CLA-2 CO:R:C:V 555357 KAC
Mr. William D. Outman, II
Baker & McKenzie
815 Connecticut Avenue, N.W.
Suite 1100
Washington, D.C. 20006
RE: Applicability of partial duty exemption under HTSUS sub-
heading 9802.00.80 to bows formed in Mexico and attached to
footwear
Dear Mr. Outman:
This is in response to your letter of March 30, 1989, on
behalf of R.G. Barry Corporation, requesting a ruling on the
applicability of subheading 9802.00.80, Harmonized Tariff
Schedule of the United States (HTSUS) (formerly item 807.00,
Tariff Schedules of the United States (TSUS)), to U.S. ribbon
formed into bows in Mexico and attached to footwear. We regret
the delay in responding to your request.
FACTS:
You state that the ribbon used in the formation of the bows
will be of U.S. origin. The U.S. ribbon, in varying widths, from
1/4 inch to 7/8 inch, will be exported to Mexico on spools. The
ribbon will be unspooled and cut to length using the "Ace Hot
Knife Strip Cutter." The cut ribbon is then placed on a bow
maker machine, threaded around hooks and, with a press of the
footswitch, it is formed into a bow which is tied to itself.
Later, the bow will be tacked to footwear which is imported into
the U.S.
ISSUE:
Whether the formation of the bow constitutes an acceptable
assembly operation or operation incidental to assembly for
purposes of HTSUS subheading 9802.00.80.
LAW AND ANALYSIS:
HTSUS subheading 9802.00.80 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 HTSUS subheading 9802.00.80 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 value of the imported assembled article, less the
cost or value of such U.S. components, upon compliance with the
documentary requirements of section 10.24, Customs Regulations
(19 CFR 10.24).
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. See, section 10.16(a), Customs
Regulations (19 CFR 10.16(a)).
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 operation, although they may precede, accompany or
follow the actual assembly operation. 19 CFR 10.16(a). Examples
of operations considered incidental to the assembly process are
delineated at 19 CFR 10.16(b). However, any significant process,
operation, physical or chemical improvement of a component
precludes the application of the exemption under HTSUS subheading
9802.00.80.
We have previously held that cutting U.S. 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 constitutes an
acceptable assembly or operation incidental to assembly under
subheading 9802.00.80, HTSUS, or item 807.00, TSUS. See,
Headquarters Ruling Letters 071450 dated September 8, 1983,
553674 dated June 14, 1985, 554956 dated April 6, 1988, and
554943 dated April 18, 1988. We have also held in Headquarters
Ruling Letter 555475 dated November 3, 1989, that 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 qualified as an
assembly operation or operations incidental to assembly. 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.
In the present case, it is clear that the formation of the
ribbon into a bow by knotting the ribbon is not, in itself, an
assembly operation. This case is distinguishable from the above-
cited rulings as the single length of ribbon is the sole
component which is knotted to form a bow. There is no joinder of
two or more separate components as required by HTSUS subheading
9802.00.80.
Moreover, concerning the subsequent tacking of the completed
bow to the footwear, we are of the opinion that the ribbon is not
exported in condition ready for assembly without further
fabrication. The ribbon after being cut to its designated length
is placed on the bow maker machine which shapes the ribbon into a
bow and secures the bow by knotting the ribbon to itself. We
find that the decision rendered in Samsonite Corporation v.
United States, Slip Op. 88-166, 12 CIT , 702 F.Supp. 908 (CIT
1988), aff'd, Appeal No. 89-1346 (CAFC November 16, 1989), 24
Cust.Bull. 23 (January 31, 1990), is controlling. In ruling that
straight steel strips, which were sent abroad for bending into a
squared "C" shape and then assembled into luggage, were not
exported in condition ready for assembly without further
fabrication, the court
[f]ound that the "bending process" to which the strips were
subjected "did more that 'adjust' the article. The process
created the component to be assembled, the essence of which
is its configuration."
The operation of forming the ribbon into the bow on the bow maker
machine, in effect, does more than adjust the ribbon. The
formation operation creates the bow which later will be tacked on
to the footwear. The assembly of the bow with the footwear
cannot take place until the ribbon has been formed into the shape
of a bow, the configuration of which is the essence of the
component to be assembled. Thus, the complete change in shape
from ribbon to bow is a significant process and cannot be
considered an operation incidental to assembly. As the ribbon
does not meet the requirement of clause (a) of HTSUS subheading
9802.00.80, no allowance in duty can be made for the cost or
value of the U.S. ribbon.
HOLDING:
From the information presented, we conclude that the
formation of a single length of U.S. ribbon into a bow which is
knotted to secure its shape is not an acceptable assembly
operation, but rather is further fabrication of the exported
ribbon. Therefore, the U.S. ribbon will not qualify for the
partial duty exemption of HTSUS subheading 9802.00.80.
Sincerely,
John Durant, Director
Commercial Rulings Division