CLA-2 CO:R:C:V 555249 DBI
David R. Ostheimer, Esq.
Lamb and Lerch
233 Broadway
New York, New York 10279
RE: Applicability of subheading 9802.00.50, HTSUS, and country
of origin marking requirements to sweatshirts subjected to
a chenilling process in Haiti
Dear Mr. Ostheimer:
This is in response to your letter to the Regional
Commissioner of Customs, New York, dated August 30, 1988, on
behalf of Styletek, Inc., requesting a ruling concerning the
applicability of subheading 9802.00.50, Harmonized Tariff
Schedule of the United States (HTSUS), and country of origin
marking requirements to sweatshirts that are shipped to Haiti for
certain chenilling operations and returned. Sample sweatshirts
have been submitted for our examination. We regret the delay in
responding to your request.
FACTS:
You advise that your client will be exporting U.S.-made
sweatshirts to Haiti where they will be subjected to a chenilling
process. Certain of the sweatshirts arriving in Haiti will have
a pre-printed, silk-screened design already placed on them.
Other sweatshirts will be exported to Haiti without a design, and
the stencilled design will be placed on the sweatshirt in Haiti
prior to the chenilling. The chenilling process consists of the
following steps:
(1) Buckram or similar material of U.S. origin is used
as backing.
(2) The area to be chenilled is outlined by a border
stitch.
(3) The area is chenilled using a drop stitch method on a
sewing machine and then ironed to provide a smooth surface.
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(4) A mounting stitch is placed on the outside of the
chenilled area to secure the edge to the buckram.
(5) Any excess is removed.
Following the processing, the sweatshirts will be sent back
to the U.S. to be sold to college and university bookstores and
other organizations.
ISSUES:
(1) Whether the described sweatshirts, when returned to the
U.S., will eligible for the partial exemption from duty under
subheading 9802.00.50, HTSUS (formerly item 806.20, Tariff
Schedules of the United States (TSUS)).
(2) Whether, for country of origin marking purposes, the
country of origin of the returned sweatshirts will be the U.S. or
Haiti.
LAW AND ANALYSIS:
As you know, the HTSUS replaced the TSUS, on January 1,
1989. Item 806.20, TSUS, was carried over into the HTSUS as
subheading 9802.00.50. This provision provides for the
assessment of duty on the value of repairs or alterations
performed on articles returned to the U.S. after having been
exported for that purpose. However, the application of this
tariff provision is precluded in circumstances where the
operations performed abroad destroy the identity of the articles
or create new or commercially different articles. See A.F.
Burstrom v. United States, 44 CCPA C.A.D. 631 (1957); Guardian
Industries Corporation v. United States, 3 CIT 9 (1982).
Treatment under subheading 9802.00.50, HTSUS, also is precluded
where the exported articles are incomplete for their intended use
and the foreign processing is a necessary step in the preparation
or manufacture of finished articles. Dolliff and Company, Inc.
v. United States, 66 CCPA 77, C.A.D. 1225, 599 F.2d 1015 (1979).
In a ruling dated July 27, 1988 (HQ 554974), we held that
T-shirts that were hand-painted with a design abroad were not
eligible for item 806.20, TSUS, treatment. In that case, we
reasoned that 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.
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In a similar ruling dated December 10, 1986 (HQ 554371), we
held that sweatshirts that were design hand-painted abroad were
not entitled to item 806.20, TSUS, treatment. We stated that
although garments may be worn whether design painted or not,
hand-painting, like printing, is considered neither a repair nor
an alteration under the provisions of item 806.20, TSUS. A
design hand-painted garment is different from an unpainted one
and, as such, the foreign hand-painting operations create a
different article of commerce. Moreover, we stated that the
foreign hand-painting operations constitute a finishing of the
garment performed in the course of manufacture -- the last step
in the total process of producing hand-painted sweatshirts. We
further noted that, depending on customer needs, the garments are
not considered finished products until they undergo the final
design painting and become ready for marketing and sale.
We believe that our holdings in these rulings are
controlling with respect to the applicability of subheading
9802.00.50, HTSUS, to the sweatshirts under consideration here.
The silk-screening and chenilling operations to be performed in
Haiti on the exported plain sweatshirts clearly will impart
substantially new and different characteristics to these shirts.
The placing of a particular logo on a sweatshirt by these
processes gives it specialized appeal, and is a prerequisite to
marketing and selling the shirts in the U.S. in the manner
desired by your client. Moreover, in regard to both the plain
sweatshirts to be exported to Haiti and those that will have the
pre-printed, silk-screened design on them when exported, the
chenilling operation is the last step in the total process of
producing finished sweatshirts bearing specific chenilled
designs.
With regard to the applicability of country of origin
marking requirements to the returned sweatshirts, because the
articles in question are textile products 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)),
provides that any textile or textile product of the U.S. which is
sent abroad and advanced in value or improved in condition shall,
upon its return to the U.S., be considered a foreign article for
the purposes of the Tariff Act of 1930, as amended.
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In the case at hand, the chenilling operation to be
performed in Haiti clearly will advance the value and improve the
condition of the sweatshirts and render them suitable for a
specific market. Consequently, we find that the chenilling
process to be performed in Haiti satisfies the standard set forth
in 19 CFR 12.130(c). Therefore, Haiti will be the country of
origin and the sweatshirts should be marked accordingly.
HOLDING:
On the basis of the information submitted, it is our
opinion that the chenilled sweatshirts will not be eligible for
treatment under subheading 9802.00.50, HTSUS, upon return to the
U.S. The chenilling process in Haiti will advance the
sweatshirts in value and improve them in condition. Thus, for
country of origin marking purposes, according to 19 CFR
12.130(c), the country of origin of the returned sweatshirts will
be Haiti, and they must be marked accordingly.
Sincerely,
John Durant
Director, Commercial
Rulings Division