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HQ 560617




November 13, 1997

CLA-2 RR:TC:SM 560617 MLR

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80

John B. Pellegrini, Esq.
Ross & Hardies
Park Avenue Tower
65 East 55th Street
New York, NY 10022-3219

RE: Applicability of partial duty exemption under HTSUS subheading 9802.00.80 to tassels; cutting-to-length; tying

Dear Mr. Pellegrini:

This is in reference to your letter of August 19, 1997, requesting a ruling on behalf of Equality Specialties, Inc., regarding the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to certain tassels. Samples and pages of a catalog were submitted with your request.

FACTS:

The articles at issues are various types of tassels imported from St. Lucia. It is stated that the tassels are manufactured to customer specifications and vary from order to order, but that the cord loop tassels, cord loop tassel with slides, and academic tassels on pages 30 and 31 of the catalog account for the majority of the subject merchandise.

It is stated that the materials used in the manufacture of the loop parts of the tassels include twisted cords (submitted as a sample) and braided cords. Other materials include rayon chainette, acrylic floss (submitted as a sample), gimp rayon twist, acrylic yarn, and metallic yarn for warp and barbs, and slide material which is placed over the warp/barb. All of these materials are stated to be of U.S. origin. It is stated that all of these materials are exported to St. Lucia in continuous lengths on spools or festooned in boxes in continuous lengths of not less than 50 yards. Also submitted with the ruling request is the cord after it is in St. Lucia and prior to assembly, floss as used in the tassel, and a finished tassel.

The assembly operations for the three types of tassels are stated to be similar. Cord (braided or twisted) or elastic for the loop is cut to length. A second component, the warp material (the floss in the sample) is then brought over the loop material and knotted. Cutting the warp material to length forms the tassels.

For the banded varieties, another piece of warp material (chainette, gimp, rayon twist, floss, etc.) is used to cinch the tassel and to prevent it from unraveling. In a telephone conversation on November 7, 1997, it was indicated that the warp material is cut-to-length and wrapped around the tassel portion a few times to form the band, and then is tied in a knot which is tucked under the tassel portion. For the overhand tassel variety, the loop cord is knotted back on itself and trimmed to complete the tassel assembly. If a slide is specified, an additional production step is necessary. The slide material (stated by counsel telephonically to be composed of wire covered with rayon) is cut to length and folded over the loop of the tassel several times to act as an adjustable stop. It is stated that the slide material does not need to be tied since the wire keeps it in place.

ISSUE:

Whether the tassels exported from St. Lucia will qualify for the partial duty exemption under HTSUS subheading 9802.00.80, when imported 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 cost or value of the imported assembled article, less the cost or value of the U.S. components assembled therein, 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, lamination, 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. See 19 CFR 10.16(a). 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).

It is claimed that although the materials are imported on spools or in continuous lengths, they are fully fabricated components as provided in section 10.14, example three, which provides that:
wires of various type, insulating tapes, ribbons, findings used in dressmaking, and similar products, which are in a finished state when exported from the United States, and are ready for use in the assembly of the imported article, are regarded as fabricated components if they are only cut to length or subjected to operations incidental to the assembly process while abroad.

Furthermore, it is indicated that section 10.16(b)(6) treats cutting to length as incidental to the assembly process. It is stated that the exported U.S.-made components and materials are only cut-to-length. As support that this processing is acceptable, Headquarters Ruling Letter (HRL) 559675 dated April 30, 1996, is cited where elastic on spools used in the manufacture of slippers were considered to be a fully fabricated component.

It is further claimed that all of the subject tassels are made with two or more components, typically the loop and tassel and in some cases a slide, and that the components are joined by various means including knotting. As support, HRL 555475 dated November 3, 1989, is cited where the knotting of two pieces of ribbon to make a bow was considered to be an acceptable assembly. In HRL 555475 dated November 3, 1989, ribbon was cut to length, wrapped twice around the middle of a coat hanger bar and base of a hanger hook, and knotted into a bow. This is contrasted to HRL 555594 dated May 16, 1990, where the knotting of cord to create a net was held to be a manufacturing process. It is claimed that this case is more analogous to HRL 555475.

Customs has previously held that cutting U.S. ribbon to appropriate lengths abroad, forming one or more pieces of ribbon into the shape of a bow, and then tying the center of the bow with coated or tinsel wire to secure the bow shape constituted an acceptable assembly or operation incidental to assembly under subheading 9802.00.80, HTSUS, or item 807.00, TSUS (the precursor provision to subheading 9802.00.80, HTSUS). See HRL 071450 dated September 8, 1983; HRL 553674 dated June 14, 1985; HRL 554956 dated April 6, 1988; and HRL 554943 dated April 18, 1988. In each of these cases, the bow formation process involved the joinder of two or more components. The ribbon's bow shape was secured either by tying wire around its center or by wrapping and knotting the ribbon to the hanger.

However, in HRL 555357 dated February 16, 1990, Customs found that the formation of a single ribbon into a bow by knotting the ribbon was not, in itself, an assembly operation. In HRL 555357, cut-to-length ribbon was placed on a bow maker machine to form a bow which was tied to itself. The bow was then tacked to certain footwear prior to importation. HRL 555357 was distinguished from the rulings above as the single length of ribbon was the sole component which was knotted to form a bow, and there was no joinder of two or more separate components. See also HRL 557467 dated September 13, 1994.

In this case, it is our opinion that cutting the loop and warp components to length are operations incidental to the assembly process, just as they were in the rulings discussed above where the ribbon was cut-to-length. Additionally, we find that typing the loop and the warp (or other substitute materials) together to form the tassel is an acceptable assembly operation, just as the tying of ribbon to a coat hanger or tying two pieces of ribbon together to form a bow.

In some instances once these operations are performed the tassels are finished; however, for the banded varieties another piece of warp material is wrapped around the tassel portion and tied in a knot to prevent unraveling. For the overhand tassel variety, slide material consisting of wire covered rayon is wrapped over the loop portion of the tassel, and by nature of the wire in the slide material it stays in place. Pursuant to section 10.16(a), example 1, winding wire around a core constitutes an acceptable means of assembly, as two components are securely joined together. See also C.S.D. 90-6, (HRL 555218 dated September 13, 1989), which held that winding wrap wire around core wire to create guitar strings was an acceptable means of assembly. Similarly in this case we find that the wrapping of one material (i.e., the warp or slider material) around either the tassel portion or the loop portion is an acceptable assembly operation because two components are being joined together. Therefore, we find that the imported tassels will be eligible for subheading 9802.00.80, HTSUS, treatment, with allowances in duty for the materials of U.S. origin.

HOLDING:

On the basis of the information and samples submitted, we find that tying the warp and loop material and wrapping the warp around the tassel or slide material around the loop are acceptable assembly operations. Furthermore, we find that cutting the warp, loop, and slide material to length are operations incidental to the assembly process. Therefore, allowances in duty may be made under subheading 9802.00.80, HTSUS, for the cost or value of the U.S. fabricated components incorporated into the tassels, provided the documentary requirements of 19 CFR 10.24 are satisfied.

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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