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HQ 555499

June 6, 1990

CLA-2 CO:R:C:V 555499 KAC


TARIFF NO.: 9802.00.80

David O. Elliott, Esq.
Barnes, Richardson & Colburn
475 Park Avenue South
New York, New York 10016

RE: Applicability of partial duty exemption under HTSUS 9802.00.80 to sausage casing formed by extruding xanthate cellulose solution over U.S.-origin paper;Assembly;Coating;C.J. Tower;Sigma;Carter.

Dear Mr. Elliott:

This is in response to your letters of October 3, 1989, January 3, and May 2, 1990, on behalf of Vista International Packaging Inc., requesting a ruling on the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to sausage casing to be imported from Finland. Samples of the sausage casing, and photographs and slides of the cellulose coating were submitted for our consideration.


Vista intends to ship U.S. manufactured special grade paper to Finland where the paper will be coated by OY Visko AB (Visko) with a xanthate cellulose solution which regenerates and hardens into cellulose. The foreign operations to be performed in Finland consist of the following:

(1) soaking cellulose material (wood in sheet form) in a sodium hydroxide solution in order to form an alkali cellulose compound;
(2) removing excess water which leaves a cake-like material;
(3) shredding the alkali cellulose cake;
(4) allowing the shredded alkali cellulose cake to mature; (5) treating the matured alkali cellulose with carbon disulfide to form cellulose xanthate.
(6) dissolving the cellulose xanthate in an aqueous sodium hydroxide solution to form the xanthate cellulose solution.
(7) forming a paper tube by twisting the U.S.-origin strip of paper, and continuously feeding the tube through the center of the extruder and inside the annular orifice;

(8) spraying the xanthate cellulose solution onto the outer surface of continuously moving paper tube; (9) passing the xanthate cellulose penetrated paper tube through a series of acidic baths wherein the xanthate cellulose solution coagulates, and then regenerates into cellulose which forms the casing;
(10) passing the casing through a series of purifying baths to remove acid, sulphur and salts;
(11) passing the casing through a final bath of glycerin (the casing absorbs glycerin which acts as a softener and humectant);
(12) drying the casing by passing it through a dryer on rollers to remove excess water; and
(13) collecting the casing on reels.

The operations described in step nine take place within a period of seconds so that once the xanthate cellulose solution makes contact with the paper the xanthate cellulose solution hardens almost instantaneously. Visko estimates that the paper tube will move about two feet before the hardening process is completed. It is estimated by Visko that approximately 70% of the xanthate cellulose solution hardens on the exterior side, 10% hardens on the interior side, and 20% hardens within the interstices of the individual strands of paper fiber in the paper tube. You state that the xanthate cellulose solution does not penetrate the fibers, as seen under a sufficiently magnified electron microscope.

Upon completion of the above foreign operations the fibrous sausage casings will be imported into the U.S.


Whether the U.S. special grade paper to be exported to Finland will qualify for the duty exemption available under HTSUS subheading 9802.00.80 when returned to the U.S.


HTSUS subheading 9802.00.80 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, 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 10.24, Customs Regulations (19 CFR 10.24).

Section 10.16(a), Customs Regulations (19 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.

In C.J. Tower & Sons of Buffalo, Inc. v. United States, C.D. 3840, 62 Cust.Ct. 643, 304 F.Supp. 1187 (1969), imported plastic film was composed of two plastic sheets--one Canadian polyethylene, the other U.S. polyester mylar--produced in Canada by an extrusion process which joined the foreign polyethylene, first made from pellets in a liquid form of high viscosity, to the U.S. mylar sheets, using an adhesive or adhesive promoter. The court found that the involved process was nothing more or less than a combination of manufacturing and assembling processes, and that the process was a controlled operation which anticipated the transformation of the foreign liquid into a solid before completion of the process. Therefore, the operation provided in advance for the adhesion of two solids together in the final product and was an assembly of solids within the meaning of item 807.00, Tariff Schedules of the United States (TSUS) (the precursor to HTSUS subheading 9802.00.80).

In Sigma Instruments, Inc. v. United States, 5 CIT 90, 565 F.Supp. 1036 (1983), affirmed, 2 CAFC 24, 724 F.2d 930 (1984), U.S. terminal pins were incorporated into header assemblies by a transfer molding operation, wherein the molding compound, exported in rope form, was transformed into a viscous state by heating before being joined to the terminal pins by solidifying around the pins in the mold cavity. The court determined that an allowance in duty should be made for the cost or value of the terminal pins under item 807.00, TSUS.

