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HQ 558011




November 10, 1994

CLA-2 CO:R:C:S 558011 WAS

CATEGORY: CLASSIFICATION

Mr. Michael R. McGee
McGee & Gelman
200 Summer Street
Buffalo, New York 14222

RE: Eligibility of men's suit jackets for the partial duty exemption available under subheading 9802.00.80, HTSUS; sewing; 19 CFR 12.130; 19 CFR 10.24; "product of"; 19 CFR 10.12(e)

Dear Mr. McGee:

This is in reference to your letters dated March 16, and July 14, 1994, on behalf of your client, Canada Hair Cloth Company, Limited, concerning the eligibility of interlining fabric for the partial duty exemption available under subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS). A sample of the merchandise was submitted for our review.

FACTS:

You state that Canada Hair Cloth purchases fabric ("W-75 fabric") for its W-75 product from Gilliland Industries Corporation of South Carolina. The fabric is 100 percent U.S. origin fabric. Upon purchasing the fabric, Canada Hair Cloth ships the fabric in bolt form to Canada. In Canada, the fabric is dyed, napped and an adhesive coating is applied. You state that the result of this processing creates the W-75 fabric, which is used as interlining material for the front area of men's suit jackets.

Upon completing the dyeing, napping and application of adhesive to the fabric in Canada, the W-75 is sold in bolts to a U.S. customer, Target Sportswear. You state that the fabric is imported into the U.S. under subheading 5903.90.2500, HTSUS, which is subject to Textile Category Number 229. In the U.S., Target Sportswear cuts the W-75 product into various sizes and shapes suitable for assembly into men's suit jackets. After cutting the fabric, Target Sportswear ships the pre-cut fabric components, along with other pre-cut portions of a men's suit jacket, to the Caribbean for assembly.

In the Caribbean, the pre-cut fabric component parts are sewn together into completed men's suit jackets. After the sewing operation, the completed men's suit jackets are imported into the U.S.

ISSUE:

Whether the completed men's suit jackets will be entitled to the partial duty exemption under subheading 9802.00.80, HTSUS, upon return 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 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).

For a component to receive a duty allowance under subheading 9802.00.80, HTSUS, it must be a "product of" the U.S. According to section 10.12(e), Customs Regulations (19 CFR 10.12(e)), a "product of the U.S." is an article manufactured within the Customs territory of the U.S. and may consist wholly of U.S. components or materials, of U.S. and foreign components and materials, or wholly of foreign components or materials. If the component consists wholly or partially of foreign components or materials, the manufacturing process must be such that the foreign components or materials have been substantially transformed into a new and different article, or have been merged into a new and different article.

Section 12.130, Customs Regulations (19 CFR 12.130), sets forth the principles for determining the country of origin of textiles and textile products subject to section 204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1854). These principles are applicable to such merchandise for all purposes including duty, quota, and marking. The country or origin of textile products is deemed to be that foreign territory, country or insular possession where the article last underwent a substantial transformation.

In determining whether a substantial transformation has occurred in connection with textile products, 19 CFR 12.130(b) provides that a new and different article of commerce must emerge by means of substantial manufacturing or processing operations. The factors to be considered in determining whether or not a manufacturing operation is substantial are set forth in 19 CFR 12.130(d) and (e).

Section 12.130(e)(iv) provides that a textile article will usually be a product of a particular country if the cutting of the fabric into parts and the assembly of those parts into the completed article has occurred in that country. However, 19 CFR 12.130(e)(2)(ii) provides that material usually will not be considered to be a product of a particular foreign country by virtue of merely having undergone cutting to length or width and hemming or overlocking fabrics which are readily identifiable as being intended for a particular commercial use.

We have held that cutting specific pattern pieces for garments, which involves laying out the pattern according to the weave of the fabric, and following the shape of the pattern, amounted to substantial manufacturing operations. See HRL 731028 dated July 18, 1988 (cutting of fabric into garment parts for wearing apparel constitutes a substantial transformation; also, HRL 555489 dated May 14, 1990 (cutting of fabric into glove patterns results in substantial transformation), and HRL 555693 dated April 15, 1991 (cutting of fabric to create pattern pieces for infant carrier results in a substantial transformation).

We are of the opinion that the cutting operations in the instant case are analogous with the cutting operations in HRL's 731028, 555489 and 555693. The cutting in the instant case which is performed in the U.S. to the fabric which has been dyed, napped and coated with an adhesive, involves cutting to precise sizes and shapes to form suit components which are used in the assembly of completed men's suit jackets. Accordingly, the cutting operation in the U.S. constitutes a substantial transformation of the fabric into a "product of" the U.S.

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, lamination, sewing, or the use of fasteners.

In the instant case, we are satisfied from the information provided that the U.S. fabricated components meet the requirements of subheading 9802.00.80, HTSUS, and therefore, are entitled to the partial duty exemption available under this tariff provision. The foreign operation that entails attaching two or more components together by sewing is considered an acceptable assembly operation pursuant to 19 CFR 10.16(a). Therefore, sewing the pre-cut fabric pieces together to form completed men's suit jackets is considered an acceptable assembly operation within the meaning of subheading 9802.00.80, HTSUS.

HOLDING:

On the basis of the information and sample submitted, it is our opinion that the operations performed abroad to create the men's suit jackets are considered proper assembly operations. Therefore, allowances in duty may be made under subheading 9802.00.80, HTSUS, for the cost or value of the U.S. fabricated components incorporated into the men's suit jackets when they are returned to the U.S., provided the documentary requirements of 19 CFR 10.24, are satisfied.

Sincerely,

John Durant, Director

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