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HQ 563184




May 5, 2005

CLA-02 RR:CR:SM 563184 AL

John B. Pellegrini
McGuireWoods LLP
1345 Avenue of the Americas
New York, New York 10105-0106

RE: Applicability of HTSUS Subheading 9802.00.80, HTSUS, to Athletic Footwear

Dear Mr. Pellegrini:

This is in response to your request for a ruling, dated January 7, 2005, on behalf of your client, Reebok International, Ltd. (“Reebok”). The request concerns the importation of athletic footwear into the U.S. and whether certain U.S. manufactured components incorporated into the finished footwear would be eligible for a duty exemption under subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS). Samples were submitted with your request.

FACTS:

Reebok plans to manufacture two versions of inflatable bladders in the U.S. to be incorporated into footwear abroad. The inflatable bladders adjust the fit of the footwear and are stated to be exported in fully fabricated condition. Version A is incorporated into the external surface of the footwear upper as part of the upper component, and remains visible after incorporation into the finished shoe. The bulbous end of the upper component is the pump, which in the shoe is found in the heel and is visible when the sock lining is removed. Version B is similar to Version A but is inserted beneath the external surface of the upper.

You indicate that the bladders are not cut or trimmed prior to incorporation into the footwear. After incorporation into the footwear, the only change to the bladders is the attachment of a logo to Version A, and the insertion and gluing of the logo to the valve of Version B.

ISSUE:

Whether the two versions of the bladders will qualify for the partial duty exemption under HTSUS subheading 9802.00.80, when imported into the United States as part of the finished footwear.

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 appraised value of the imported assembled article, less the cost or value of the U.S. components assembled therein, upon compliance with the documentation requirements of section 10.24, Customs Regulations (19 CFR 10.24).

Section 10.16(a), Customs Regulations (10 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 HTSUS subheading 9802.00.80 to that component. See 19 CFR 10.16(c).

Examining the Version A bladder, and finished footwear, the bladder is incorporated into the footwear by sewing and the logo is glued to the bladder. Examining the Version B bladder and finished footwear, the bladder is incorporated into the footwear by sewing. Other footwear components are added to the top of the bladder so that the bladder no longer is visible. The logo is inserted and glued to the valve of the bladder. In Headquarters Ruling Letter (HRL) 560458 dated March 6, 1998, Customs held that subheading 9802.00.90, HTSUS, was applicable to certain baseball style hats. As part of the assembly process, a visor was made by inserting the visor board into the visor pocket, and by sewing the visor board and pocket pieces together. Pursuant to 19 CFR 10.16(a), we find that the insertion, sewing, and gluing operations which are used to incorporate the bladders into the finished footwear are acceptable assembly operations. Therefore, the Version A or B bladders incorporated into the finished footwear will qualify for a partial duty exemption under subheading 9802.00.80, HTSUS.

HOLDING:

On the basis of the information and samples submitted, we find that the inflatable bladders exported abroad are fully fabricated components and that the insertion, sewing and gluing operations which are used to incorporate the bladders into the finished footwear are acceptable assembly operations. Therefore, allowances in duty may be made under subheading 9802.00.80, HTSUS, for the cost or value of the inflatable bladders, 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 this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs and Border Protection officer handling the transaction.

Sincerely,

Myles B. Harmon, Director
Commercial Rulings Division

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