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HQ 557875




May 4, 1995

CLA-2 CO:R:C:S 557875 BLS

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.90

Mr. William D. Outman, II
Baker & McKenzie
815 Connecticut Avenue, N.W.
Washington, D.C. 20006-4078

RE: Applicability of subheading 9802.00.90, HTSUS, to soft-sided luggage; Special Regime Program; findings; Article 509

Dear Mr. Outman:

This is in reference to your letter dated April 7, 1994, and other correspondence, on behalf of Samsonite Corporation ("Samsonite"), requesting a ruling that certain soft-sided luggage to be imported from Mexico will be eligible for duty-free treatment under subheading 9802.00.90, Harmonized Tariff Schedule of the United States (HTSUS).

FACTS:

Samsonite sends various components comprised of different materials to Mexico to be used in assembling soft-sided luggage. These components include the following:

1) Fabric components of 100 percent nylon used for the shell of the suitcase and the internal linings; and of 50 percent nylon and 50 percent polyester used to make carrying straps. These fabric components are wholly formed and cut in the U.S.

2) Other fabric components wholly formed in the U.S. that will be exported to Mexico on reels or spools. In the assembly process, these materials will be unspooled, stitched to another textile article (e.g., side panel) and then cut to length.

3) Fabric and non-fabric components used in the assembly process, traditionally considered "findings and trimmings", such as zippers and articles for decorative purposes. These items may be both of U.S. and foreign manufacture.

4) Other non-fabric components such as plastic, metal, or wood. In the subject suitcase, these non-fabric components include metal frames, metal or plastic wheels, metal handle rings, metal rivets, plastic webbing, vinyl washers, and wood bases. These components may be both of U.S. and foreign manufacture.

You state that vinyl components used in the assembly process are cut to shape in the U.S. from vinyl sheet sourced from Asia. These components have a variety of uses, including handle covers and straps, shoulder strap reinforcements, zipper pulls, and decorative trim. The largest vinyl components cut to shape are used as reinforcement on the bottom rail of the suitcase.

The assembly operation in Mexico is as follows:

Work Center A10

The various components are bundled and inspected.

Work Center B10

The cap and socket are installed on the interior back panel; vinyl reinforcements are sewn to the back panel; vinyl supports are sewn to the rail handle; loose threads on the rail are cut.

Work Center Bll

The primary operations at this center include cutting to length of ribbon, elastic, and zippers. Other operations include the installation of grommets on sliders, and buckles on ribbons by sewing.

Work Center B13

The metal strip used as the frame for the luggage is warmed and bent, and the ends are cut and leveled. The frame is then perforated. The other primary operations involve the assembly of the wheels, puller, polys, springs and stud with the frame by riveting, stapling, and gluing.

Work Center B14

Tasks related to the frame and welt assembly are performed at this work center. The operations include cutting the handle to length and sewing on the covering, sewing the vinyl reinforcement to the webbing, and stapling the handle with rings.

Work Centers C10, C36

At these Centers, the tasks involve various sewing operations, including sewing accents to the front lower pocket, sewing zippers and bindings to the front netting, and the liner to the central panel. Additional tasks include cutting the elastic cord and webbing to length, and riveting a plastic hook to the webbing.

Work Centers Dll, El0, G10, H10 and K10

At these Centers, sewing operations are performed which involve attaching the various components.

Work Center Lll

Stapling and riveting operations of certain components to the frame and base are performed at this Center.

ISSUE:

Whether the soft-sided luggage will be eligible for duty-free treatment under subheading 9802.00.90, HTSUS, upon importation into the U.S.

LAW AND ANALYSIS:

Annex 300-B of the North American Free Trade Agreement ("NAFTA") is applicable to textile and apparel goods. Appendix 2.4 of Annex 300-B provides that:

[o]n January 1, 1994, the U.S. shall eliminate customs duties on textiles and apparel goods that are assembled in Mexico from fabrics wholly formed and cut in the United States and exported from and reimported into the United States under:

(a) U.S. tariff item 9802.00.80.10; or

(b) Chapter 61, 62, or 63 if, after such assembly, those goods that would have qualified for treatment under 9802.00.80.10 have been subject to bleaching, garment dyeing, stone-washing, acid-washing or perma-pressing.

Thereafter, the U.S. shall not adopt or maintain any customs duty on textile or apparel goods of Mexico that satisfy the requirements of subparagraph (a) or (b) or
the requirements of any successor provision to U.S. tariff item 9802.00.80.10.

Consequently, subheading 9802.00.90, HTSUS, was created to provide for the duty-free entry of:

Textile and apparel goods, assembled in Mexico in which all fabric components were wholly formed and cut in 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; provided the goods classifiable in chapters 61, 62, or 63 may have been subject to bleaching, garment dyeing, stone-washing, acid-washing or perma-pressing after assembly as provided for herein.

"Textile and Apparel Goods"

The initial question we must address is whether the subject luggage is considered a "textile and apparel good" under subheading 9802.00.90, HTSUS.

