture in the U.S. which results in their substantial transformation into a new and different article having a distinctive name, character, or use different from that originally possessed. However, the mere finishing or modification of a partially or nearly complete foreign product in the U.S. will not result in a substantial transformation. Cutting of textile material to length or width is not usually considered sufficient to change the country of origin. See section 12.130(e)(2)(ii), Customs Regulations (19 CFR

The cutting of the foreign fabric to width is not a processing which substantially increases the value of the imported product or involves a considerable investment in plant facilities and production costs. National Juice Products Association et al. v. U.S., 10 CIT 48, 628 F. Supp. 990 (1986). The fact that the cutting is a minor finishing step which may be accomplished easily anywhere with a minimum of effort and investment may be considered in determining whether there is a substantial transformation. Ferrostaal Metals Corporation v. U.S., 11 CIT , 614 F. Supp. 535 (1987). A substantial transformation results only if the article processed has a new name, character, or use, and if the processing is a minor one which leaves the identity intact, a substantial transformation has not occurred. The relative costs, manufacturing time, and complexity of operations are important considerations. Uniroyal, Inc. v. U.S., 3 CIT 220, 542 F. Supp. 1026 (1982).

HOLDING:

In view of the simple, inexpensive, and uncomplicated nature of the operation of cutting fabric to width, we remain of the opinion that this processing does not result in a substantial transformation of the foreign-made fabric. Accordingly, the cut material cannot be considered to be a fabricated U.S. component which is eligible for tariff treatment under subheading 9802.00.80, HTSUS.

Sincerely,

Harvey B. Fox

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