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HQ 556849

December 23, 1992

CLA-2 CO:R:C:S 556849 RAH


TARIFF NO.: 9802.00.80

Siegel, Mandell & Davidson
One Astor Plaza
1515 Broadway
43rd Floor
New York, New York 10036

RE: Applicability of subheading 9802.00.80, HTSUS, to U.S.-origin pocket parts embroidered in Guatemala

Dear Sir or Madam:

This is in response to your letter of June 24, 1992, on behalf of Industris Textile Choishin, S.A., requesting a ruling on the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to U.S. pocket components of womens' cotton pullovers which will be assembled in Guatemala.


U.S.-origin pockets will be exported with other cut components of a knit T-shirt styled pullover. The pockets will be embroidered in Guatemala by computerized machinery prior to their being sewn to the body fabric of the apparel. The pullovers will be assembled in Guatemala from cut-to-shape components of U.S.-origin fabric which include front panels, back panels, sleeve panels, pockets and neckbands cut-to-shape in the U.S.

The embroidery process involves the joining of three components (the U.S.-origin cut pocket, a pellon backing fabric of Korean origin and foreign origin embroidery thread). Prior to the embroidering of a pocket by the computerized stitching process, the pellon backing will be cut to the approximate shape of the particular embroidery in Guatemala; the size of each piece of pellon fabric will be slightly larger than the embroidery for which it is used. The pocket and pellon backing are then positioned by hand so that the computerized equipment can affix the embroidery stitch which binds those two components. After the computerized embroidery process has been completed, the excess pellon material will be trimmed away by hand.

You contend that the cut pocket fabric exported from the United States is eligible for the duty exemption under subheading 9802.00.80, HTSUS, and that the embroidery process does not affect the pocket's eligibility for the partial duty exemption under subheading 9802.00.80, HTSUS. In support of your contention, you cite L'Eggs Products, Inc. v. United States, 704 F. Supp. 1127 (1989), Headquarters Ruling Letter (HRL) 555399 dated December 28, 1989 (published as C.S.D. 90-28), and HRL 555625 dated August 1992.


Whether the embroidered pockets will be eligible for the duty exemption under subheading 9802.00.80, HTSUS, upon importation of the pullovers into the United States.


All articles imported into the U.S. are subject to duty unless specifically exempted therefrom under the HTSUS.

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 this tariff provision is subject to duty upon the full cost or value of the imported assembled article, less the cost or value of the U.S. components assembled therein, 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)), states in part that:

[t]he components must be in condition ready for assembly without further fabrication at the time of their exportation 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.

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, lamination, sewing, or the use of fasteners.

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 operations. However, any significant process, operation or treatment whose primary purpose is the fabrication, completion, physical or chemical improvement of a component precludes the application of the exemption under subheading 9802.00.80, HTSUS, to that component. See, 19 CFR 10.16(c).

Customs has held that embroidering a single layer of fabric does not qualify as an acceptable assembly operation for purposes of subheading 9802.00.80, HTSUS, because the thread used to embroider is used to ornament and not necessarily to join or fit together solid components. See, Headquarters Ruling Letter (HRL) 555565 dated May 14, 1990 (embroidering a logo, trademark or other identifying symbol onto a towel was not an acceptable assembly operation because it was not necessary and not related to the assembly process, but was merely a decorative feature of the beach towel).

However, in HRL 555399 dated December 26, 1989, published as C.S.D. 90-28 in Customs Bulletin, Volume 24, 1990, we determined that although embroidery on slippers was ornamental, in that it served to decorate the slipper vamps, the thread used in this manner also acts as a binding agent because it penetrated the two or three layers of the vamp and serves to keep the center of the vamp from puckering.

Another case, decided after C.S.D. 90-28, held that a foreign embroidery operation which involved placing knit fabric and pellon backing into an embroidery hoop, placing the hoop in an embroidery machine and embroidering a design onto the material in the hoop is distinguishable from previous rulings (i.e., HRL 063098, supra) which held that embroidering a single layer of fabric did not qualify as an acceptable assembly operation. HRL 555625 dated August 8, 1990. In that case, the embroidery stitch was used to join the knit fabric and the pellon backing together. We found that the pellon backing was a necessary part of the operation because it prevented the thread from becoming entangled in the embroidery machine and prevented the embroidery stitch from unraveling.

Under the facts presented, we find that the embroidery thread serves not only as a decoration but also functions as a binding agent of the U.S. fabric and pellon backing. Accordingly, based on the decisions in C.S.D. 90-28 and HRL 555626, we find that the knit T-shirt will be eligible for the partial duty exemption under subheading 9802.00.80, HTSUS.


From the information and samples submitted, it is our opinion that the operations performed in Guatemala to create the knit T-shirt pullover are considered proper assembly operations or operations incidental thereto. Therefore, the shirts may be entered under subheading 9802.00.80, HTSUS, with allowances in duty for the cost or value of the U.S. fabric components incorporated therein, upon compliance with the documentary requirements of 19 CFR 10.24.


John Durant, Director
Commercial Rulings Division

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