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HQ 555184


April 25, 1989

CLA-2 CO:R:C:V 555184 GRV

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80, HTSUS (formerly 807.00, TSUS)

Ms. Susanne Fontana
Susanne Fontana, Inc.
Custom House Broker
P.O. Box 330136-0136
Miami, Florida 33133

RE: Applicability of the duty exemption under HTSUS subheading 9802.00.80 to tubular ribbing fabric incorporated into children's pajamas to be imported from the Dominican Republic

Dear Ms. Fontana:

This is in response to your letters of November 4, 1988, requesting rulings on the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS) (formerly item 807.00, Tariff Schedules of the United States (TSUS)), to tubular ribbing fabric incorporated into children's pajamas to be imported from the Dominican Republic after assembly operations. Samples of the tubular ribbing fabric to be exported from the U.S. and the pajamas to be returned to the U.S. were submitted for examination. You also request advice concerning the proper method of determining the dutiable portion of the freight costs to be incurred in transporting the fabric from the U.S. to the place of assembly in the Dominican Republic when the fabric transits Puerto Rico.

FACTS:

You state that bolts of tubular fabric of U.S. manufacture will be cut into continuous lengths measuring five inches and two and 3/4 inches wide and wound onto spools in the U.S. The spools of tubular fabric and other U.S. cut fabric components will then be transported to Puerto Rico where they will be physically landed prior to their reshipment to the intended destination of the Dominican Republic. In the Dominican Republic the spool of continuous length ribbing material will be positioned so that the ribbing can be sewn directly onto the garment from the spools. The ribbing material is folded by an attachment as it is initially sewn. After the desired amount of ribbing material is attached to the particular pajama article, the sewing machine operator cuts the ribbing from the spool. The ends of the
ribbing are then stitched together and the inside rough edges of the ribbing are joined together inside by a "zig zag" or finishing overcast stitch. The assembled pajamas are then packaged for return to the U.S.

ISSUE:

Whether the tubular fabric will be entitled to the partial duty exemption provided for under HTSUS subheading 9802.00.80 when returned to the U.S. as part of the children's pajamas.

LAW & ANALYSIS:

As you may know, the HTSUS replaced the TSUS, effective January 1, 1989. TSUS item 807.00 was carried over into the HTSUS without change as subheading 9802.00.80. This tariff pro- vision 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, lubricating and painting.

An article entered under HTSUS subheading 9802.00.80 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).

Section 10.14(a), Customs Regulations (19 CFR 10.14(a)), provides, in part, that:

[t]he components must be in condition ready for assembly without further fabrication at the time of their exporta- tion 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. Materials undefined in final dimensions and shapes, which are cut into specific shapes or patterns abroad are not considered fabricated components.

Section 10.16(a), Customs Regulations (19 CFR 10.16(a)), provides, in part, that:

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....

In the instant case, the description of the foreign assem- bly operation and an examination of the sample submitted shows that the tubular ribbing fabric is eligible for the partial duty exemption available under HTSUS subheading 9802.00.80. In the U.S., bolts of tubular fabric are cut into continuous lengths and spooled for export. Once abroad, the fabric is sewn directly onto the garment from the spools and cut to length by the opera- tor following the assembly operation. A trimming or cutting to length operation of U.S. component material sent abroad in bulk or on spools or rolls for assembly does not constitute a fabri- cation process. The Olga Company v. United States, 71 Cust. Ct. 42, C.D. 4468 (1973). Accordingly, we are of the opinion that the fabric is in condition ready for assembly when exported. Further, merely cutting spooled fabric to length is considered an operation incidental to the assembly process. See, 19 CFR 10.16(b)(6). Stitching constitutes a sewing operation, which is specifically enumerated as an acceptable assembly operation. (19 CFR 10.16(a)). An examination of the sample submitted shows that the fabric does not lose its physical identity in the assembly operation and that it is not advanced in value or improved in condition except by assembly or operations incidental to the assembly operations.

With respect to the issue regarding the dutiability of the freight charges, based upon the information presented, we cannot conclusively determine that Puerto Rico will, in fact, be the port of exportation for purposes of section 10.17, Customs Regulations (19 CFR 10.17). However, assuming that Puerto Rico is the port of exportation, then a separate rate from the transportation company for the Miami to Puerto Rico portion of the journey and another rate for the Puerto Rico to the Dominican Republic portion will suffice to determine the charges from Puerto Rico to the Dominican Republic.

CONCLUSION:

On the basis of the described assembly operation and after examining the samples submitted, the continuously cut and spooled tubular fabric to be incorporated into children's pajamas will be entitled to the partial duty exemption under HTSUS subheading 9802.00.80 when returned to the U.S., upon compliance with the requirements of 19 CFR 10.24.

Sincerely,

John Durant, Director

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