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HQ 557533


January 11, 1994

CLA-2 CO:R:C:S 557533 MLR

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80

Ms. Silvia Perez
M.G. Maher & Company, Inc.
One Canal Place
Suite 2100
New Orleans, LA 70130

RE: Applicability of partial duty exemption under HTSUS subheading 9802.00.80 to trousers from the Dominican Republic; loop stitching; embroidery; reinforce; fusible fused to pocket panel

Dear Ms. Perez:

This is in response to your letters of June 25, 1993, and July 20, 1993 to the District Director of Customs, New Orleans, Louisiana, which were forwarded to our office, requesting a ruling on behalf of your client, Big Yank Corporation, regarding the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to trousers subjected to a stitching operation in the Dominican Republic. Samples were submitted with your request.

FACTS:

Big Yank Corporation assembles men's trousers in the Dominican Republic from U.S. components. The subject of this ruling pertains to the operations of fusing the fusible panels to the pocket panels (both of which are cut to shape in the U.S.) and then stitching a loop design on the back pockets with U.S.- origin thread. It is alleged that the stitching is necessary to hold the fusible panel and the pocket panel together and is not primarily ornamental.

ISSUE:

Whether the stitching operation performed on the back pockets is an acceptable assembly operation under subheading 9802.00.80, HTSUS.

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 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. See 19 CFR 10.16(a). 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).

This ruling will only address the fusing and stitching operations. For purposes of this ruling, we will assume that the trousers otherwise qualify for subheading 9802.00.80, HTSUS, treatment. In C.S.D. 90-28, 24 Cust. Bull. 346 (1990), (Headquarters Ruling Letter (HRL) 555399 dated December 26, 1989), we held that an embroidered design which penetrated two or three layers of fabric was an acceptable assembly operation. The embroidered design served as a binding agent, as it penetrated two or three layers of a laminated slipper vamp (composed of a terrycloth top, a polyester foam center, and a terrycloth backing) and served to keep the center of the vamp from puckering. Based upon C.S.D. 90-28, HRL 555625 dated August 8, 1990, held that an embroidery stitch used to join knit fabric and pellon backing together was an acceptable assembly operation. The pellon backing was considered necessary to the embroidery operation because, without the backing, the thread would become entangled in the embroidery machine, making the embroidery operation impossible. However, in HRL 555565 dated May 14, 1990, the embroidery of a logo onto a beach towel was not an acceptable assembly operation because it only involved the embroidery of a single layer of fabric.

In the present case, the stitching of the loop design affects two garment components (i.e., the fusible and pocket panels). Based on the rulings above, if an embroidery operation is used to join components together, it is considered an acceptable assembly operation. However, the question in this case is whether the stitching is an acceptable assembly operation in view of the fact that the fusing operation already joins the two components together and the stitching only reinforces that joining. In HRL 555625, the pellon backing and knit fabric were placed in an embroidery hoop and the design was embroidered. However, in C.S.D. 90-28, the top surface of the laminated slipper vamp was sprayed with an adhesive and an applique was positioned on the vamp before the embroidery operation. As in C.S.D. 90-28, where the embroidery stitch was used to prevent the applique from unraveling and enhanced the attractiveness of the vamp, the embroidery in this case is used to reinforce the attachment of the fusible panel onto the pocket panel. Therefore, in view of the fact that the application of subheading 9802.00.80, HTSUS, was not negated by positioning the applique onto the slipper vamp with adhesive before the embroidery, it is our opinion that the fusing and stitching operations are acceptable assembly operations.

HOLDING:

On the basis of the information and samples submitted, because the fusing and stitching operations join the pocket panel and fusible panel together, they are considered acceptable assembly operations. Therefore, the trousers subjected to the stitching operation may be entered under subheading 9802.00.80, HTSUS, with allowances in duty for the cost or value of the U.S. components, provided the documentary requirements of 19 CFR 10.24 are satisfied and the garments otherwise qualify for subheading 9802.00.80, HTSUS, treatment.

Sincerely,

John Durant, Director

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