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HQ 560631

February 10, 1998

CLA-2 RR:CR:SM 560631 RSD


TARIFF NO. 9802.00.90

Port Director
United States Customs Service
P.O. Box 3130
(Juarez-Lincoln Bridge)
Laredo, Texas 78044-3130

RE: Request for Internal Advice; applicability of subheading 9802.00.90, HTSUS to polypropylene bulk bags assembled in Mexico; Special Regime Program; Article 509

Dear Director:

This is in response to your memorandum dated August 20, 1997, forwarding an internal advice request from the law firm of Siegel, Mandell & Davidson on behalf of Mountain Bag Manufacturing Corporation ("Mountain Bag") regarding the eligibility of polypropylene flexible intermediate bulk containers (bulk bags), from Mexico for duty free treatment under subheading 9802.00.90, Harmonized Tariff Schedule of United States (HTSUS). We have received several supplemental submissions from counsel. The most recent submission is dated January 22, 1997. Counsel's request for confidentially regarding any cost, pricing or trade secret information in their submissions has been granted.


The subject merchandise consists of flexible intermediate bulk containers ("bulk bags") used to store, transport, and handle a variety of free-flowing solids and powders such as chemicals, minerals, and food products. The bags are only straight panel bulk bags. There are two types of straight panel bags: U-panel bulk bags and circular bulk bags. The circular bulk bag features a tube which forms all four sides of the bag, while the U-panel bulk bag features a "U-shaped" panel which forms the bottom and two sides of the bag. Two separate panels form the remaining two sides of a U-panel bulk bag. In both circular and U-panel bulk bags, the top is comprised of a separate panel.

In ordering bulk bags from Mountain Bag, each customer develops individual specifications for the bags to meet the needs of their products, filling equipment, transportation system and/or the requirements of their customers in receiving the product. Both circular and U-panel bulk bags are constructed primarily of woven polypropylene fabric and share a variety of other features. In addition to the top, bottom, and side panels, both the U-panel and circular bulk bags may also share such supplementary features as a chute and/or spout construct of woven polypropylene fabric, four lift loops constructed of polypropylene webbing, draw strings constructed of zenith cord, a perimeter band constructed of polypropylene webbing, ribbon ties, a plastic liner, a manufacturer's identification tag and a warning tag.

All of the above-mentioned components and features of the polypropylene bulk bags are of U.S. origin. Specifically, each of the components are produced by a continuous weaving or braiding process and are then cut to length (and in the case of the fabric, cut to width) in the United States. As evidence that fabric cutting was done in the United States, counsel furnished a sworn affidavit from Mr. James Bates, a process engineer with Amoco Fabric and Fiber Company. In his affidavit, Mr. Bates states that he is responsible for the manufacturing process including processes related to the manufacture of the polypropylene fabric used in making the bulk bags. He further states that the flat stock of the polypropylene fabric is woven by Amoco to widths ranging from 90 to 99 inches. Mr. Bates continues that having been woven onto a loop roll, the fabric is then cut to width by means of a circular knife pursuant to specifications (generally ranging 36 to 54 inches, with the majority being 40, 42, or 48 inches). Finally, Mr. Bates indicates that once cut to width, the rolls of fabric are transported and delivered in fulfillment of the order.

The remaining fabric components of the bulk bags i.e., lift straps (polypropylene webbing), perimeter band (polypropylene webbing), ribbon ties (polypropylene ribbon/tape) and drawstrings (cord) are produced by a continuous weaving or braiding process and then are cut to length in the United States. Finally, the tags are also manufactured in the U.S. from materials of U.S. origin. Upon receipt of an order, the rolls and trim components are picked up from the warehouse and delivered to the plant in Mexico for assembly.

The first step in the Mexican assembly process consists of the unrolling and cutting to length of different fabric components. The polypropylene fabric which forms the U-panel (in a U-panel bulk bag), side panels, tube (in circular bulk bag), top panel and bottom panel is cut to length by a Richmond machine. The Richmond machine unrolls the polypropylene fabric to the proper width and separates the fabric into panels of the proper length by melting the fabric with a bar heated to 325-375 degrees Fahrenheit. As the fabric is unrolled, the Richmond machine automatically hems the panels by gluing the edges of the fabric together.

In Mexico, the lighter weight polypropylene fabric used to form the chute and/or spout is cut to length in one direction by hand at a cutting table. The material is ordered from U.S. suppliers in specific widths. The webbing, ribbon, and zenith cord are also received on rolls and are cut to length in one direction by hand to specific customer order.

