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HQ 557743

May 12, 1994

CLA-2 CO:R:C:S 557743 BLS


TARIFF NO.: 9802.00.80

Ms. Rita Taur
Todd Uniform, Inc.
3668 South Geyer Rd.
St. Louis, Missouri 63127

RE: Applicability of subheading 9802.00.80, HTSUS, to embroidery operation performed on knit shirts

Dear Ms. Taur:

This is in reference to the letter dated November 15, 1993, from M.G. Maher & Co., on behalf of Todd Uniform, Inc., regarding the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to an embroidery operation performed on knit shirts assembled in Costa Rica. In your letter of March 15, 1994, you advised that our response should be addressed to your attention, as M.G. Maher & Co. no longer represents your company. Samples of the merchandise have been submitted.


A cut-to-shape pellon, thread, and shirt components, all of U.S.-origin, will be exported to Costa Rica, where they will be assembled and embroidered by sewing. The pellon backing for the embroidery is attached to the pocket of the shirt by embroidery, and then trimmed. The purpose of the pellon backing is to secure and stabilize the embroidery.


Whether embroidering the knit shirt pocket using the pellon backing constitutes an acceptable assembly operation for purposes of subheading 9802.00.80, 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 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 the U.S. components assembled therein, provided there has been compliance with the documentary requirements of 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.

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 the component. See, 19 CFR 10.16(a).

Since we are addressing the applicability of HTSUS subheading 9802.00.80 to the embroidery operation only, we will assume that the shirts otherwise qualify for treatment under this tariff provision. In Headquarters Ruling Letter (HRL) 555625 dated August 8, 1990, U.S.-origin thread, knit fabric, and a pellon backing were shipped to Mexico for an embroidery 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. The pellon backing also prevented the embroidery stitch from unraveling. After the design was complete, the portion of the pellon backing not caught between the material and embroidered thread was removed. Based upon C.S.D. 90-28, 24 Cust. Bull. 346 (1990), which held that an embroidered design which penetrated two or three layers of fabric was an acceptable assembly operation, the embroidery operation in HRL 555625 was also found to be acceptable because the embroidery stitch was used to join the knit fabric and the pellon backing together. In C.S.D. 90-28, the embroidered design served as a binding agent, as it penetrated two or three
layers of slipper vamp and served to keep the center of the vamp from puckering. See L'Eggs Products v. United States, 704 F. Supp. 1127 (CIT) 1989, which held that thread used as a binding agent to join material to itself qualified as a component and was eligible for the duty exemption available under subheading 9802.00.80, HTSUS. See also HRL 557386 dated August 20, 1993, where we held that an embroidery operation which joined sweatshirt components and a pellon backing together was an acceptable assembly operation; and HRL 557733 dated January 14, 1994, where we found that an embroidery operation used to join shirt components and a tear-away pellon was an acceptable assembly operation.

The operations in the above-cited cases must be distinguished from embroidery operations in which the stitching is performed on one layer of fabric only. In this type of operation, the thread used to embroider is used to ornament only and not to join or fit together solid components, as required by HTSUS subheading 9802.00.80. Thus, the mere embroidery of fabric without the requisite joining of materials does not constitute an acceptable assembly operation. See e.g., HRL 555565 dated May 14, 1990 (embroidery of a logo onto beach towels does not constitute acceptable assembly operation), and HRL 071031 dated November 12, 1982 (embroidery designs on fabrics by needling and tufting yarns onto the fabric is not an acceptable assembly operation).

In the instant case, the embroidery operation is considered an acceptable assembly operation under subheading 9802.00.80, HTSUS, since it will be used to join the shirt components and the pellon backing. Therefore, the shirt components and the thread will be eligible for the duty allowance under subheading 9802.00.80, HTSUS. However, the pellon backing is not eligible for the duty allowance under this tariff provision, because nearly all of it is removed after the assembly operation. (Section 10.16(b)(4), Customs Regulations, 19 CFR 10.16(b)(4), considers trimming, filing, or cutting off of small amounts of excess material to be incidental operations.)


Based on the information submitted, the embroidery operation used to join the shirt component and the pellon backing is considered an acceptable assembly operation. However, the removal of almost all of the pellon backing is not incidental to the embroidery operation. Therefore, the knit shirts may be entered under subheading 9802.00.80, HTSUS, with allowances in duty for the cost or value of the U.S. components (except the pellon backing),
provided the documentary requirements of 19 CFR 10.24 are satisfied and the shirts otherwise qualify for subheading 9802.00.80, HTSUS, treatment.


John Durant, Director
Commercial Rulings Division

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