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HQ 555663


March 6, 1991

CLA-2 CO:R:C:S 555663 DSN

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80

Mr. Jorge E. Veitia
Pronto Cargo Brokers, Inc.
7330 N.W. 66 Street
Miami, Florida 33166-3009

RE: Applicability of partial duty exemption under HTSUS subheading 9802.00.80 to totebags from Columbia. Assembly; incidental operations; cutting to length, 555565,555525

Dear Mr. Veitia:

This is in response to your letter dated May 2, 1990, on behalf of Bag Specialists, Inc., requesting a ruling concerning the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to totebags assembled in Columbia from U.S. and Japanese components. Samples were provided for examination. We regret the delay in responding.

FACTS:

Your client intends to ship zippers, cloth straps and rubber strips in continuous lengths from the U.S. to Columbia where they will be cut to length and attached to the fabric to form the finished totebags. The zippers, which are of Japanese origin, are first sewn onto the fabric comprising the totebag and then cut to length according to the particular size of the totebag. The U.S.-origin straps are measured and cut to length before being sewn to the fabric. The U.S.-origin rubber strips are attached to the fabric and then cut to length once the seams have been covered by the strips.

ISSUE:

Whether the cutting to length of certain components is considered an incidental assembly operation, thereby qualifying the totebags for the partial duty exemption available 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 articles assembled abroad in whole or in part of U.S.-origin fabricated components provided the components meet the following three conditions imposed by the statute:

(a) are exported ready for assembly without further fabrication;

(b) do not lose their physical identity by change in form, shape or otherwise; and

(c) are not advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process.

Articles entitled to entry under this provision are dutiable on their full value less the cost or value of the U.S. components incorporated therein. The duty rate to be applied is the rate applicable to the article under the appropriate Chapter 1-97, HTSUS, tariff provision.

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 promary 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).

Examples of operations considered incidental to the assembly process are set forth in 19 CFR 10.16(b). Cutting to length of materials exported in continuous lengths is specifically enumerated in the examples as an operation incidental to assembly. Therefore, allowances in duty may be made under subheading 9802.00.80, HTSUS, for the cost or value of the U.S.- origin cloth straps and rubber strips incorporated into the totebags. See, Headquarters Ruling Letter (HRL) 555565 of May 14, 1990, and HRL 555525 of June 5, 1990. However, as stated previously, allowances in duty under subheading 9802.00.80, HTSUS, are made only to U.S.-origin components assembled abroad. Therefore, as the zippers are of Japanese origin, they are not entitled to the partial duty exemption under this tariff provision.

HOLDING:

On the basis of the information presented, it is our opinion that the cutting to length of the U.S.-origin straps and strips is considered incidental to the assembly process and, therefore, the imported totebags may be entered under subheading 9802.00.80, HTSUS, with allowances in duty for the cost or value of these U.S.-origin components incorporated therein. No duty allowance under this tariff provision may be made for the Japanese-origin zippers.

Sincerely,

John Durant, Director
Commercial Rulings Division

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