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HQ 560661




November 21, 1997

CLA-2 RR:TC:SM 560661 MLR

CATEGORY: CLASSIFICATION

TARIFF NO.: 5609.00.30; 9802.00.80

Mr. Keith Krauthoff
P.O. Box 1626
Bozeman, MT 59771

RE: Applicability of partial duty exemption under HTSUS subheading 9802.00.80 to zipknots from Philippines, China, Taiwan, South Korea, Vietnam; Classification; Generalized System of Preferences

Dear Mr. Krauthoff:

This is in response to your letters dated September 11 and 17, and November 6, 1997, regarding the duty-free treatment of "zipknots". A sample was submitted.

FACTS:

On May 21, 1997, Customs issued to you Headquarters Ruling Letter (HRL) 560060 concerning the applicability of duty-free treatment for zipknots pursuant to Section 222 of the Customs Trade Act of 1990 (Public Law 101-382), which amended U.S. Note 2, Subchapter II, Chapter 98, Harmonized Tariff Schedule of the United States (HTSUS), {hereinafter "Note 2(b)}. In HRL 560060, we held that zipknots made in Costa Rica are eligible for duty-free treatment under Note 2(b), assuming they are wholly made from materials of U.S. origin, and upon complying with the documentation requirements of Headquarters telex 9264071 dated September 28, 1990.

In HRL 560060, the facts indicate that the "zipknot" is a zipper pull used on outdoor garments and equipment such as backpacks, tents, or sleeping bags. You stated that the zipknot is made from 3 millimeter (mm) polypropylene braided rope which is manufactured in the U.S. and that the rope will be cut-to-length in the U.S. You also stated that the cut-to-length pieces will be shipped directly to Costa Rica where they will be tied into a "monkey's fist" knot with a loop that allows it to be attached to a zipper. The monkey's fist knot forms a ball approximately 18 mm in diameter, and protruding from it is a loop approximately 40 mm in length.

Now, you inquire whether the zipknots will receive duty-free treatment if the same operations discussed in HRL 560060 are performed in the Philippines. Additionally, you inquire about the duty rate if the zipknots are wholly manufactured in China, Taiwan, South Korea, or Vietnam.

ISSUES:

I. What is the classification of the zipknots?

II. Whether the zipknots are eligible for duty-free treatment under the Generalized System of Preferences.

III. Whether the zipknots will qualify for the partial duty exemption available under subheading 9802.00.80, HTSUS, when returned to the U.S.

LAW AND ANALYSIS:

I. Classification

Classification of goods under the HTSUS is governed by the General Rules of Interpretation (GRIs). GRI 1 provides that "classification shall be determined according to the terms of the headings and any relative section or chapter notes and, provided such headings or notes do not otherwise require, according to [the remaining GRIs taken in order]."

The zipknot is made from 3 millimeter diameter polypropylene braided cord tied into a monkey's fist knot. Heading 6307 provides for other made-up articles of any textile material which are not included more specifically in other headings of Section XI. However, Note 1 to Chapter 63 specifies that Sub-Chapter I applies only to made up articles of any textile fabric. Since the zipknot is made of braided cordage, it is not a textile fabric for tariff purposes and is therefore precluded from classification in heading 6307, HTSUS. The classification of the braided cordage would be under heading 5607, HTSUS, which provides for "twine, cordage, ropes and cables, whether or not plaited or braided and whether or not impregnated, coated, covered or sheathed with rubber or plastics". Since, the cordage has been knotted and formed into a loop, however, it has been advanced in condition beyond the scope of heading 5607.

Heading 5609, HTSUS, provides for articles of cordage, rope or cable, not elsewhere specified or included. The Explanatory Notes to the HTSUS constitute the official interpretation of the nomenclature at the international level. The Explanatory Notes to heading 5609 indicate that this provision includes cordage cut to length and looped at one or both ends. We are of the opinion that the zipknots are properly classifiable under heading 5609. Within heading 5609, HTSUS, articles of yarn are distinguished by their composition. The instant goods are made of man-made fibers, which are described in subheading 5609.00.3000, HTSUSA, "Articles of ... cordage, rope or cables ... of man-made fibers." See HRL 087100 dated August 17, 1990; and HRL 086609 dated April 12, 1990.

II. Generalized System of Preferences

Under the Generalized System of Preferences (GSP), eligible articles the growth, product or manufacture of a designated beneficiary developing country (BDC) which are imported directly into the customs territory of the U.S. from a BDC may receive duty-free treatment if the sum of (1) the cost or value of materials produced in the BDC, plus (2) the direct costs of the processing operations performed in the BDC, is equivalent to at least 35 percent of the appraised value of the article at the time of entry into the U.S. See 19 U.S.C. 2463(b).

Of the countries you list in your ruling request, only the Philippines is a designated BDC for purposes of the GSP. As indicated above, the zipknots are classifiable under subheading 5609.00.30, HTSUS. Subheading 5609.00.30, HTSUS, is not a GSP-eligible provision. Therefore, even assuming that the zipknots were wholly made in the Phillippines using cordage of Philippine origin, they would not be eligible for duty-free treatment under the GSP as they are not classified in a GSP-eligible provision.

III. Subheading 9802.00.80

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).

Customs has previously held that cutting U.S.-origin ribbon to appropriate lengths abroad, forming one or more pieces of ribbon into the shape of a bow, and then tying the center of the bow with coated or tinsel wire to secure the bow shape constituted an acceptable assembly or operation incidental to assembly under subheading 9802.00.80, HTSUS, or item 807.00, Tariff Schedules of the United States (TSUS) (the precursor provision to subheading 9802.00.80, HTSUS). See HRL 071450 dated September 8, 1983; HRL 553674 dated June 14, 1985; HRL 554956 dated April 6, 1988; HRL 554943 dated April 18, 1988; and HRL 555475 dated November 3, 1989 (ribbon cut to length, wrapped twice around the middle of a coat hanger bar and base of a hanger hook, and knotted into a bow constituted an acceptable assembly operation). In each of these cases, the bow formation process involved the joinder of two or more components. The ribbon's bow shape was secured either by tying wire around its center or by wrapping and knotting the ribbon to the hanger.

However, in HRL 555357 dated February 16, 1990, Customs found that the formation of a single ribbon into a bow by knotting the ribbon was not, in itself, an assembly operation. HRL 555357 was distinguished from the rulings above as the single length of ribbon was the sole component which was knotted to form a bow, and there was no joinder of two or more separate components. See also HRL 557467 dated September 13, 1994.

In this case, only one component is used to tie the monkey's fist knot to form the zipknot. Accordingly, as two or more components are not being assembled together, we find that the zipknots will not qualify for subheading 9802.00.80, HTSUS, treatment.

HOLDING:

On the basis of the information and sample submitted, since the zipknots are not classifiable in a GSP-eligible provision, they will not be eligible for duty-free treatment under the GSP. Additionally, we find that tying the polypropylene braided cord into a monkey's fist knot and a loop to form the zipknot is not an acceptable assembly operation within the meaning of subheading 9802.00.80, HTSUS.

Therefore, the zipknots will be classifiable in subheading 5609.00.3000, HTSUSA, which provides for articles of yarn, ... cordage, rope or cables, not elsewhere specified or included, of man-made fibers. The rate of duty is 7.6 percent ad valorem.

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are 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,

John Durant, Director

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