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HQ 555327

June 16, 1989

CLA-2 CO:R:C:V 555327 GRV


TARIFF NO.: 9802.00.80, HTSUS

Mr. Ken W. Read
Baxter Healthcare Corporation
Convertors Operation
One Butterfield Trail
El Paso, Texas 79906

RE: Applicability of partial duty exemption under HTSUS subhead- ing 9802.00.80 to scrub tops to be imported from Mexico

Dear Mr. Read:

This is in response to your letter of February 9, 1989, requesting a ruling on the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to scrub tops to be imported from Mexico after assembly operations. Samples of the component materials to be exported from the U.S. and the scrub tops to be returned to the U.S. were submitted for examination.


You state that a reinforced paper material known as "Sontara" is manufactured in the U.S. From this material, two components--the body of the top and a pocket--will be cut to shape in the making of scrub tops, commonly used as wearing apparel by hospital operating room personnel for the scrub (washing) phase prior to entering an operating room. These two components will be exported in bulk on pallets, as will U.S. thread in spool form, to Mexico for assembly operations. The assembly operations will consist of sewing the thread onto the sides of the top, turning the material right side out, and sewing the pocket onto the front of the body. The assembled scrub tops are then packaged for return to the U.S.


Whether the scrub tops will be entitled to the partial duty exemption provided for under HTSUS subheading 9802.00.80 when returned to the U.S.


HTSUS subheading 9802.00.80 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:

[t]he 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....

Section 10.16(b), Customs Regulations (19 CFR 10.16(b)), interprets the statutory phrase "operations incidental to the assembly process," and states in example (6) that the cutting to length of certain products (including thread) exported in contin- uous length is an operation incidental to the assembly process.

In the instant case, the description of the foreign assem- bly operation and an examination of the samples submitted show that the scrub tops are eligible for the partial duty exemption available under HTSUS subheading 9802.00.80. In the U.S., the two "Sontara" components are cut to shape and exported in bulk on pallets; the thread is exported in continuous length on spools. In Mexico, the sides of the top component are merely sewn
together, and the pocket component is sewn onto the top after the top is turned right side out. The two "Sontara" components and the thread component fully meet the requirements of 19 CFR 10.14 for fabricated components subject to the exemption. See, L'Eggs Products, Inc., v. United States, 13 CIT ___, 704 F.Supp. 1127 (CIT 1989). Cutting the thread component is a permissible inci- dental operation under 19 CFR 10.16(b), and sewing is specifi- cally enumerated as an acceptable assembly operation in 19 CFR 10.16(a). An examination of the sample submitted shows that the "Sontara" material and thread do not lose their physical identity in the assembly operation, and that they are not advanced in value or improved in condition except by assembly or operations incidental to the assembly operations.


On the basis of the described assembly operation, and after examining the samples submitted, the scrub tops will be eligible for the partial duty exemption available under HTSUS subheading 9802.00.80 when returned to the U.S., upon compliance with the requirements of 19 CFR 10.24.


John Durant, Director

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