In Carter Footwear, Inc. v. United States, 11 CIT 554, 669 F.Supp. 439 (1987), a cotton textile vamp portion of a footwear upper, pre-cut to exact shape and size in the U.S., was reinforced with a thermoplastic applied to the toe area in a molten state to form a box toe. As the thermoplastic solidified in a matter of seconds (the plastic does not remain in its incipient form) and displayed the salient features of a solid, i.e., elasticity, high viscosity, tensile strength, crystallinity and differential adhesion, the court was persuaded that upon completion of the process there was a permanent union of two solids. Further evidence indicated that due to the higher viscosity and elasticity of the thermoplastic, it did not penetrate or intermix with individual fibers of yarn, but because of the thermoplastics weight it sagged into the fabric and adhered to a portion of the surface. Moreover, the court distinguished the thermoplastic from a liquid which would penetrate the interstices between fiber, thoroughly wetting the entire fabric and create a wicking effect.

In the instant case, we find that the process by which xanthate cellulose solution is applied to, and regenerates into a cellulose coating on, the U.S. special grade paper does not constitute an acceptable assembly operation for purposes of HTSUS subheading 9802.00.80.

In support of your contention that a duty allowance should be granted for the U.S. paper, you rely on the above three cases decided by the Court of International Trade, or its predecessor, which we believe are distinguishable from the facts in this case. In C.J. Tower, Canadian polyethylene in pellet form was heated and, in its molten state, applied to a solid U.S. polyester sheet with an adhesive or adhesive promoter holding the two plastic sheets together. The polyethylene cooled to solid form like the polyester film to which it was joined, although there was no intermixing of the sheets during the process due to the adhesive layer. In Sigma, a molding compound in rope form was heated and, in a transitory molten state, forced into a mold where it solidified around the U.S. terminal pins, holding them in place. In Carter, a U.S. textile vamp component was reinforced with plastic applied to the toe area to form a box toe. The plastic, which was initially in rod form, was applied while in a transitory molten state after heating. Relying on testimony that solids may, in some cases, flow and still be distinquishable from liquids, the court indicated that the molten plastic was considered a solid.

In regard to the instant case, we believe that the operation performed on the U.S. paper is essentially a coating operation. The xanthate cellulose solution is applied to the U.S. paper and, after the paper quickly passes through a series of acidic baths, the solution coagulates and rapidly regenerates and solidifies into a cellulose casing. The xanthate cellulose solution will not coagulate until it passes through the acidic baths. Upon review by Headquarters Office of Laboratories and Scientific Services, it was determined that the xanthate cellulose is an aqueous solution and, therefore, readily distinguishable from the transitory molten substances in C.J. Tower, Sigma, and Carter.

Moreover, it was determined that the aqueous xanthate cellulose solution completely saturates the paper, thereby thoroughly entering into the interstices between the paper fibers. As noted in your May 2, 1990, letter, after the xanthate solution is sprayed onto the outer surface of the paper tube, the solution passes through the paper and, upon solidification, 70% of the cellulose remains on the outer surface, 20% remains within the paper's interstices, and 10% remains on the inner surface of the tube. This is in contrast to the Carter case where the molten plastic, by virtue of its own weight, sagged into the fabric and minimally penetrated certain of the interstices of the top layer of the fabric. According to the Carter decision, the defendant's expert witness testified that, in contrast to the molten plastic, "... a liquid would penetrate the interstices between the fibers of the yarn, thoroughly wetting the entire fabric...." It is clear that the cellulose solution in the instant case thoroughly wets the entire paper.

We recognize that, as was the case with the cotton fibers in Carter, the solution in the instant case does not actually seep into the paper fibers themselves since, if this were to occur, the fibers would dissolve or swell, essentially resulting in the destruction of the paper. However, we understand that while liquids, such as the solution here, will saturate or thoroughly wet the interstices between paper fibers, they will not necessarily penetrate the fibers themselves. Thus, we believe that the fact that the xanthate cellulose solution does not seep into the paper fibers is not controlling on the issue of whether the subject processing results in an acceptable assembly of two solids.


From the information and samples presented, we conclude that the process by which xanthate cellulose solution regenerates into a cellulose coating on the special grade paper is not an acceptable assembly operation. Therefore, no allowance in duty may be made under HTSUS subheading 9802.00.80 for the cost or value of the U.S. special grade paper.


John Durant, Director
Commercial Rulings Division

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