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HQ 557556

October 28, 1993

CLA-2 CO:R:C:S 557556 MLR


TARIFF NO.: 9802.00.80

Jack D. Mlawski, Esq.
Galvin & Mlawski
425 Park Avenue - 29th Floor
New York, New York 10022-3506

RE: Applicability of partial duty exemption under HTSUS subheading 9802.00.80 to shoulder pads; die cutting; sewing

Dear Mr. Mlawski:

This is in response to your letter of July 20, 1993, forwarded to us by the Chief, National Import Specialist Branch 5, requesting a ruling on behalf of Seventh Avenue Trim, Inc., regarding the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to shoulder pads from the Dominican Republic.


Seventh Avenue Trim, Inc. will export U.S.-origin fabric to Crest Caribbean Pad Co., S.A., a related shoulder pad manufacturer in the Dominican Republic. The U.S.-origin fabric exported to the Dominican Republic consists of fiberfill, a polyester fabric neither woven nor knit, and tricot or taffeta fabric which is used to cover the shoulder pad. In the Dominican Republic, the fiberfill will be placed into a machine usually 20 to 30 layers at a time, which cuts out a shoulder pad shape with the use of a die. This results into 20 to 30 shoulder pads. The fiberfill is then placed into a machine which compresses air out of the fiberfill and applies heat to allow it to retain the desired shape. In some instances no further operations are required, and the shoulder pad is sold to related and unrelated wearing apparel assemblers in the Dominican Republic for incorporation into apparel which will be imported into the U.S. In other instances the shoulder pad is covered with the U.S. tricot or taffeta fabric. Just as the fiberfill, the tricot and taffeta fabric is layered when placed in the machine so that 30 to 50 pieces are cut. Identical tricot or taffeta pieces are then placed on the top and bottom of a fiberfill piece, and the edges of the tricot or taffeta pieces are sewn together to complete the shoulder pad.

The wearing apparel assemblers then attach the shoulder pad with a few stitches to the inside shoulder component of the wearing apparel. With respect to the shoulder pad which is not covered with the tricot or taffeta covering, it is stated that 70 to 80 percent of the cost can be attributed to the U.S. fiberfill fabric. With respect to the covered shoulder pad, it is stated that approximately 60 percent of the cost can be attributed to the fiberfill, tricot, and taffeta fabrics.


Whether the shoulder pads made from the U.S.-origin fiberfill, and tricot or taffeta fabrics will qualify for the partial duty exemption available under subheading 9802.00.80, HTSUS, when returned to the U.S.


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).

It is stated that while materials cut into specific shapes or patterns abroad are not normally treated as qualifying components under subheading 9802.00.80, HTSUS, Customs has recognized that bulk fabric cut abroad is eligible. You cite New Ruling Letter 885237, where U.S. bulk vinyl belt material in 54- inch rolls was cut to length and width, holes were punched, and buckles were attached. It was determined that the material was eligible for subheading 9802.00.80, HTSUS, treatment. Similarly, you state that 19 CFR 10.16(e) provides an example where foil and rolls of paper which were exported, cut to specific length abroad, interleaved, and rolled to form electrodes and dielectric of a capacitor, were eligible for the duty benefit.

You also cite Headquarters Ruling Letter (HRL) 555878 dated June 1991, where the issue was whether foreign-made fabric cut in the U.S. qualified as a U.S. component when assembled overseas. In determining that the foreign-made fabric cut into the top of comforter shells in the U.S. did not qualify as a U.S. component, it was stated that:
cutting the fabric into large pieces for the top of the comforter shells is more analogous to cutting fabric for toweling. The cutting of the top pieces for the comforter shells is not as complex as cutting specific pattern pieces for garments, gloves and infant carriers. In cutting pattern pieces for garments, care must be taken to properly lay out the pattern according to the weave of the fabric, as well as carefully following the shape of the pattern which does not merely involve cutting fabric to length and/or width (i.e., cutting fabric in straight lines). In the present case, the cutting of comforter shell pieces involves simply cutting straight lines similar to cutting toweling fabric to length and/or width. See HRL 556015 of May 20, 1991.

You allege that this case demonstrates that unlike the complex cutting operations required for cutting specific pattern pieces for garments, gloves and infant carriers, the cutting of fabric to length and/or width is not a complex manufacturing process and, thus, such processes do not disqualify the components made from the operations from subheading 9802.00.80, HTSUS, treatment.

In this situation, you allege that no pattern is necessary and no care must be taken to lay out the fabric according to its weave because the fiberfill has no weave. In fact, it is alleged that the operation is less complex than cutting fabric to length and/or width because the fabric is only punched out which requires no measurements. Accordingly, since cutting fabric to length is considered an operation incidental to the assembly process, so also should the punching operation in this instance.

In HRL 555878, the foreign-made fabric was not eligible for subheading 9802.00.80, HTSUS, treatment, because it was not substantially transformed into a product of the U.S. However, it is not relevant to allege that because the cutting operation in HRL 555878 is not complex enough to constitute a substantial operation it should be considered an incidental operation. Section 10.16, Customs Regulations (19 CFR 10.16) specifically provides that "any significant process ... whether or not it effects a substantial transformation of the article, shall not be regarded as incidental to the assembly and shall preclude the application of the exemption to such article."

In Proctor & Gamble Distributing Co. v. United States, 11 CIT 450 (1987), the court held that dry lap used to create a diaper core was "further fabricated" because part of the process included creating the basic diaper shape from a roll of dry lap. The court stated that "this is not equivalent to despooling wire and cutting it to length. It is rather like the process of creating the wire from other forms of metal." In regard to the second requirement of item 807.00, Tariff Schedules of the United States (TSUS) (now subheading 9802.00.80, HTSUS), that the components cannot lose their physical identity by change in form, shape, or otherwise, the court looked to E. Dillingham Inc. v. United States, 60 CCPA 39, 470 F.2d 629 (1972). The Dillingham case, in its discussion of felt base, stated that form changes only affect duty status under item 807.00, TSUS, if they cause the article to lose its physical identity. 60 CCPA at 46, 470 F.2d at 635. The court in Proctor & Gamble stated that
certainly it is possible to tell that the diaper core is made from the dry lap ... but the compact dry lap in roll form in no way resembles the fluffed, fully formed diaper core. This is not simply cutting lengths from the dry lap, it is the making of a new article. Thus, the second criterion for duty-free treatment under item 807 is not met.... Looking at item 807 as a whole, and at the process as a whole, it appears to the court that the creation of the diaper core is not merely an assembly process, a process incidental to assembly or some other minor activity; rather, it involves substantial fabrication and changes in physical characteristics which give the finished product its essential feature.

11 CIT at 453.

It is, therefore, our opinion that the fiberfill, tricot and taffeta fabrics, by being die stamped in the Dominican Republic, are further fabricated. It is the die stamping or punching, itself, that creates the shoulder pad. Because the fiberfill, tricot, and taffeta fabrics are not exported in condition ready for assembly, and, therefore, do not qualify for subheading 9802.00.80, HTSUS, treatment, we do not need to address whether compressing air out of the fiberfill to help retain its shape is an incidental operation.


On the basis of the information submitted, it is our opinion that the fiberfill, tricot, and taffeta fabrics are not exported in condition ready for assembly. Therefore, the shoulder pads are not eligible to receive subheading 9802.00.80, HTSUS, treatment, when they are returned to the U.S.


John Durant, Director

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