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HQ 556672


February 25, 1993

CLA-2 CO:R:C:S 556672 CW

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80

S. Richard Shostak, Esq.
Stein, Shostak, Shostak & O'Hara
Suite 807
1620 L Street, N.W.
Washington, D.C. 20036-5605

RE: Applicability of partial duty exemption under subheading 9802.00.80, HTSUSA, to carpeting; HRL 555344

Dear Mr. Shostak:

This is in reference to your letter of April 15, 1992, on behalf of Tuftex Industries, concerning the applicability of a partial duty exemption under subheading 9802.00.80, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), to carpeting created by "tufting".

FACTS:

Two carpet types are the subject of this ruling: loop pile greige carpet, and cut pile greige carpeting. The carpets consist of two primarily components, nylon yarn and woven backing material, of U.S.-origin.

The loop pile greige carpeting consists of U.S. woven backing material which is fed longitudinally into a tufting (multineedle sewing) machine, where U.S. nylon yarn is then inserted by a combination of a needle which holds the yarn, and a looper, which temporarily grabs the yarn after the needle sews it through the backing to form a loop. After the insertion, the tufting the carpeting will be returned to the U.S. where it will be dyed the desired color. After the dyeing process, a binding agent is applied to the backing of the greige goods to secure the loops and to facilitate the attachment of a secondary backing.

The manufacture of the cut pile greige carpeting is similar to the loop pile greige carpeting, except that, following the insertion of the U.S.-origin yarn into the backing to form the loop, a knife cuts the top of the loop to form the cut pile. The cut pile carpeting is returned to the U.S., where it will also be dyed and a binding agent applied.

Each of the tufting machines used in the tufting operations abroad has hundreds of needles, sufficient in gauge and number to create various densities of greige goods. For each needle in the machine, a cone of yarn is installed on a rack known as a creel. The creel allows the cone to unwind freely to feed the tufting machine in a continuous fashion. The yarn is fed through plastic tubes that feed into a single needle.

ISSUE:

Whether tufting operations are an acceptable assembly operation under subheading 9802.00.80, HTSUSA.

LAW AND ANALYSIS:

Subheading 9802.00.80, HTSUSA, 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 subheading 9802.00.80, HTSUSA, 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 cost or 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 10.16(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 force fitting, sewing, or the use of fasteners.

In Headquarters Ruling Letter (HRL) 555344 dated May 19, 1989, it was determined that tufting operations similar to the operations at issue were analogous to weaving operations, and since weaving operations were considered an unacceptable assembly operation pursuant to section 10.16(a), Customs Regulations (19 CFR 10.16(a)), a partial duty exemption under subheading 9802.00.80, HTSUSA, was not allowed.

It is your position that the tufting operations of the carpeting is not analogous to weaving, rather it is analogous to sewing. You provide a definition from the Man-made Fiber and Textile Dictionary that notes that tufting is not a weaving operation and, moreover, that it is described and recognized as a sewing process. Specifically, the description of "tufted carpet" provides as follows:

Carpet produced by a tufting machine instead of a loom. It is an outgrowth of hand-tufted bedspreads. Today, broadloom tufting machines produce over 90% of all domestic carpeting. Tufting machines are essentially multineedle sewing machines which push the pile yarns through a primary backing fabric and hold them in place to form loops as the needles are withdrawn.... Formerly, all carpets were woven, either by hand or machine....

Furthermore, you cite E. Dillingham, Inc. v. U.S., 60 C.C.P.A. 40 (1970), in which the Court of Customs and Patent Appeals held that a needling operation whereby massed fibers and fabric were shipped to Canada where the fibers were oiled, carded, and opened, and then needled into the fabric, was an acceptable assembly operations under item 807.00, Tariff Schedules of the United States (TSUS), the precursor tariff provision to subheading 9802.00.80, HTSUSA.

It is Customs position that the tufting operations are more analogous to sewing-type operations, and, therefore, pursuant to section 10.16(a), Customs Regulations, would be an acceptable assembly operations for purposes of subheading 9802.00.80, HTSUSA. In addition, the holding of the E. Dillingham, case, whereby a needling operations was an acceptable operation under item 807.00, TSUS, further supports a finding that the tufting operations of this case are an acceptable assembly operation under this program.

Consequently, HRL 555344, pursuant to section 177.9, Customs Regulations (19 CFR 177.9), shall be revoked as inconsistent with Customs current position concerning tufting operations.

HOLDING:

Based on the information provided, it is Customs position that the tufting operations performed in Mexico, constitute an acceptable assembly operation pursuant to 19 CFR 10.16(a). Therefore, a duty allowance may be claimed for the cost or value of the U.S. materials under subheading 9802.00.80, HTSUSA, provided that the documentation requirements of 19 CFR 10.24 are satisfied.

Sincerely,

John Durant, Director

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