CLA-2 CO:R:C:V 554974 CW/LW
Ms. Nancy Fox
Import and Small Business Consultant
25 Mt. Tenaya Drive
San Rafael, California 94903
RE: Applicability of partial duty exemption provision and
country of origin marking requirements to certain
hand-painted T-shirts from China
Dear Ms. Fox:
This is in response to your letter of March 28, 1988, in
which you request a ruling concerning the applicability of item
806.20, Tariff Schedules of the United States (TSUS), to U.S.-
made T-shirts which will be sent to the People's Republic of
China to be hand-painted, and then returned to the U.S. for sale.
You also inquire as to the applicability of visa, quota, and
country of origin marking requirements to the returned T-shirts.
A sample has been submitted for examination.
FACTS:
You advise that the T-shirts to be purchased in the U.S. by
your client will be made of 100 percent cotton and will cost
approximately $2.50 each, while the cost of the hand-painting
will be approximately $1.50 per shirt. You request our
confirmation that item 806.20, TSUS, will apply to the returned
shirts, that they will not be subject to any visa or quota
requirements, and that it is acceptable for the label in each
shirt to read "garment made in the U.S.A., hand-painted in
China."
ISSUE:
Whether the described hand-painted T-shirts will be eligible
for the partial exemption from duty provided for in item 806.20,
TSUS (subheading 9802.00.40, Harmonized Tariff Schedule of the
United States (HTSUS)), and whether, for marking purposes, the
country of origin of the returned T-shirts will be the U.S. or
China.
- 2 -
LAW AND ANALYSIS:
Item 806.20, TSUS, provides for the assessment of duty on
the value of repairs or alterations performed on articles that
are sent abroad for that purpose. However, the application of
this tariff provision is precluded where the operations performed
abroad create new or different articles of commerce, or where the
exported articles are incomplete for their intended use and the
foreign processing operation is a necessary step in the prepara-
tion or manufacture of finished articles. See Guardian
Industries Corp. v. United States, USITR, 3 CIT 9 (1982), and
Dolliff & Company, Inc. v. United States, 66 CCPA 77, C.A.D. 1225
(1979).
We have previously held in a ruling dated December 10, 1986
(554371), that certain U.S.-made sweatshirts which are design
hand-painted abroad and returned to the U.S. are not eligible for
item 806.20, TSUS, treatment. We stated that the hand-painting
operation creates a different article of commerce and constitutes
the last step in the production of finished hand-painted
sweatshirts. We believe that our holding in that case is
controlling with respect to the applicability of item 806.20,
TSUS, to the T-shirts under consideration here. In our opinion,
the hand-painting of the exported T-shirts imparts substantially
new and different characteristics to the shirts, resulting in new
and different articles of commerce with unique, specialized
appeal.
Please be advised that upon return of the T-shirts to the
U.S. from China, they will be subject to all applicable visa and
quota requirements as products of China.
With respect to the issue of country of origin marking,
because the T-shirts are textiles subject to section 204 of the
Agricultural Act of 1956, as amended (7 U.S.C. 1854), section
12.130(c), Customs Regulations (19 CFR 12.130(c)), is applicable.
That section provides that, pursuant to Headnote 2, Part 1,
Schedule 8, TSUS, any U.S. textile or textile product which is
returned after having been advanced in value or improved in
condition abroad, or assembled abroad (whether or not it has
undergone a substantial transformation abroad), shall be a
foreign article for the purposes of the Tariff Act of 1930, as
amended.
HOLDING:
On the basis of the information and sample submitted, it is
our opinion that the hand-painted T-shirts are not eligible for
item 806.20, TSUS, treatment upon return to the U.S.
- 3 -
Although the T-shirts are woven and sewn in the U.S., the
hand-painting in China has advanced the T-shirts in value. Thus,
for country of origin marking purposes, according to 19 CFR
12.130(c), the country of origin of the returned T-shirts is
China, and they must be marked accordingly.
Sincerely,
John Durant
Director, Commercial
Rulings Division