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HQ 082012

April 5, 1989

CLA-2 CO:R:C:G 082012 CMR


TARIFF NO.: 256.7000

Assistant District Director
Commercial Operations
Laredo, Texas 78044-3130

RE: Internal Advice Request concerning reclassification of certain adult diapers, style 2810, medium, and style 2811, large

Dear Sir:

This request for Internal Advice was initiated by Don P. Newton, of Border Opportunity Saver Systems (B.O.S.S.), Del Rio, Texas.


B.O.S.S., in conjunction with Johnson & Johnson Products, Inc., of New Brunswick, N.J., has submitted redesigned adult diapers--style 2810, medium, and style 2811, large--in order to achieve reclassifi- cation of these styles as paper products, instead of as articles of textile. Reclassification is sought for the redesigned diapers imported prior to January 1, 1989.

Since these articles are not provided for eo nomine, they are classified according to the component material of chief value. B.O.S.S. has submitted cost breakdowns for the processing of both styles for 1986, as a textile product, and 1987, as a paper product.

Samples of B.O.S.S.'s diaper products were submitted for our review, as well as a video presentation of the assembly process. A Customs import specialist from the Laredo, Texas office visited the B.O.S.S. plant in Del Rio, Texas, in July 1987, and supplied us with a very clear written breakdown of the assembly process.

The diapers are made of processed wood pulp formed into panels and laminated between a textile facing and an outer cover of polyvinyl film. Three strands of rubber are laminated between the
facing and outer cover at the center of the sides for the leg openings. The diaper panels are shipped from Texas to Acuna, Mexico, where textile fabric belts with adhesive tabs are hot glued to the tops and bottoms of the panels.

The changes made in the production of the adult diapers to achieve reclassification as products of paper include a reduction in the sizes of the textile belts, an increase of approximately 15 percent in the amount of wood pulp in the product, and an increase in the cost of the wood pulp component.

Importations of the redesigned diapers began in late March 1987. B.O.S.S. is requesting reclassification of all entries after April 1, 1987.

On October 6, 1988, Customs attorneys met with representatives of B.O.S.S., Johnson & Johnson, and their counsel, to discuss the request for reclassification. Part of the discussion focused on the point of final assembly in the production process for the purpose of determining the component material of chief value. While disagreeing on where the point of final assembly occurs, the representatives of B.O.S.S. and Johnson & Johnson agreed to submit cost breakdowns which did not include the costs of the lamination process. The new figures would include the cost of drying the pulp which had not been included in the original cost breakdowns, and would not include the costs of the hampene and perfume. Additionally, waste would be taken into account since the submitted component costs figures were based on the amounts of the component materials found in the finished product. Customs received the new breakdowns in December 1988. These break- downs included information for styles 2810 and 2811 for the last three quarters of 1987, and style 2809 which was introduced in the third quarter of 1987.


Are styles 2810 and 2811 reclassifiable as products of paper?


When determining the component material of chief value, the fundamental question is establishing the point in the production process at which the component materials have reached a state where nothing further needs to be done to them other than to put them together. United States v. Jovita Perez, 44 CCPA 35, 39, C.A.D. 633 (1957). This stage in the production process has often been referred to as the point of final assembly. The cost of processing a compo- nent into a usable form for manufacture into the final product is added to the value of the component. Swiss Manufactures Association, Inc. et al. v. United States, 39 Cust. Ct. 227, 233, C.D. 1933 (1957), appeal dismissed, 45 CCPA 129 (1958). Additionally, assembly
costs which are incurred prior to the point of final assembly are apportioned between the component materials involved in the assembly. This apportionment is generally made on the basis of the weight of the materials.

Customs believes the point of final assembly in the diaper production process for the purpose of assessing the component materials of chief value occurs at the lamination stage of the process. B.O.S.S. and Johnson & Johnson believe the point of final assembly occurs at the belting stage. However, since the figures submitted after the October 1988 meeting are based on component material values prior to lamination and clearly show the diapers to be in chief value of paper, this disagreement on where the point of final assembly occurs for assessing component material values is immaterial.


Based on the revised figures submitted to Customs on the values of the component materials of the diapers at issue, all entries of diaper styles 2809, 2810, and 2811, entered after April 1, 1987, are reclassified as being in chief value of pulp in item 256.7000, TSUSA. Articles in this item are duty free.


John Durant, Director

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