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HQ 563280




August 4, 2005

CLA-02 RR:CR:SM 563280 KKV

CATEGORY: CLASSIFICATION

Mr. Larry Ordet
Sandler, Travis & Rosenberg, P.A.
5200 Blue Lagoon Drive
Miami, FL 33126-2022

RE: Eligibility of zipper chain for duty preference under subheading 9802.00.80, HTSUS; brass round wire and polyester tape substantially transformed when processed into zipper tape; cutting to length; attachment by sewing

Dear Mr. Ordet:

This is in response to your letter dated March 31, 2005, addressed to the National Commodity Specialist Division, which was forwarded to our office for response. Specifically, you requested a binding ruling regarding the eligibility of certain zipper chain for duty preference under subheading 9802.00.80, Harmonized Tariff Schedule of the United States. No samples were provided for our examination.

FACTS:

You state that Talon International will produce Size 42 Brass Metal Zipper Chain manufactured in the United States from Chinese polyester tape and either U.S. or Peruvian-origin brass round wire. Specifically, prior to assembly to the tape, the wire will be made into a “formed” wire in the U.S. with a complex cross-section. Then, teeth will be cut into the formed wire and the cut faces will be stamped to create a crown on the top of each tooth and a pocket below. The formed wire teeth will then be crimped down to the tape, creating the zipper chain.

Once assembled, the zipper chain will be exported from the U.S. in roll form. Upon receipt in the foreign country, the zipper chain rolls will be unwound and then cut to length. No other operation – cutting or otherwise – will occur prior to the sewing of the zipper chain into various garments. When sewn to the garments, the zipper chain will remain in the same form and shape as exported from the U.S., with the exception of having been cut to length.

ISSUE(S):

Whether the foreign and domestic round brass wire and polyester tape are substantially transformed into a U.S. fabricated component which is a product of the U.S.

Whether the zippers chain will be eligible for duty preference under subheading 9802.00.80, HTSUS, when exported and assembled into clothing.

LAW AND ANALYSIS:

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 HTSUS subheading 9802.00.80 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).

For purposes of subheading 9802.00.80, HTSUS, a “product of the United States” is an article manufactured within the Customs territory of the U.S. and may consist wholly of U.S. components or materials, of U.S. and foreign components or materials, or wholly of foreign components or materials. If the article consists wholly or partially of foreign components or materials, the manufacturing process must be such that the foreign components or materials have been substantially transformed into a new and different article, or have been merged into a new and different article. See, section 10.12(e), Customs Regulations (19 CFR 10.12(e)). Section 10.14(b), Customs regulations (19 CFR 10.14(b)) provides that a “substantial transformation occurs when, as a result of processing, a new and different article emerges, having a new name, character or use, which is different from that originally possessed by the article or material before being subject to the manufacturing process. If the manufacturing or combining process is merely a minor one which leaves the identity of the article intact, a substantial transformation has not occurred. See, Uniroyal Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026 (CIT 1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983).

In Headquarters Ruling Letter (HRL) 560521, dated August 15, 1997, Customs considered zipper chain manufactured in Mexico from U.S.-origin tape and wire. Customs determined that the process of forming the wire into teeth prior to assembly with the woven textile tape was a “further fabrication” of the wire in Mexico. Therefore, Customs held that the cost or value of the wire was ineligible for preferential treatment under subheading 9802.00.80, when the zipper chain was entered into the U.S. An allowance for the woven textile tape was allowed.

In the instant case, the wire is formed into teeth in the U.S. prior to assembly with the foreign-origin tape. The round wire and polyester tape are subjected to a manufacturing process in the U.S. which includes the shaping of “formed wire,” cutting, stamping and crimping. The finished product, zipper chain, has a character and commercial identity distinct from the raw materials from which it was produced, and been transformed by the U.S. processing from articles with a number of potential uses to an article with a single use as zipper chain, ready to be assembled with other components to create garments. As a result, the wire and tape will be considered to have undergone a substantial transformation and be considered a fabricated product of the U.S. for purposes of subheading 9802.00.80, HTSUS.

With regard to the exemption provided by 9802.00.80, the provisions of 19 CFR 10.14(a) state, in part, that the 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. Qualifying assembly abroad is described in 19 CFR 10.16. The assembly operations 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, and may be preceded, accompanied, or followed by operations incidental to the assembly. 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.

In the instant case, the zipper chain will be exported in roll form, unwound and cut to length prior to attachment to garments by sewing. Because the processing abroad constitutes an acceptable assembly operation or operation incidental to assembly, the imported garments will be entitled to entry under subheading 9802.00.80, HTSUS, with an allowance in duty for the cost or value of the zipper chain, provided that the documentary requirements of 19 CFR 10.24 are satisfied. HOLDING:

Based on the information provided, foreign and domestic wire and tape are substantially transformed into zipper chain by operations that include the shaping of “formed wire,” cutting, stamping and crimping. As a result, the exported zipper chain is considered a fabricated product of the U.S. Where U.S.-origin zipper chain is exported in roll form, unwound and cut to length and attached to garments by sewing, the processing abroad constitutes an acceptable assembly operation or operations incidental to assembly. Accordingly, the imported garments will be entitled to entry under subheading 9802.00.80, HTSUS, with an allowance in duty for the cost or value of the zipper chain, provided that the documentary requirements of 19 CFR 10.24 are satisfied.

A copy of this ruling letter should be attached to the entry document 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 officer.

Sincerely,

Monika R. Brenner

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