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HQ 556274


January 17, 1992

CLA-2 CO:R:C:S 556274 DSN

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80

Ms. Teresa R. Soza
Umbro U.S.A.
P.O. Box 10648 Federal Station
25 East Court Street
Greenville, South Carolina 29601

RE: Applicability of partial duty exemption to mens' and boys' soccer shorts; assembly; L'Eggs; Oxford Industries; sewing

Dear Ms. Soza:

This is in response to your letter of August 26, 1991, requesting a ruling on the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to mens' and boys' soccer shorts to be produced in Mexico and Brazil from U.S.-origin components. You also seek advice regarding the country of origin marking language for the labels attached to the shorts. You were advised of the tariff classification by letter of December 30, 1991.

FACTS:

According to your submission, U.S.-origin components will be sent to factories in Mexico and Brazil to be assembled into mens' and boys' soccer shorts. You state that U.S.-origin fabric, elastic, binding and drawstrings will be cut to shape and length in the U.S. In Mexico and Brazil, the following processes will be performed:

1. crease and set pocket;

2. join side seams (front, back rise and inside leg);

3. bind side vents;

4. hem leg opening;

5. overlock and set the elastic;

6. cut two buttonholes at the waist for the drawstring;

7. lockstitch and set labels;

8. multineedle the waist;

9. set drawstring at the waist;

10. fold and pack and attach handtag.

The thread used in the above operation will be of foreign origin. Upon completion of the assembly, the soccer shorts will be imported into the U.S.

ISSUE:

Whether the mens' and boys' soccer shorts qualify 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:

[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 this tariff provision is subject to duty upon the full value of the imported assembled article, less the cost or value of such U.S. components, 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 lose 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.

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 primary purpose is the fabrication, completion, physical or chemical improvement of a component precludes the application of the exemption under subheading 9802.00.80, HTSUS, to that component. See, 19 CFR 10.16(c).

In the instant case, the operations that entail sewing fabric onto itself using any type of stitch, including hemming and forming pockets are considered acceptable assembly operations. See, L'Eggs Products, Inc., v. United States, Slip Op. 89-5, 13 CIT ___, 704 F.Supp. 1127 (CIT 1989). Attaching two pieces of fabric together by sewing the side seams and waist band are also considered acceptable assembly operations pursuant to 19 CFR 10.16(a). In addition, cutting two buttonholes at the waist for the drawstring constitutes a permissible incidental operation. See, United States v. Oxford Industries, Inc., 1 CIT 230, 517 F.Supp. 694 (1981), aff'd, 69 CCPA 55, 668 F.2d 507 (1981), where the court held that a buttonholing operation performed to assure a proper fit of the buttons was a minor operation and considered a permissible incidental operation.

We note that the country of origin marking language you propose -- "Assembled in ____ of U.S. components" -- for the labels is acceptable provided all components are of U.S.-origin. Any components not of U.S.-origin should be identified. (However, it will not be necessary to identify the foreign origin of the thread). Alternatively, the marking "Assembled in _____" is acceptable, even if all the components are not of U.S.- origin.

HOLDING:

On the basis of the information provided, it is our opinion that the operations performed abroad to create the soccer shorts are considered proper assembly operations or operations incidental thereto. Therefore, the shorts may enter under subheading 9802.00.80, HTSUS, with allowances in duty for the cost or value of the U.S. components therein, upon compliance with the documentary requirements of 19 CFR 10.24.

Sincerely,

John Durant, Director
Commercial Rulings Division

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