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HQ 557115


May 28, 1993

CLA-2 CO:R:C:S 557115 MLR

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80

Mr. Bruce Schiller
V.P. of Operations
MSAS Customs Logistics Inc.
8725 NW 18th Terrace
Suite 301
Miami, Florida 33172

RE: Applicability of partial duty exemption under HTSUS subheading 9802.00.80 to garments; numerous washing cycles; softening; bleaching

Dear Mr. Schiller:

This is in response to your letter of January 29, 1993, requesting a ruling on behalf of the Hartwell Company, regarding the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to certain garments washed in a process termed "classic wash." Samples of treated and untreated fabric were submitted with your request.

FACTS:

Garment components are sent from the U.S. to Colombia, Guatemala, or Costa Rica, where they are assembled and subsequently washed using a process termed "classic wash." It is stated that the wash process is intended for use on sueded twill fabric for the purpose of softening the fabric. The process consists of the following steps:

1. Fill machine, low water, 140 degrees Fahrenheit (F), add acetic acid until a pH of 4-4.5 is achieved. Add 1/2-1 wt. percent of a non-ionic neutral detergent (romene ad), supplied by the Hopkins Chemical Co. Check to see if pH is 4-4.5. Do not drain. Add 2-4 wt. percent of cellulose enzyme (SPR-50), supplied by the Dexter Chemical Corp. Wash 20-30 minutes.

2. Drain.

3. Fill machine, high water, 120 degrees F, rinse 2 minutes.

4. Drain.

5. Fill machine, high water, 140 degrees F, add 2 wt. percent alkali detergent (T-207), supplied by the Virkler Chemical Company, and 4 wt. percent sodium perborate. Wash 10 minutes.

6. Fill machine, high water, 120 degrees F, rinse 2 minutes.

7. Drain.

8. Fill machine, high water, 100 degrees F, rinse 2 minutes.

9. Drain.

10. Fill machine, high water, 100 degrees F, add 2 wt. percent Cationic softener (RNG), from the Dexter Chemical Corp. Wash 6 minutes.

11. Drain, extract, dry. Low temperature, 155 degrees F, cool down 10 minutes.

It is stated that the acetic acid used in step 1 is only present to adjust the pH level; it is not present to react with the fabric. The enzyme in step 1 is allegedly designed to lift the suede (thereby softening the fabric), but does not abrade the fibers. The alkali detergent and sodium perborate in step 5 are allegedly present to kill the enzyme and clean the fabric. The cationic softener in step 10 is added to soften the fabric via removal of the sizing. It is also stated that the washing process constitutes only 5 percent of the entered value of the finished garments.

ISSUE:

Whether the garments subjected to the "classic wash" process qualify for the partial duty exemption available under subheading 9802.00.80, HTSUS, when returned to the United States.

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 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 10.14(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.

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. See 19 CFR 10.16(a). For instance, section 10.16(b)(1), Customs Regulations {19 CFR 10.16(b)(1)}, provides that cleaning is an incidental operation. 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). The Customs Regulations expressly provide that the chemical treatment of components or assembled articles to impart new characteristics, such as shower-proofing, permapressing, sanforizing, dyeing, or bleaching of textiles, is not considered incidental to the assembly process. 19 CFR 10.16(c)(4).

It is alleged that the classic wash process is in the nature of a cleaning procedure because it only removes sizing and raises the suede of the fabric. Furthermore, because the washing process constitutes only 5 percent of the entered value of the finished garments, it is alleged that the classic wash is an operation incidental to the assembly process as provided in 19 CFR 10.16(b).

This ruling will only address the classic wash process; it is assumed that the U.S.-origin components otherwise qualify for subheading 9802.00.80, HTSUS, treatment. Customs has consistently held, consistent with the regulations above, that operations such as ovenbaking, stone-washing, and bleaching are not incidental to the assembly process, and U.S. components subjected to such an operation are precluded from receiving subheading 9802.00.80, HTSUS, treatment. For example, see Headquarters Ruling Letter (HRL) 027763 dated September 13, 1973, (notwithstanding the question of whether or not trousers were structurally or chemically changed by being treated with synthetic resins before being oven-cured to produce a permanent press, the fact that the trousers were oven-cured introduced new characteristics by a non-assembly process, which did not exist before the heat treatment, i.e., "locking-in" the shape of the trousers, durable pleats and press creases, durable smooth seams, "locked-out" wrinkles, machine washability and dryability, and a fresh appearance without ironing), HRL 555665 dated March 11, 1991, (denim garments, assembled in the Dominican Republic and stonewashed, were ineligible for a duty allowance under subheading 9802.00.80, HTSUS; however, other components such as the buttons, zippers, and thread were eligible for the duty exemption because the stonewashing process was merely incidental to their assembly, and had no effect on their intended function), and HRL 555008 dated March 24, 1989, (U.S.-origin cloth assembled into pants in Mexico and stonewashed, which constituted washing the pants with water and a stone and no detergents or softeners, were precluded from item 807.00, Tariff Schedules of the United States (TSUS) (the predecessor provision of subheading 9802.00.80, HTSUS), treatment, because the process added characteristics that did not exist prior to assembly).

