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HQ
560429

April
30, 1997

CLA-2: RR:TC:SM 560429 BLS

CATEGORY: CLASSIFICATION

Port Director
U.S. Customs Service
Charlotte Amalie
St. Thomas, Virgin Islands 00801

RE: Applicability of General Note 3(a)(iv), HTSUS, to dolls imported from the Virgin
Islands; substantial transformation

Dear Sir:

This is in reference to a letter from your office dated April 15, 1997, forwarding letters from St. Croix Handicraft Industries Inc., dated October 21, 1996 and March 21, 1997, requesting a ruling concerning the applicability of General Note 3(a)(iv), Harmonized Tariff Schedule of the United States (HTSUS), to certain dolls that may be imported into the U.S. from the Virgin Islands.

FACTS:

Raw wicker reeds (strands) from China or Malaysia are imported into the U.S. and then exported to St. Croix, Virgin Islands, where they undergo dyeing operations. The strands are then shipped to Trinidad where they are weaved or plaited into three different styles of dolls. The dolls are returned to St. Croix where finishing operations are performed, as follows:

Market Lady Doll - A hook ring used to hang the doll is pierced through the head basket and verti-vert (potpourri) or bay leaves are put into the basket. A scarf is glued to the head and a tag is hung around the doll's neck.

Dancing Lady (Quadrille Dancer) - The finishing operations performed on this doll also involve the attachment of a head scarf, hook ring, and tag.

Mockie-Jumbie Doll - This doll is completely woven or plaited in Trinidad with the exception of the long stilt legs. In St. Croix, the unwoven reeds or strands at the legs are twisted around the stilts. A hat is woven to the head. The mask, which is a stripe of
fabric, is attached to the face. Thin reed strips which are woven together in St. Croix to form a whip are attached to the right hand. A stand for this doll is produced in St. Croix by gluing a piece of upholstery fabric to a round piece of wood. The doll is then attached to the stand.

ISSUE:

Whether the dolls will be considered a product or manufacture of the Virgin Islands, for purposes of determining whether they will be eligible for duty-free treatment under General Note 3(a)(iv), HTSUS, upon importation into the U.S.

LAW AND ANALYSIS:

Under General Note 3(a)(iv), HTSUS, goods imported from an insular possession (including the Virgin Islands) may enter the customs territory of the U.S. free of duty if they:
l. Are manufactured or produced in the possession;

2. Do not contain foreign materials which represent more than 70% of the goods' total value (or more than 50%with respect to articles ineligible for the Caribbean Basin Economic Recovery Act (CBERA) treatment); and

3. Are imported directly to the customs territory of the U.S. from the possession.

Materials imported into an insular possession, as in this case, become a product or manufacture of that possession only if they are substantially transformed there into a new and different article of commerce. A substantial transformation occurs when an article emerges from a process with a new name, character, or use different from that possessed by the article prior to processing. See Texas Instruments v. United States, 69 CCPA 152, 681 F.2d 778 (1982).

Customs has ruled that the shell of a doll imparts its essential character and that stuffing a doll does not effect a substantial transformation. See Headquarters Ruling Letter (HRL) 733838 dated February 7, 1991 and HRL 734149 dated November 25, 1991. (See also HRL 735242 dated July 6, 1994, where we held that the shell of a teddy bear imparts its essential character and sewing a musical button into the teddy bear does not effect a substantial transformation.)

In the instant case, the wicker dolls are essentially complete as a result of the operations performed in Trinidad. These articles are recognizable as dolls when imported into the Virgin Islands and only finishing operations are required to be
performed in St. Croix before exportation of the dolls to the U.S. As in HRLs 734149,
733838 and 735242, the articles imported into St. Croix from Trinidad impart the essential character to the completed dolls and the finishing operations performed in the insular possession do not effect a change in the character or use of the articles. Therefore, we find that the operations performed in the Virgin islands do not result in a substantial transformation, and when imported into the U.S., the dolls will be considered a product of Trinidad and not the insular possession.

HOLDING:

Wicker dolls produced in Trinidad and imported into the Virgin islands do not undergo a substantial transformation as a result of the finishing operations performed in the insular possession. Accordingly, the dolls are not considered a product of the Virgin islands and will not qualify for duty-free treatment under General Note 3(a)(iv), HTSUS.

Please provide a copy of this decision to St. Croix Handicraft Industries Inc., P.O. Box 25402, Gallows Bay, St. Croix, V.I. 00824.

Sincerely,

John

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