United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 1997 HQ Rulings > HQ 560327 - HQ 734474 > HQ 560380

Previous Ruling Next Ruling


HQ

560380

June 17,
1997

CLA-2 RR:TC:SM 560380 BLS

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80, 6307.90

Daniel Cavazos, Esq.
Cacheaux, Cavazos, Newton, Martin & Cukjati, L.L.P. 1300 10th Street
McAllen, Texas 78501

RE: Applicability of subheading 9802.00.80, HTSUS, to fabric sweatbands; substantial transformation; subheading 6307.90; 19 U.S.C. 19 CFR 10.25

Dear Mr. Cavazos:

This is in reference to your letter dated March 25, 1997, on behalf of Western Textile Products Company, requesting a ruling that certain fabric sweatbands imported from Mexico will be entitled to the partial duty exemption under subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), upon return from Mexico.

FACTS:

You state that the sweatband is comprised of the following components:

1. U.S.-origin non-woven fabrics slit to specific width and wound into 100 yard rolls;

2. U.S.-origin polyfilm slit to specific width and wound into 100 yard rolls.

3. U.S.-origin thread.

4. A bias formed sweat band liner.

The sweat band liner is produced in the U.S. in the following manner:
a. Greige woven cotton fabric of Pakistani or Chinese origin is sent to
finishers where it is prepared for dyeing and finishing by desizing or bleaching to remove impurities.
b. The bleached fabrics are dyed.
c. The dyed fabrics are sent through a finishing process which consists of heat setting and chemical treatment if required.
d. The dyed and finished fabrics are then sewn into a tubular form.
e. The tubular sewn fabric is then re-opened on a bias-cutting machine.
f. The bias-formed fabric is slit to specific widths and wound into 100 yard rolls ready for export.

The rolls of the sweat band liner and other fabrics will be exported to Mexico for processing. In Mexico, the components will be unwound from the rolls in which they are exported. The liner will be assembled with the other components by folding and sewing the seams of the liner and trimming when necessary. The sewn articles will then be inspected, rewound into 100 yard rolls, and packed for return to the U.S.

ISSUES:

1. Whether the sweat band liner is considered a fabricated component of the U.S. for purposes of determining whether it is eligible for the duty allowance under subheading 9802.00.80, HTSUS.

21. Whether the completed sweat bands will be entitled to the partial duty exemption under subheading 9802.00.80, HTSUS, upon importation into 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 value of the assembled article, less the cost or value of such U.S. components, 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)), provides 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, laminating, sewing, or the use of fasteners.

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). Trimming, filing, or cutting off of small amounts of excess materials is considered an operation incidental to assembly. See 19 CFR 10.16(b)(4).

Non-Woven Fabrics, Polyfilm, Thread

We find that under the facts presented, all three requirements of subheading 9802.00.80, HTSUS, will be satisfied with respect to the U.S.-origin non-woven fabrics, U.S.-origin polyfilm, and U.S.-origin thread. The foreign operations that entail sewing together the polyfilm and non-woven fabrics, and trimming excess material, are acceptable assembly operations, or operations incidental to assembly. See Headquarters Ruling Letter (HRL) 557364 (July 19, 1993) and HRL 559341 (dated November 21, 1995). Rewinding the sewn articles onto rolls is also
considered an acceptable assembly operation. See General Instrument Corporation v. United States, 61 CCPA 86, C.A.D. 1128, 499 F.2d 1318 (1974), rev'g, 70 Cust.Ct. 151, C.D. 4421, 359 F. Supp. 1390 (1973), which held that winding of wire around a core is considered an acceptable assembly operation.

Sweat Band Liner

On December 8, 1994, the President signed into law the Uruguay Round Agreements Act. Section 334 of that Act (codified at 19 U.S.C. 3592) provides new rules of origin for textiles and apparel entered, or withdrawn from warehouse, for consumption, on or after July 1, 1996. On September 5, 1995, Customs published Section 102.21, Customs Regulations (19 CFR 102.21), in the Federal Register, implementing section 334 (60 FR 46188). Thus, effective July 1, 1996, the country of origin of a textile or apparel product shall be determined by sequential application of the general rules set forth in paragraphs (c)(1) through (5) of Section 102.21.