"Textile and apparel goods" eligible for duty-free treatment under subheading 9802.00.90, HTSUS, are listed in Appendix 1.1 of Annex 300-B of the NAFTA. Chapter 42 of Appendix 1.1 includes among such goods "ex 4202.12 (Luggage, handbags and flatgoods with an outer surface predominantly of textile materials)". Thus, the subject luggage will qualify as a "textile and apparel good" if it is classified under subheading 4202.12.80, HTSUS, and has an outer surface predominantly of textile materials. After inspection of the submitted sample, we find that the article possesses an outer surface predominantly of textile materials, and is classifiable under subheading 4202.12.80, which provides in part for "Trunks, suitcases, vanity cases...With outer surface of textile materials...". Therefore, the subject soft-sided luggage is a "textile and apparel good" eligible for duty-free treatment under subheading 9802.00.90, HTSUS.

Findings and Trimmings

The enactment of subheading 9802.00.90, HTSUS, was intended to extend duty-free and quota-free status to all goods assembled in Mexico, which previously were eligible for entry under the Special Regime Program administered under subheading

9802.00.8010, HTSUS. As a result, it is Customs view that all of the policy directives implementing this program should be considered applicable for the administration of subheading 9802.00.90, HTSUS. One such policy under the Special Regime Program included the allowance of "findings, trimmings, and certain elastic strips of foreign origin" to be incorporated into the assembled good "provided they do not exceed 25 percent of the cost of the components of the assembled product." Examples of findings and trimmings are sewing thread, hooks and eyes, snaps, buttons, "bow buds," lace trim, zippers, including zipper tapes, and labels. See 53 Fed. Reg. 15726 (May 3, 1988).

It is unclear from your submissions the extent of the findings and trimmings that are of foreign origin. However, the imported article will be eligible for duty-free treatment under subheading 9802.00.90, HTSUS, provided the cost of such components, including any elastic strips, do not exceed 25 percent of the cost of the components of the assembled luggage.

FABRICATION AND ASSEMBLY

Since subheading 9802.00.90, HTSUS, was intended as a successor provision to subheading 9802.00.80, HTSUS, with respect to certain textile and apparel goods assembled in Mexico, the regulations under subheading 9802.00.80, HTSUS, may be instructive in determining whether a good is eligible for the beneficial duty treatment accorded by subheading 9802.00.90, HTSUS. (In this regard, however, as distinguished from subheading 9802.00.80, HTSUS, it is noted that the new statute requires only that all fabric components be formed and cut in the U.S., and that only such components need be exported from the U.S. in condition ready for assembly without further fabrication.)

Under section 10.14(a), Customs Regulations (19 CFR 10.14(a)), components will not lose their entitlement to the benefits of subheading 9802.00.80, HTSUS, by being subjected to operations incidental to the assembly before, during, or after the assembly with other components. Pursuant to section 10.16(a) of the Regulations (19 CFR 10.16(a)), the assembly operations performed abroad may consist of any method used to join or fit solid components, such as welding, soldering, riveting, force fitting, gluing, laminating, sewing, or the use of fasteners, and may be preceded, accompanied, or followed by operations incidental to the assembly process. Examples of operations incidental to the assembly process include trimming, filing, or cutting off of small amounts of excess materials, and
cutting to length of wire, thread, tape, foil and similar products exported in similar length. (19 CFR 10.16(b)(4) and

In the instant case, the sewing operations used to join fabric components, or to join fabric components to other items, are acceptable assembly operations. The other methods of assembly employed, e.g., riveting, gluing, and stapling, which to some extent may also involve fabric components, are similarly considered acceptable assembly operations. Cutting various fabric components to length and cutting off excess thread are operations incidental to the assembly process, and therefore will not disqualify the article from eligibility under subheading 9802.00.90, HTSUS.

Accordingly, the luggage assembled in Mexico may be entered free of duty, provided all fabric components are U.S.-formed (i.e., the fabric is woven or milled in the U.S.), the fabric is cut in the U.S. (except for cutting to length), and foreign findings, trimmings, and elastic strips do not exceed 25 percent of the cost of all components.

HOLDING:

1) Soft-sided luggage with an outer surface predominantly of textile materials is classifiable under subheading 4202.12.80, HTSUS, which provides in part for "Trunks, suitcases, vanity cases... With outer surface of textile materials...". Therefore, the article is considered a "textile and apparel good" for purposes of determining its eligibility under subheading 9802.00.90, HTSUS.

2) Since the operations performed in Mexico in connection with the fabric components are acceptable assembly operations or operations incidental to such assembly, the imported luggage will qualify for duty-free treatment under subheading 9802.00.90, HTSUS, provided all such components are cut and formed in the U.S., and the cost of all foreign findings, trimmings, and elastic strips do not exceed 25 percent of the cost of the components of the assembled article.

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
Commercial Rulings Division

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