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NY C83164




March 5, 1998

CLA-2-60:RR:NC:TA:351 C83164

CATEGORY: CLASSIFICATION

TARIFF NO.: 6001.92.0040

Ms. Shelley Townley
Panalpina, Inc.
310 Interstate Blvd.
Greenville, SC 29615

RE: The tariff classification of American-knit fabric washed, heat set and sheared in Austria.

Dear Ms. Townley:

In your letter dated January 6, 1998, you requested a classification ruling on behalf of Eybl-Cartex.

You submitted samples of polyester knit pile fabric and requested classification based upon two manufacturing scenarios. In both instances, the fabric weighs under 271 grams per square meter.

In the first scenario, 100 percent polyester filament yarn would be produced in Germany and shipped to Eybl-Cartex, Inc. in the United States. The yarn would be knit into fabric, slit and sheared in the U.S. The fabric would then be shipped to Ebyl Krems in Austria for washing and heat setting. Finally, the fabric would be returned to the U.S. where it will be laminated.

In the second scenario, 100 percent polyester filament yarn would be produced in Germany and shipped to Eybl-Cartex, Inc. in the U.S. The yarn would be knit into fabric and slit in the U.S. The fabric would then be shipped to Eybl Krems in Austria for shearing, washing, and heat setting. Finally, the fabric would be returned to the U.S. where it will be laminated.

For both situations you requested classification of the fabric upon its return to the U.S. from Austria. You also asked if heading 9802 of the Harmonized Tariff Schedule is applicable in either of these scenarios.

The applicable subheading for the fabric will be 6001.92.0040, Harmonized Tariff Schedule of the United States (HTS), which provides for pile fabrics, knitted or crocheted: other, of man-made fibers, other, other. The rate of duty will be 18.6 percent ad. valorem.

Heading 9802 provides for the assessment of duty on the value of repairs or alterations performed on articles sent abroad for that purpose. However, such treatment is precluded where the exported articles are incomplete for their intended use and the foreign processing is a necessary step in the preparation or manufacture of finished articles. The fabric in either scenario above is not complete for its intended use when exported to Austria. The operations performed abroad, especially heat setting, exceed the meaning of the terms "repairs" and "alterations". Therefore, the returned fabric will not be eligible for reduced duty treatment under heading 9802, HTS.

Since the fabric was subjected to some manufacturing or processing abroad, notwithstanding the fact that the processes rendered the fabric ineligible for treatment under HTS 9802, the fabric shall be treated as a foreign manufacture upon its return to the U.S. and will be fully dutiable. See Subchapter II, U.S. Note 2(a) of Chapter 98, HTS.

This ruling is being issued under the provisions of the Customs Regulations (19 C.F.R. 177).

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Camille R. Ferraro at 212-466-5885.

Sincerely,

Robert B. Swierupski
Director

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