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HQ 560414




December 3, 1997

CLA-2 RR:TC:SM 560414 JML

CATEGORY: CLASSIFICATION

TARIFF NO: 9802.00.80, 9802.00.90

Ms. Dorothy Black, Esq.
Mr. Mark Bravin, Esq.
Morgan, Lewis & Bockius, LLP
1800 M Street, N.W.
Washington, D.C. 20036-5869

RE: Applicability of partial duty exemption under subheading 9802.00.80 HTSUS, and full duty exemption under 9802.00.90, HTSUS, to United States origin components of brassiere hook and eye tape assembled in Mexico.

Dear. Ms. Black & Mr. Bravin:

This is in response to your letter of April 17, 1997, in which you requested a binding ruling concerning the eligibility of brassiere hook and eye tape assembled in Mexico for partial and full duty exemptions under subheadings 9802.00.80 and 9802.00.90, HTSUS, upon importation into the United States

FACTS:

Your client, L.M. Rabinowitz & Co., Inc. ("Rabinowitz"), intends to send U.S. origin components of brassiere hook and eye tape ("tape") to Mexico for assembly. The finished tape is incorporated into brassieres and used as a fastening mechanism. On a finished brassiere, tape containing one or more hooks is affixed on one side of the back of a brassiere, while a separate tape containing one or more eyes is attached to the other side of the back. The hooks are fastened into the eyes to form a locking bond and thus secure the brassiere to its wearer.

The tape consists of strips of stabilized nylon tricot fabric knit, dyed and cut into predetermined widths in the U.S., nylon coated steel wire formed into hooks and eyes and sewing thread, all of U.S. origin. In Mexico, the hooks and eyes are attached -- apparently by sewing -- to the fabric at appropriate locations. The tape is then either cut to length or formed into rolls depending on customer preference.

As a general matter, Customs notes that the finished tape is classifiable under subheading 6212.90.30, HTSUS (Brassieres, girdles, corsets, braces, suspenders, garters and similar articles and parts thereof, whether or not knitted or crocheted: Other: Of man-made fibers or man-made fibers and rubber or plastics), and subject to a duty rate of 6.9% ad valorem. See New York Ruling Letter ("NY") 847340, dated Dec. 20, 1989 Articles classifiable in that provision fall within textile category designation 659.

The finished tape is then either exported from Mexico to various countries where it is incorporated into brassieres which are subsequently imported into the U.S., or exported directly to the U.S.

ISSUES:

1) Whether the finished brassieres, upon importation into the U.S., are eligible to receive a partial duty exemption for the cost or value of the U.S. origin components of the tape as provided for under subheading 9802.00.80, HTSUS.

2) Whether the finished tape which is exported directly from Mexico to the U.S. is eligible for the full duty exemption under subheading 9802.00.90, HTSUS.

LAW AND ANALYSIS:

9802.00.80

Subheading 9802.00.80, HTSUS, provides a partial duty exemption for:

Articles 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, lubrication, 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 imported 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)), 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, 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)

Customs notes that the components of the tape -- the nylon fabric, the nylon coated steel hooks and eyes, and the sewing thread -- are in a condition ready for assembly upon their exportation from the U.S. The components do not appear to undergo any further fabrication, completion or improvement abroad other than sewing the hook and eyes to the fabric and cutting some of the finished tape to length. First, sewing the hook and eyes to the nylon tricot fabric, to the extent the operation is joining those components together, is a permissible form of assembly contemplated by subheading 9802.00.80, HTSUS. See 19 CFR 10.16(a)

Customs is of the opinion that while cutting the finished tape to length is not a permissible form of assembly under subheading 9802.00.80, HTSUS, it is an operation incidental to assembly which does not preclude application of that provision. Section 10.16(b)(6), Customs Regulations (19 CFR 10.16(b)(6)), expressly includes the cutting of materials such as wire, thread, tape and similar products to length as permissible operations incidental to assembly for purposes of 9802.00.80, HTSUS.

Aside from the above stated operations, no further processing or fabrication of the components is needed to make the finished tape. Therefore, the finished tape, both cut to length and rolled in continuous lengths, meets all three requirements for the partial duty exemption under subheading 9802.00.80, HTSUS -- assembled abroad from fabricated U.S. components ready for assembly, which have not lost their identity in change or form, and which have not been advanced in value or improved in condition except by assembly and operations incidental thereto.

Furthermore, exporting the tape to third countries for incorporation into finished brassieres does not effect its eligibility for subheading 9802.00.80, HTSUS, treatment. Section 10.16(e), Customs Regulations (19 CFR 10.16(e)), provides: "An assembly operation may involve the joining or fitting of American-made components into a part or subassembly of an article, followed by the installation of the part or subassembly into the complete article." Thus, to the extent that the assembly process of the tape otherwise qualifies under subheading 9802.00.80, HTSUS, the completed brassieres, upon importation into the U.S., will be eligible for a partial duty exemption for the cost or value of the tape.

9802.00.90

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

On 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, provided that such fabric components, in whole or in part, (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.

The initial question which must be addressed is whether the tape 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 62 of Appendix 1.1 includes among such goods those classifiable in subheading 6212.90. Customs notes that the finished tape is classifiable under subheading 6212.90.30, HTSUS. Thus, as that subheading is within those specified by Appendix 1.1, the finished tape will qualify as a "textile and apparel good" for purposes of subheading 9802.00.90, HTSUS.

Because 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, are instructive in determining whether an assembly process would render an article eligible for duty free treatment accorded by subheading 9802.00.90, HTSUS. As distinguished from subheading 9802.00.80, HTSUS, however, subheading 9802.00.90 requires that all fabric components be formed and cut in the U.S. and that only such components, in whole or in part, need be exported from the U.S. in condition ready for assembly without further fabrication. In that regard, Customs notes that the nylon tricot fabric used for the tape is knitted and dye-finished in the U.S. That same fabric is then cut to the appropriate width of the tape in the U.S. The finished fabric is then exported to Mexico for assembly into the tape, maintains its physical identity and, as described above, does not undergo any further fabrication or advancement in value other than by acceptable forms of assembly and operations incidental thereto. As a result, based upon the information submitted, Customs is of the opinion that `the finished brassiere tape would be eligible for duty free treatment under subheading 9802.00.90, HTSUS.

HOLDING:

Provided compliance with the documentary requirements of section 10.24, Customs Regulations (19 CFR 10.24), the foreign made brassieres may receive a partial duty exemption under subheading 9802.00.80, HTSUS, for the cost or value of the U.S. origin components (the tape, hooks, eyes and thread).

Similarly, as the Mexican operations performed in connection with the finished tape are acceptable assembly operations or operations incidental to such assembly, the finished tape imported directly from Mexico will qualify for duty free treatment under subheading 9802.00.90, HTSUS, provided the fabric is cut and formed in the U.S.

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are 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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