HQ 0555606 - Internal Advice Request No. 3/90; applicability of subheading 9802.00.80, HTSUS, to nonwoven disposable shoe covers formed by sewing operations; Assembly; incidental operations; L'Eggs; Applicability of subheading 9801.00.10, HTSUS, to U.S. origin packaging materials; 731806; 071449 - United States International Trade Commision Rulings

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HQ 555606

July 26, 1990

CLA-2 CO:R:C:V 555606 LS

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80; 9801.00.10

District Director of Customs
Lincoln Juarez Bridge, Bldg. #2
P.O. Box 3130
Laredo, Texas 78044-3130

RE: Internal Advice Request No. 3/90; applicability of subheading 9802.00.80, HTSUS, to nonwoven disposable shoe covers formed by sewing operations; Assembly; incidental operations; L'Eggs; Applicability of subheading 9801.00.10, HTSUS, to U.S. origin packaging materials; 731806; 071449

Dear Sir:

This is in response to your memorandum of January 11, 1990, forwarding a request for internal advice dated September 18, 1989, from John Mayo McKeown, on behalf of Medline Industries. The request relates to the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to nonwoven disposable shoe covers imported from Mexico. Samples were submitted for examination.

FACTS:

The following facts are elicited from Medline Industries' request for internal advice, and an inspection of the samples. Medline Industries is planning to send the following U.S. origin components to Mexico for assembly into nonwoven disposable shoe covers: precut sheets of 100 percent spun bonded polypropylene; rolls of elastic white band; rolls of white cotton thread; chipboard boxes; and master cartons. The elastic white band and cotton thread are cut to length in Mexico. The elastic band is then placed along the edge of the precut sheet of polypropylene and sewn by machine onto the sheet using the thread. Medline Industries has not indicated how many sewing steps take place and how many separate pieces of elastic band are used on each shoe cover. It appears that one piece of elastic band is sewn onto the upper portion of the sheet which becomes the opening of the shoe cover. It appears that the sheet is then folded in half, and another piece of band is sewn along the edge of the folded sheet to create the sole area, toe portion, and top of the shoe cover. Thus, at the same time that the elastic band is being joined by thread to the polypropylene sheet, the sheet is being
sewn to itself to create the shape of the shoe cover. Fifty pairs of completed shoe covers are then placed in each chipboard box and the bottom of the boxes are stamped with non-sterile lot numbers. Three chipboard boxes are packed in a master carton and the carton is sealed with a dust cover. The master cartons are then stamped with non-sterile lot numbers.

In an amendment to its request for internal advice, dated October 30, 1989, Medline Industries contends that the operation whereby the polypropylene sheet is sewn to itself constitutes an assembly in accordance with L'Eggs Products, Inc. v. United States, Slip Op. 89-5, 13 CIT ___, 704 F. Supp. 1127 (1989). Medline Industries states that the Customs Service has appealed this decision, and inquires as to the effect of this appeal on its proposed operations in Mexico.

The office of the Area Director of Customs, New York Seaport, advises in regard to this internal advice request that L'Eggs has not been appealed, and that the disposable shoe covers should be eligible for the partial duty exemption under subheading 9802.00.80, HTSUS, when imported into the U.S.

ISSUE:

Whether the nonwoven disposable shoe covers will qualify for the partial duty exemption under subheading 9802.00.80, HTSUS, when imported into the U.S.

LAW AND ANALYSIS:

Subheading 9802.00.80, HTSUS, 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, lubricating and painting.

All three requirements of subheading 9802.00.80, HTSUS, must be satisfied before a component may receive a duty allowance. An article entered under subheading 9802.00.80, HTSUS, is subject to duty upon the full value of the imported assembled article less the cost or value of the U.S. components, upon compliance with the documentary requirements of section 10.24, Customs Regulations (19 CFR 10.24).

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 operation. See section 10.16(a), Customs Regulations (19 CFR 10.16(a)). Examples of operations considered incidental to the assembly process are delineated at 19 CFR 10.16(b). However, any significant process, operation, or treatment whose primary purpose is the fabrication, completion, or physical or chemical improvement of a component precludes the application of the exemption under subheading 9802.00.80, HTSUS. See 19 CFR 10.16(c).

According to 19 CFR 10.16(a), assembly operations may consist of any method used to join or fit together solid components. Sewing is specifically enumerated in this regulation as an acceptable means of assembly. Thus, the operation of sewing the elastic band to the polypropylene sheet by means of thread constitutes an assembly. The fact that, in one of the sewing operations, the precut sheet is being sewn to itself at the same time that the elastic band is being joined to the sheet does not preclude the finding of an acceptable assembly, in view of the decision in L'Eggs. L'Eggs held that the joining of fabric to itself by sewing is an acceptable assembly operation for purposes of item 807.00, Tariff Schedules of the United States (precursor of subheading 9802.00.80, HTSUS).

Pursuant to 19 CFR 10.16(a), assembly operations may be preceded, accompanied, or followed by operations incidental to the assembly. The cutting of the elastic band and cotton thread to length in Mexico prior to the sewing operations is an acceptable incidental operation. See 19 CFR 10.16(b)(6).

We find that the U.S. fabricated components, consisting of the precut sheets of spun bonded polypropylene, the rolls of elastic white band, and the rolls of white cotton thread are in a condition ready for assembly without further fabrication, do not lose their physical identities in the assembly operations, and are not otherwise advanced in value or improved in condition except by assembly operations and operations incidental thereto. Therefore, the nonwoven disposable shoe covers are eligible for the duty allowance under subheading 9802.00.80, HTSUS.

Subheading 9801.00.10, HTSUS, provides for the free entry of products of the U.S. that are exported and returned without having been advanced in value or improved in condition by any process of manufacture or other means while abroad, provided the documentary requirements of section 10.1, Customs Regulations (19 CFR 10.1), are met. The packaging materials used in shipping the
shoe covers are entitled to free entry under subheading 9801.00.10, HTSUS, since they are U.S. products which are returned without having been advanced in value or improved in condition while abroad. See Headquarters Ruling Letter (HRL) 731806 dated November 18, 1988 (duty-free treatment provided by subheading 9801.00.10, HTSUS, extends to an American-made container which is exported and then reimported with its contents, provided that it meets all of the criteria for classification within that subheading). Moreover, the stamping of the non-sterile lot numbers onto the chipboard boxes and the master cartons will not preclude this packaging material from receiving duty-free treatment under subheading 9801.00.10, HTSUS. See HRL 071449 dated October 17, 1983.

HOLDING:

For the foregoing reasons, the nonwoven disposable shoe covers will be eligible for the partial duty exemption under subheading 9802.00.80, HTSUS, when imported into the U.S., upon compliance with the documentary requirements of 19 CFR 10.24. The packaging material of U.S. origin is entitled to free entry under subheading 9801.00.10, HTSUS, upon compliance with the documentary requirements of 19 CFR 10.1.

Sincerely,

John Durant, Director
Commercial Rulings Division

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