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HQ 558925




May 19, 1995

CLA-2-05 R:C:S 558925 DEC

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80

Mr. Miguel Ruiz
Miami International Forwarders
P.O. Box 523730
Miami, Florida 33152-3730

RE: Vicrosoft SME wash; 19 CFR 10.16; HRL 554599; HRL 554695; HRL 554497; HRL 554582; United States v. Mast Industries, Inc., 1 CIT 230, 517 Fed. Supp. 694 (1981), aff'd, 69 CCPA 47, 668 F.2d 501 (1981); General Motors Corp. v. U.S., 15 CIT 372, 770 F. Supp. 641 (1991), rev'd, 976 F.2d 716 (Fed. Cir. 1992)

Dear Mr. Ruiz:

This is in response to your letter dated November 1, 1995, on behalf of Associated Garment, Incorporated (Associated Garment), in which you seek a ruling regarding the eligibility of garments subjected to a wash process abroad for the partial duty exemption under subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS).

FACTS:

You indicated in your submissions that Associated Garment plans to ship fabric components of a 100% cotton woven pant in a condition ready to be assembled to the Dominican Republic. After assembly by sewing, Associated Garment intends to wash these garments using a Vicrosoft SME-342 wash process to soften the garments.

In your submission, you have included documentary evidence that describes the wash process. The garments will be desized using an alkali (Alkaflo KDY) and a detergent (Surfex), rinsed, and softened using Virco SME-342. Our Office of Laboratories and Scientific Services confirmed with manufacturer's technical representatives that the Alkaflo KDY and Virco SME-342 do not contain ingredients
which would cause color change. In addition, you submitted documentation that indicates the anticipated expense of the wash process represents approximately five percent of the cost or value of the components.

ISSUE:

Whether subjecting the garments to the Vicrosoft SME-342 wash process described above will preclude the U.S. fabric components from receiving the duty exemption available under subheading 9802.00.80, HTSUS, when returned to the United States.

LAW AND ANALYSIS:

Subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS) provides for 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 United States components assembled abroad, provided the section 10.24, Customs Regulations (19 CFR 10.24), documentary requirements are satisfied.

Section 10.14(a), Customs Regulations (19 CFR 10.14(a)), states, in part, that

The 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. 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). According to 19 CFR 10.16(c)(4), the chemical treatment of components or assembled articles to impart new characteristics, such as shower- proofing, permapressing, sanforizing, dying or bleaching of textiles, is not considered incidental to the assembly process.

Consistent with the above regulation, Customs has held that operations such as stone-washing, acid-washing and ovenbaking are not incidental to the assembly process and preclude subheading 9802.00.80, HTSUS, treatment to the U.S. components subjected to such an operation. See, Headquarters Ruling Letter (HRL) 555686, dated July 23, 1990; HRL 555008, dated March 24, 1990; and HRL 554939, dated November 15, 1988.

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.

In United States v. Mast Industries, Inc., 1 CIT 230, 517 Fed. Supp. 694 (1981), aff'd, 69 CCPA 47, 668 F.2d 501 (1981), the court stated that Congress intended a balancing of all relevant factors to ascertain whether an operation of a "minor nature" is incidental to the assembly process. The court indicated that dependant on the particular case, relevant factors may include:

1) the relative time and cost of the particular operation;

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) if performed concurrently with assembly, whether economic or practical considerations dictate that the operations be so performed.

In General Motors Corp. v. U.S., 15 CIT 372, 770 F. Supp. 641 (1991), rev'd, 976 F.2d 716 (Fed. Cir. 1992), the Court of International Trade held that topcoat painting operations performed on U.S. origin sheet metal components shipped to Mexico for assembly into automobiles were "incidental to assembly" within the meaning of TSUS item 807.00 (now HTSUS subheading 9802.00.80). On appeal, the Court of Appeals for the Federal Circuit reversed the lower court and held that, considering the cost of all of the painting operations performed abroad (including undercoating, sanding, baking, top coating, and waxing), these operations were not minor, and, therefore, not "incidental to assembly." As a result, no duty allowance under item 807.00 was permitted for the cost or value of the U.S. components which were subjected to the painting operations. The appellate court reasoned that, although item 807.00 specifically refers to "painting," it is simply an example of an operation which is potentially incidental to the assembly process- - not a definitive statement that all painting operations, no matter how extensive, are allowed under item 807.00. The court recognized from the statute's legislative history that only operations (including painting) "of a minor nature incidental to the assembly process" are permitted. Id. at 719.

In this case, the issue is whether the wash process described above resembles a cleaning operation which would not preclude the application of the subheading 9802.00.80, HTSUS, partial duty exemption. While the wash produces some fading to the fabric, it is our opinion that it serves chiefly as a fabric softening process. The wash process yields a garment that is uniformly and mildly faded from the pre-wash garment and a garment that is softer to the touch. In addition, the cost of this process represents only five percent of the cost of the components. We are satisfied that this washing operation is of a minor nature and is incidental to the assembly process.

HOLDING:

The Vicrosoft SME-342 wash process is a washing and fabric softening operation that is deemed an operation incidental to an assembly and will not preclude the application of the subheading 9802.00.80, HTSUS, exemption to the U.S. fabric components.

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.

Sincerely,

John Durant, Director

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