Section 102.21(c)(1) (19 CFR 102.21(c)(1)) provides that "The country of origin of a textile or apparel product is the single country, territory, or insular possession in which the good was wholly obtained or produced." As the subject merchandise is not wholly obtained or produced in a single country, territory or insular possession, paragraph (c)(1) of section 102.21 is inapplicable.

Section 102.21(c)(2) (19 CFR 102.21(c)(2)) provides that "Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) of this section, the country of origin of the good is the single country, territory, or insular possession in which each foreign material incorporated in the good underwent an applicable change in tariff classification, and/or met any other requirement, specified for the good in paragraph (e) of this section."

The subject sweat band liner is classifiable under subheading 6307.90, HTSUS,
"Other made up articles, including dress patterns:...Other." Section 102.21(e) (19 CFR 102.21(e)) provides that "The following rules shall apply for purposes of determining the country of origin of a textile or apparel product under paragraph (c)(2) of this section:"

6307.90 The country of origin of a good classifiable under subheading
6307.90 is the country, territory, or insular possession in which the fabric comprising the good was formed by a fabric-making process.

As the fabric-making process for the sweat band liner occurs in a single country, it is considered a product of either Pakistan or China, where such fabric-making process takes place.

Section 334(b)(4)(A) of the Act (19 U.S.C. 3592(b)(4)), provides that:

[t]he value of a component that is cut to shape (but not to length, width, or both) in the United States from foreign fabric and exported to another country, territory, or insular possession for assembly into an article that is then returned to the United States --

(i) shall not be included in the dutiable value of such article.

The effect of 19 U.S.C. 3592(b)(4) is to preserve the tariff treatment afforded by subheading 9802.00.80, HTSUS, that otherwise would no longer be available under the section 334 origin rules since cutting fabric in the U.S. will no longer result in the cut fabric being considered a "product of" the U.S.

Section 10.25, Customs Regulations (19 CFR 10.25), implements 19 U.S.C. 3592(b)(4), and incorporates by reference the same operational, valuation, and documentation requirements applicable to goods entered under subheading 9802.00.80, HTSUS. Therefore, imported goods entitled to a duty allowance under 19 CFR 10.25 are to be entered under subheading 9802.00.80, HTSUS, and, solely for purposes of calculating the duty allowance under this subheading, Customs will treat the textile components cut to shape in the U.S. from foreign fabric as if they were "U.S. fabricated components."

The issue we must now resolve is whether the processing of the foreign-origin sweat band liner in the U.S. satisfies the requirements of 19 CFR 10.25, so that a reduction in the dutiable value of the completed sweat band will include an allowance for the cost or value of the sweat band liner. In this regard, as described above, the operations in the U.S. on the foreign-origin fabric used to produce the liner include sewing the fabric into a tubular form, re-opening the fabric on a bias-cutting machine, slitting to width, and winding the liner onto rolls.

We find that the processing of the foreign fabric in the U.S., which includes cutting the fabric only to width, does not meet the requirements under 19 CFR 10.25, as this provision specifically excludes from entitlement to its benefits textile components which are cut to length, width or both in the U.S. Accordingly, upon importation of the completed article, the cost or value of the foreign-origin sweat band liner will not be excluded from the dutiable value of the sweat band.

HOLDING:

Based on the information presented, fabric sweat bands imported from Mexico will be entitled to the partial duty exemption under subheading 9802.00.80, HTSUS, with an allowance in duty for the cost or value of the U.S.-origin non-woven fabrics, polyfilm, and thread, upon compliance with the documentation requirements of 19 CFR 10.24. An allowance in duty will not be permitted for the Chinese or Pakistani origin sweat band liner, as this textile component does not satisfy the cut to shape requirements under 19 CFR 10.25.

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
Tariff

Previous Ruling Next Ruling

See also: