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NY 811371

July 7, 1995

CLA-2-57:S:N:N6:349 811371


TARIFF NO.: 5702.42.1000

Mr. Jeff Martin
Orian Rugs Inc.
P.O. Drawer 2276 - Highway 81 North
Anderson, South Carolina 29622

RE: The tariff classification of two rugs from Belgium.

Dear Mr. Martin:

In your letter dated May 30, 1995, received by this office on June 8, 1995, you requested a tariff classification ruling.

You submitted two representative swatches of woven pile rugs. Both rugs will be made of 100 percent olefin (polpropylene) yarn for the pile surface, polyester/cotton warp yarns, polyester fringe yarn, and jute wefts. The rugs have a floral design formed by the pile yarn. One rug has green, beige, and dusty rose colored pile yarns forming a floral design. The upper surface of the other carpet consists of black, blue, pink, and white pile yarns.

In your letter, you mention that you export United States made BCF Olefin yarn and 3-ply polyester fringe yarn to Belgium. In Belgium the yarn will be made into rugs. Attached to your letter is a weight and percentage breakdown sheet. It is your belief that since a large portion of the content of the rug is made in the United States you would qualify for a duty rate reduction. Please note, subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTS), 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, HTS, must be satisfied before a component may receive a duty allowance. Customs has consistently held that the weaving process used to manufacture fabrics is not regarded as an acceptable assembly under subheading 9802.00.80, HTS, but rather, is a further fabrication of the thread or yarn. The third example set forth in 19 CFR 10.16(a) provides that:

[t]he manufacture abroad of cloth on a loom using thread or yarn exported form the U.S. on spools, cops, or pirns is not considered an assembly but a weaving operation, and the thread or yarn does not qualify for the exemption.

In this case the U.S. yarn sent aboard has been woven to make the rug and as such does not constitute an acceptable assembly operation. The rugs are ineligible for partial duty exemption under subheading 9802.00.80, HTS.

Also note, that if the olefin and polyester yarns are provided free of charge or at a reduced cost to the Belgian manufacturer, the yarns constitute on assist as defined in Section 152 of the Customs Regulations (19 C.F.R. 152.102(a)). Under section 152 of the Customs Regulations, to the extent that the value of the assist is not otherwise included in the price actually paid or payable for the merchandise, the value of the assist must be added to the price paid or payable for the merchandise in determining the transaction value of the imported merchandise (19 C.F.R. 152.102, 19 C.F.R. 152.103).

The applicable subheading for the rugs will be 5702.42.1000, Harmonized Tariff Schedule of the United States (HTS), which provides for carpets and other textile floor coverings, woven, not tufted or flocked, whether or not made up, including "Kelem", "Schumacks", "Karamnie" and similar hand-woven rugs: other, of pile construction, made up: of man-made textile materials: Wilton (including brussels) and velvet (including tapestry) floor coverings and floor coverings of like character or description. The rate of duty will be 9 percent ad valorem.

This ruling is being issued under the provisions of Section 177 of the Customs Regulations (19 C.F.R. 177).

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is imported. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.


Jean F. Maguire
Area Director
New York Seaport

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