Simultaneous to the melting of the polypropylene fabric by the Richmond machine to create the main panels of the bulk bag, an attachment to the Richmond machine, similar to a branding iron, descends on the fabric while it is stationary and burns an "X" or "O" into the fabric. The burning of an "X" is only performed on bottom panels (if circular bag) or U-panels (if U-panel bag) and only when a customer orders bulk bags with a chute. Likewise, the burning of an "O" is only performed on top panels and only when a customer orders bulk bags with a spout. In the case of the "X", the Richmond attachment burns slits into the fabric in the shape of an "X", creating no waste. In the case of the "O", the Richmond attachment burns a hole through the fabric. The circle of fabric which is removed is later sewn onto the bag as a flap. It takes the Richmond machine attachment 4.5 seconds to descend toward the fabric to burn either an "X" or "O" into the fabric and ascend again.

Once the components are cut to length, the sub-assembly operation commences. The subassembly consists of five basic processes. First, the side panels are hemmed. Then the lighter weight polypropylene fabric is formed into a tube and the edges are sewn, creating the chute and/or spout and a tie-off ribbon is applied. The points of the "X" slits are folded back and sewn, which creates loops. A draw string is threaded through the loops. A tube (already formed in the second process) is then sewn to the bottom panel over the "X", thereby creating the chute, and another tube is sewn to the top panel over the "O" thereby creating the spout. In the finally sub-assembly process, the circle of fabric which is removed from the "O" is sewn onto the bag as a protective flap covering the chute.

During the pre-assembly operation, the main body panels of the bulk bag are sewn together. Specifically, for a U-panel bulk bag, the side panels are sewn to the U-panel and the pre-cut lift loop are sewn into the seams.

In the final assembly operation, the top panel, with the spout applied, is sewn to the U-panel and the sides. While the top panel is sewn to the side, a length of webbing called the perimeter band is sewn into the top seam. Finally, the warning and identification tags are sewn onto the assembled bulk bag. The last step is to inspect the bulk bag to ensure that it complies with the dimensions and features required by the customer's order. At this time any loose threads are trimmed.


Whether the bulk bags which subject to this internal advice request are eligible for the full duty exemption under subheading 9802.00.90, HTSUS. when returned to the U.S.


Annex 300-B of the North American Free Trade Agreement ("NAFTA") is applicable to textile and apparel goods. Specifically, Appendix 2.4 of Annex 300-B provides that:

On January 1, 1994, the U.S. shall eliminate customs duties on textiles and apparel goods that are assembled in Mexico from fabrics wholly formed and cut in the United States and exported from and re-imported into the United States under:

(a) U.S. tariff item 9802.00.80.10; or

(b) Chapter 61, 62, or 63 if, after such assembly, those goods that would have qualified for treatment under 9802.00.80.10 have been subject to bleaching, garment dyeing, stone-washing, acid-washing or perma-pressing.

Thereafter, the U.S. shall not adopt or maintain any customs duty on textile or apparel goods of Mexico that satisfy the requirements of subparagraph (a) or (b) or the requirements of any successor provision to U.S. tariff item 9802.00.80.10.

Consequently, subheading 9802.00.90, HTSUS, was created to provide for the duty free entry of:

Textile and apparel goods, assembled in Mexico in which all fabric components were wholly formed and cut in the United States, provided that such fabric components, in whole or in part, (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; provided the goods classifiable in chapters 61, 62, or 63 may have been subject to bleaching, garment dyeing, stone-washing, acid-washing or perma-pressing after assembly as provided for herein.

The initial question which must be addressed is whether the bulk bags are considered "textile and apparel goods" under subheading 9802.00.90, HTSUS. "Textile and apparel goods" eligible for duty free treatment under subheading 9802.00.90, HTSUS, are listed in Appendix 1.1 of Annex 300-B of the NAFTA. Appendix 1.1 includes among such goods those classifiable in subheading 6305. Customs notes that the bulk bags are classifiable under subheading 6305, HTSUS as sacks and bags, of a kind used for the packing of goods. Thus, as that subheading is within those specified by Appendix 1.1, the bulk bags will qualify as "textile and apparel goods" for purposes of subheading 9802.00.90, HTSUS.

