CLA-2 CO:R:C:S 556672 CW
S. Richard Shostak, Esq.
Stein, Shostak, Shostak & O'Hara
Suite 807
1620 L Street, N.W.
Washington, D.C. 20036-5605
RE: Applicability of partial duty exemption under subheading
9802.00.80, HTSUSA, to carpeting; HRL 555344
Dear Mr. Shostak:
This is in reference to your letter of April 15, 1992, on
behalf of Tuftex Industries, concerning the applicability of a
partial duty exemption under subheading 9802.00.80, Harmonized
Tariff Schedule of the United States Annotated (HTSUSA), to
carpeting created by "tufting".
FACTS:
Two carpet types are the subject of this ruling: loop pile
greige carpet, and cut pile greige carpeting. The carpets
consist of two primarily components, nylon yarn and woven backing
material, of U.S.-origin.
The loop pile greige carpeting consists of U.S. woven
backing material which is fed longitudinally into a tufting
(multineedle sewing) machine, where U.S. nylon yarn is then
inserted by a combination of a needle which holds the yarn, and a
looper, which temporarily grabs the yarn after the needle sews it
through the backing to form a loop. After the insertion, the
tufting the carpeting will be returned to the U.S. where it will
be dyed the desired color. After the dyeing process, a binding
agent is applied to the backing of the greige goods to secure the
loops and to facilitate the attachment of a secondary backing.
The manufacture of the cut pile greige carpeting is similar
to the loop pile greige carpeting, except that, following the
insertion of the U.S.-origin yarn into the backing to form the
loop, a knife cuts the top of the loop to form the cut pile. The
cut pile carpeting is returned to the U.S., where it will also be
dyed and a binding agent applied.
-2-
Each of the tufting machines used in the tufting operations
abroad has hundreds of needles, sufficient in gauge and number to
create various densities of greige goods. For each needle in the
machine, a cone of yarn is installed on a rack known as a creel.
The creel allows the cone to unwind freely to feed the tufting
machine in a continuous fashion. The yarn is fed through plastic
tubes that feed into a single needle.
ISSUE:
Whether tufting operations are an acceptable assembly
operation under subheading 9802.00.80, HTSUSA.
LAW AND ANALYSIS:
Subheading 9802.00.80, HTSUSA, 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,
lubrication, and painting.
All three requirements of subheading 9802.00.80, HTSUSA, 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 10.16(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 force fitting, sewing, or the use of fasteners.
In Headquarters Ruling Letter (HRL) 555344 dated May 19,
1989, it was determined that tufting operations similar to the
operations at issue were analogous to weaving operations, and
since weaving operations were considered an unacceptable assembly
operation pursuant to section 10.16(a), Customs Regulations (19
CFR 10.16(a)), a partial duty exemption under subheading
9802.00.80, HTSUSA, was not allowed.
-3-
It is your position that the tufting operations of the
carpeting is not analogous to weaving, rather it is analogous to
sewing. You provide a definition from the Man-made Fiber and
Textile Dictionary that notes that tufting is not a weaving
operation and, moreover, that it is described and recognized as a
sewing process. Specifically, the description of "tufted carpet"
provides as follows:
Carpet produced by a tufting machine instead of a loom. It
is an outgrowth of hand-tufted bedspreads. Today, broadloom
tufting machines produce over 90% of all domestic carpeting.
Tufting machines are essentially multineedle sewing machines
which push the pile yarns through a primary backing fabric
and hold them in place to form loops as the needles are
withdrawn.... Formerly, all carpets were woven, either by
hand or machine....
Furthermore, you cite E. Dillingham, Inc. v. U.S., 60
C.C.P.A. 40 (1970), in which the Court of Customs and Patent
Appeals held that a needling operation whereby massed fibers and
fabric were shipped to Canada where the fibers were oiled,
carded, and opened, and then needled into the fabric, was an
acceptable assembly operations under item 807.00, Tariff
Schedules of the United States (TSUS), the precursor tariff
provision to subheading 9802.00.80, HTSUSA.
It is Customs position that the tufting operations are more
analogous to sewing-type operations, and, therefore, pursuant to
section 10.16(a), Customs Regulations, would be an acceptable
assembly operations for purposes of subheading 9802.00.80,
HTSUSA. In addition, the holding of the E. Dillingham, case,
whereby a needling operations was an acceptable operation under
item 807.00, TSUS, further supports a finding that the tufting
operations of this case are an acceptable assembly operation
under this program.
Consequently, HRL 555344, pursuant to section 177.9, Customs
Regulations (19 CFR 177.9), shall be revoked as inconsistent with
Customs current position concerning tufting operations.
-4-
HOLDING:
Based on the information provided, it is Customs position
that the tufting operations performed in Mexico, constitute an
acceptable assembly operation pursuant to 19 CFR 10.16(a).
Therefore, a duty allowance may be claimed for the cost or value
of the U.S. materials under subheading 9802.00.80, HTSUSA,
provided that the documentation requirements of 19 CFR 10.24 are
satisfied.
Sincerely,
John Durant, Director