In HRL 554676 dated November 23, 1987, dyed denim fabric was assembled into searing apparel articles in the Dominican Republic, and then washed in a washing machine. It was stated that the washing not only cleaned the newly assembled garments of dust and dirt but also of the excess dye, which would prevent the dye from running and staining other garments during the first washing. The detergents used in the foreign washing cycle were either plain high strength detergent or high strength detergent containing about 10 percent bleach substance. It was held that washing the textile articles with high strength detergent was a process analogous to cleaning, and considered incidental to assembly; however, washing with a high strength detergent containing a 10 percent bleach was regarded as too substantial to be treated as merely incidental. The bleaching changed the color of the exported fabric, similar to dyeing fabric, and was not considered an incidental operation. In HRL 554232 dated August 25, 1986, bleaching and softening exported fabric was also regarded as too substantial to be treated as merely incidental because there was not only a change in color, but a change in texture as well.

The foregoing rulings are distinguished from HRL 554599 dated June 8, 1987, which held that washing garments in a fabric softener and pressing them were operations incidental to assembly, because the inclusion of a softener in the wash cycle was considered a part of the cleaning process. The softener was also comparable to commercial softeners available to retail consumers. Furthermore, in HRL 554695 dated June 16, 1989, it was held that washing garments, which were assembled in the Dominican Republic or Costa Rica, with a detergent and softener in hot water without any bleach constituted a minor procedure with minimal change in color. It was stated that the washing process removed sizing and excess pigment from the fabric and merely constituted a cleaning operation. The same conclusion was reached in HRL 554497 dated March 18, 1987, which involved washing assembled garments in a commercial laundry using a standard detergent and softener, and tumble drying and lightly pressing them, and in HRL 554582 dated March 12, 1987, which involved garments washed in an industrial machine utilizing an alkaline detergent and fabric softener.

Therefore, at issue is whether the classic wash process resembles a cleaning operation, or an operation which adds new characteristics to the garments, thereby precluding the fabric from subheading 9802.00.80, HTSUS, treatment. The classic wash process consists of 6 cycles. This alone does not appear to preclude subheading 9802.00.80, HTSUS, treatment, because the garments are washed with detergents that were deemed acceptable in HRLs 554497, 554582, 554599, 554676, and 554695. Furthermore, the addition of a softener in step 10 does not appear to preclude the partial duty exemption, because the rulings also allowed the use of a softener in the wash cycle, and whether the water is drained and refilled automatically by the machine or manually, as in this case, the effect on the garment is the same.

However, the addition of sodium perborate in the wash cycle appears to be too substantial to allow subheading 9802.00.80, HTSUS, treatment. The Random House Dictionary of the English Language, (1973), defines "sodium perborate" as a white, crystalline, water-soluble solid, used chiefly as a bleaching agent and disinfectant. The applicant states that the sodium perborate is added to kill the enzyme (added in step 1), which appears to meet the definition of a disinfectant. "Disinfectant" is defined as a "chemical agent used to inhibit the growth of or destroy harmful organisms." That organism appears to be the enzyme which is defined as a complex organic substance originating from living cells and capable of producing certain chemical changes in organic substances by catalytic action, as in digestion. However, although the sodium perborate may be used as a disinfectant, it also has the effect of bleaching the fabric, which is obvious from the samples provided. Therefore, we are of the opinion that the classic wash process is not an incidental operation because it gives the garments new characteristics.

The applicant also states that the classic wash process constitutes only 5 percent of the entered value of the finished garments. According to United States v. Mast Industries, Inc. 515 F. Supp. 43, (CIT 1981), aff'd, 69 CCPA 47, 668 F.2d 501 (1981), the court, in examining the legislative history of the meaning of "incidental to the assembly process," stated that:

/t/he apparent legislative intent was to not preclude operations that provide an "independent utility" or that are not essential to the assembly process; rather, Congress intended a balancing act of all relevant factors to ascertain whether an operation of a "minor nature" is incidental to the assembly process.

The court then indicated that relevant factors included:

(1) whether the relative cost and time required by the operation are such that the operation may be considered minor;

(2) whether the operation is necessary to the assembly process;

(3) whether the operation is so related to the assembly that it is logically performed during assembly; and

(4) whether economic or other practical considerations dictate that the operation be performed concurrently with assembly.

It would appear that the cost of the classic wash process is minor; however, regarding the relative cost and time of an operation, in Samsonite Corp. v. United States, 702 F. Supp. 908, 911 (1988), aff'd, 889 F.2d 1074 (1989), the trial court stated that "[t]he magnitude of a particular process in terms of time and cost does not make that process any less one of fabrication, nor does it make the result thereof any less significant." On appeal, the court stated "[t]he critical inquiry in determining whether fabrication rather than mere assembly took place ..., is not the amount of processing that occurred ..., but its nature." It is the nature of the classic wash process, which adds new characteristics to the garments, that is significant. Furthermore, as the Court of Appeals for the Federal Circuit noted in General Motors Corp. v. United States, 976 F.2d 716, 719 (Fed. Cir. 1992), the Mast decision is not to be interpreted "as announcing factors that must invariably be used to the exclusion of all others, or that all such factors are pertinent in every case involving [subheading 9802.00.80, HTSUS]." However, even if we were to strictly apply the Mast factors, we note that the classic wash process requires a total of 52-62 minutes, hardly an insignificant amount of time.

HOLDING:

On the basis of the information submitted, it is our opinion that the classic wash process is more than a mere incidental operation to assembly. Therefore, the fabric is precluded from subheading 9802.00.80, HTSUS, treatment, and duty is payable on the total value of the fabric in accordance with the appropriate tariff provision.

Sincerely,

John Durant, Director

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