Next, in considering whether the bulk bags are eligible for subheading 9802.00.90, HTSUS, treatment, we need to determine if the fabric components were fully formed and cut in the United States before they were exported to Mexico. In HRL 560100 dated July 22, 1997, we held that to be eligible for duty free treatment under subheading 9802.00.90, HTSUS, there must be cutting of fabric components performed in the United States. We have also previously accepted the cutting of fabric to width in the United States as satisfying the requirement that the fabric components must be cut in the United States. See HRL 560414 dated December 13, 1997. In this instance, we are persuaded by the sworn affidavit of Mr. Bates, a process engineer with Amoco Fabric and Fiber Company, that cutting of fabric components was performed in the United States. To reiterate, Mr Bates stated that the polypropylene fabric is woven by Amoco to widths ranging from 90 to 99 inches and then cut to width in the U.S. by means of a circular knife pursuant to specifications. We have no evidence which contradicts Mr. Bates' affidavit. Moreover, we do not find that the cutting operations should be disregarded because they were done at the same facility immediately after the fabric was formed .

Because subheading 9802.00.90, HTSUS, was intended as a successor provision to subheading 9802.00.80, HTSUS, with respect to certain textile and apparel goods assembled in Mexico, the regulations under subheading 9802.00.80, HTSUS, are instructive in determining whether an assembly process would render an article eligible for duty free treatment accorded by subheading 9802.00.90, HTSUS.

Pursuant to section 10.16(a), the assembly operations 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 to the use of fasteners, and may be preceded, accompanied, or followed by operations incidental to the assembly process. In the instant case, the sewing, hemming, threading, and gluing operations performed in Mexico in which the various components of the bulk bag, such as the panels, lift loops, perimeter band, tags and, when applicable, chute and spout, were joined together are consistent with 19 CFR 10.16(a). Thus, the operations performed in Mexico constitute acceptable assembly operations under subheading 9802.00.90 HTSUS.

We now must consider whether any non-assembly operations performed in the Mexico qualify as operations incidental to the assembly process. Under section 10.14(a), Customs Regulations (19 CFR ? 10.14(a)), components will not lose their entitlement to the benefits of subheading 9802.00.80, HTSUS, by being subjected to operations incidental to the assembly either before, during or after the assembly with other components. 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. Examples of operations which are incidental to the assembly process include cutting to length of wire, thread, tape, foil and similar products exported in continuous lengths; and trimming, filing or cutting off or small amounts of excess materials. See section 10.16(b)(4) and (6) Customs Regulations 19 (CFR 10.16(b)(4) and (6). 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, HTSUSA, to the component. See section 10.16(c), Customs Regulations (19 CFR

In this case, the fabric is cut to length and a small amount of the fabric is trimmed. As already noted, 19 CFR 10.16(b), allows cutting to length as an operation incidental to the assembly process. See also HRL 556594 dated July 24, 1992. Accordingly, the cutting to length of the material is an operation incidental to assembly which would not disqualify the bulk bag from receiving the exemption under subheading 9802.00.90 HTSUSA. In addition, the operation of trimming is among the operations specifically provided for as incidental to the assembly process as set forth in 19 CFR 10.16(b).

With respect to the process of burning an "X" in the bottom panel and an "O" in the top panel for bags which require chute and spout respectively, it appears that these are relatively minor operations. Counsel indicates that the burning of the "X" constitutes 0.43 percent of the affected component's cost, and the cost of burning an "O" constitutes approximately 2.0 percent of affected component cost and that both operations constitute about .29 percent of the total cost of the assembly operations. In addition, the process of burning either an "X" or "O" accounts for only .28 percent of the total assembly time of a U-panel bag. Counsel also points out that these operations are closely related to assembly operations as shown by the fact that the same Richmond machine which cuts the U-panels and top panels to length simultaneously burns the "X" and "O" into those same panels by use of an attachment.

We note that, even if we were to find that these operations are not incidental to the assembly process, subheading 9802.00.90, HTSUS, requires only that the "fabric components, in whole or in part" (emphasis added) satisfy the three conditions identified in this provision under (a), (b), and (c). See Presidential Proclamation 6821 dated September 13, 1995 (60 FR 47663). Each bulk bag consist of a number of fabric components, only one of which is subjected to the either of these burning processes. Therefore, regardless of whether or not the burning of the "X" and "O" constitutes an operation incidental to the foreign assembly process, these operations will not preclude the bulk bags from receiving the benefits of this tariff provision. As a result, based upon the information submitted, Customs is of the opinion that the bulk bags are eligible for duty-free treatment under subheading 9802.00.90, HTSUS.


The operations performed in Mexico in connection with the polypropylene fabric components are acceptable assembly operations or operations incidental to such assembly. Therefore, the imported bulk bags, as described above, qualify for duty-free treatment under subheading 9802.00.90, HTSUS.

This decision should be mailed by your office to counsel for the internal advice requester no later than 60 days from the date of this letter. On that date, the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, Freedom of Information Act and other public access channels.


John Durant, Director
Commercial Ruling Division

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