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HQ 560440




August 25, 1997

CLA-2 RR:TC:SM 560440 JML

CATEGORY: CLASSIFICATION

TARIFF NO: 9802.00.80

Mr. Miguel Ruiz
Miami International Forwarders
P.O. Box 523730
Miami, FL 33152-3730

RE: Eligibility of girl's pullover garment assembled in Haiti for the partial duty exemption under subheading 9802.00.80, HTSUS; embroidery; incidental operations.

Dear Mr. Ruiz:

This is in response to your letter of April 27, 1997, requesting a binding ruling concerning the eligibility of certain girl's pullover garments assembled in Haiti for the partial duty exemption under subheading 9802.00.80, Harmonized Tariff Schedule of the United States ("HTSUS").

FACTS:

Your client, HH Cutler Company ("Cutler"), intends to import girl's pullover garments, style number T1494T. The garment is constructed from United States ("U.S.") origin fabricated components -- front and back panels, sleeve panels, pocket piece, neckbands, and thread -- sent to Haiti ready for assembly. The garment components are knit 100% acrylic fabric, fleeced on the inside. The garment is long sleeved without cuffs, a straight hem at the bottom and a ribbed crew neck. The front panel of the garment features a large pocket constructed of 50% polyester and 50% cotton fabric fleeced on the inside. On the bottom hem of the front panel and front pocket is a contrasting color decorative "blanket stitch." Appearing on the front panel of the garment is a printed design of the trademarked name "Barbie" and three heart shapes (all printing performed in the U.S.). You state that Cutler is authorized in writing by the trademark owner to import garments bearing that trademark.

The assembly operations performed in Haiti consist of sewing the U.S. origin components together. The "blanket stitch" is performed using a merrow stitch sewing machine. You define the stitch as a crocheted single needle that finishes the edges where it is placed. Specifically, the blanket stitch is placed on the bottom hem of the front panel and the pocket edges of the garment, is done in contrasting thread color, and penetrates two layers of fabric. You state that the blanket stitch must be performed prior to the assembly of the front and back panels, pocket, and front panel components.

ISSUE:

Whether the Haitian blanket stitch operation precludes the finished girl's pullover garment from the partial duty exemption 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 appraised value of the imported assembled article, less the cost or value of the U.S. components assembled therein, upon compliance with the documentation requirements of section 10.24, Customs Regulations (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 HTSUS subheading 9802.00.80 to that component. See 19 CFR 10.16(c).

This ruling will address only the legal implications under subheading 9802.00.80, HTSUS, of the decorative stitching on the garments. For purposes of this ruling, we will assume that the garments otherwise satisfy the conditions and requirements of this tariff provision.

In L'Eggs Products Inc. v. United States, 704 F.Supp. 1127 (CIT 1989), the Court of International Trade held that thread used as a binding agent to join material to itself qualified as a component and was eligible for a duty allowance under subheading 9802.00.80, HTSUS. Customs held in C.S.D. 90-28, 24 Cust. Bull. 346 (1990) (Headquarters Ruling Letter (HRL) 555399 dated December 26, 1989), that an embroidered design which penetrated two or three layers of fabric was an acceptable assembly operation. The embroidered design served as binding agent, as it penetrated two or three layers of fabric. In Peg Bandage v. United States, 17 CIT 1337 (1993), Ace-type elastic bandages of U.S. origin were shipped to Haiti where the ends were sewn with thread. The court found that this operation amounted to an assembly under the precursor to HTSUS subheading 9802.00.80, as it involved the joinder of the unsewn bandage "with another fully fabricated component, i.e., sewing thread."

The thread used to perform the blanket stitching operation involved in this case penetrates two layers of fabric at the hem of the garment and the pocket edges (because the fabric is folded over at those points to create the hem and pocket edges). Thus, the blanket stitching operation involves the joinder of two fully fabricated components -- the thread and the garment material -- and qualifies as an acceptable form of assembly for purposes of subheading 9802.00.80, HTSUS.

HOLDING:

On the basis of the information presented, it is Customs' opinion that the decorative blanket stitching applied to the girl's pullover garment assembled in Haiti is an acceptable form of assembly and will not preclude the garment from receiving duty exemptions under subheading 9802.00.80, HTSUS, assuming compliance with the documentation requirements of 10 CFR 10.24.

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

Sincerely,


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