CLA-2 CO:R:C:S 557115 MLR
Mr. Bruce Schiller
V.P. of Operations
MSAS Customs Logistics Inc.
8725 NW 18th Terrace
Suite 301
Miami, Florida 33172
RE: Applicability of partial duty exemption under HTSUS
subheading 9802.00.80 to garments; numerous washing cycles;
softening; bleaching
Dear Mr. Schiller:
This is in response to your letter of January 29, 1993,
requesting a ruling on behalf of the Hartwell Company, regarding
the applicability of subheading 9802.00.80, Harmonized Tariff
Schedule of the United States (HTSUS), to certain garments washed
in a process termed "classic wash." Samples of treated and
untreated fabric were submitted with your request.
FACTS:
Garment components are sent from the U.S. to Colombia,
Guatemala, or Costa Rica, where they are assembled and
subsequently washed using a process termed "classic wash." It is
stated that the wash process is intended for use on sueded twill
fabric for the purpose of softening the fabric. The process
consists of the following steps:
1. Fill machine, low water, 140 degrees Fahrenheit (F),
add acetic acid until a pH of 4-4.5 is achieved. Add
1/2-1 wt. percent of a non-ionic neutral detergent
(romene ad), supplied by the Hopkins Chemical Co.
Check to see if pH is 4-4.5. Do not drain. Add 2-4
wt. percent of cellulose enzyme (SPR-50), supplied by
the Dexter Chemical Corp. Wash 20-30 minutes.
2. Drain.
3. Fill machine, high water, 120 degrees F, rinse 2
minutes.
4. Drain.
5. Fill machine, high water, 140 degrees F, add 2 wt.
percent alkali detergent (T-207), supplied by the
Virkler Chemical Company, and 4 wt. percent sodium
perborate. Wash 10 minutes.
6. Fill machine, high water, 120 degrees F, rinse 2
minutes.
7. Drain.
8. Fill machine, high water, 100 degrees F, rinse 2
minutes.
9. Drain.
10. Fill machine, high water, 100 degrees F, add 2 wt.
percent Cationic softener (RNG), from the Dexter
Chemical Corp. Wash 6 minutes.
11. Drain, extract, dry. Low temperature, 155 degrees F,
cool down 10 minutes.
It is stated that the acetic acid used in step 1 is only
present to adjust the pH level; it is not present to react with
the fabric. The enzyme in step 1 is allegedly designed to lift
the suede (thereby softening the fabric), but does not abrade the
fibers. The alkali detergent and sodium perborate in step 5 are
allegedly present to kill the enzyme and clean the fabric. The
cationic softener in step 10 is added to soften the fabric via
removal of the sizing. It is also stated that the washing
process constitutes only 5 percent of the entered value of the
finished garments.
ISSUE:
Whether the garments subjected to the "classic wash" process
qualify for the partial duty exemption available under subheading
9802.00.80, HTSUS, when returned to the United States.
LAW AND ANALYSIS:
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.
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). For instance, section
10.16(b)(1), Customs Regulations {19 CFR 10.16(b)(1)}, provides
that cleaning is an incidental operation. 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). The Customs Regulations expressly provide that the
chemical treatment of components or assembled articles to impart
new characteristics, such as shower-proofing, permapressing,
sanforizing, dyeing, or bleaching of textiles, is not considered
incidental to the assembly process. 19 CFR 10.16(c)(4).
It is alleged that the classic wash process is in the nature
of a cleaning procedure because it only removes sizing and raises
the suede of the fabric. Furthermore, because the washing
process constitutes only 5 percent of the entered value of the
finished garments, it is alleged that the classic wash is an
operation incidental to the assembly process as provided in 19
CFR 10.16(b).
This ruling will only address the classic wash process; it
is assumed that the U.S.-origin components otherwise qualify for
subheading 9802.00.80, HTSUS, treatment. Customs has
consistently held, consistent with the regulations above, that
operations such as ovenbaking, stone-washing, and bleaching are
not incidental to the assembly process, and U.S. components
subjected to such an operation are precluded from receiving
subheading 9802.00.80, HTSUS, treatment. For example, see
Headquarters Ruling Letter (HRL) 027763 dated September 13, 1973,
(notwithstanding the question of whether or not trousers were
structurally or chemically changed by being treated with
synthetic resins before being oven-cured to produce a permanent
press, the fact that the trousers were oven-cured introduced new
characteristics by a non-assembly process, which did not exist
before the heat treatment, i.e., "locking-in" the shape of the
trousers, durable pleats and press creases, durable smooth seams,
"locked-out" wrinkles, machine washability and dryability, and a
fresh appearance without ironing), HRL 555665 dated March 11,
1991, (denim garments, assembled in the Dominican Republic and
stonewashed, were ineligible for a duty allowance under
subheading 9802.00.80, HTSUS; however, other components such as
the buttons, zippers, and thread were eligible for the duty
exemption because the stonewashing process was merely incidental
to their assembly, and had no effect on their intended function),
and HRL 555008 dated March 24, 1989, (U.S.-origin cloth assembled
into pants in Mexico and stonewashed, which constituted washing
the pants with water and a stone and no detergents or softeners,
were precluded from item 807.00, Tariff Schedules of the United
States (TSUS) (the predecessor provision of subheading
9802.00.80, HTSUS), treatment, because the process added
characteristics that did not exist prior to assembly).
In HRL 554676 dated November 23, 1987, dyed denim fabric was
assembled into searing apparel articles in the Dominican
Republic, and then washed in a washing machine. It was stated
that the washing not only cleaned the newly assembled garments of
dust and dirt but also of the excess dye, which would prevent the
dye from running and staining other garments during the first
washing. The detergents used in the foreign washing cycle were
either plain high strength detergent or high strength detergent
containing about 10 percent bleach substance. It was held that
washing the textile articles with high strength detergent was a
process analogous to cleaning, and considered incidental to
assembly; however, washing with a high strength detergent
containing a 10 percent bleach was regarded as too substantial to
be treated as merely incidental. The bleaching changed the color
of the exported fabric, similar to dyeing fabric, and was not
considered an incidental operation. In HRL 554232 dated August
25, 1986, bleaching and softening exported fabric was also
regarded as too substantial to be treated as merely incidental
because there was not only a change in color, but a change in
texture as well.
The foregoing rulings are distinguished from HRL 554599
dated June 8, 1987, which held that washing garments in a fabric
softener and pressing them were operations incidental to
assembly, because the inclusion of a softener in the wash cycle
was considered a part of the cleaning process. The softener was
also comparable to commercial softeners available to retail
consumers. Furthermore, in HRL 554695 dated June 16, 1989, it
was held that washing garments, which were assembled in the
Dominican Republic or Costa Rica, with a detergent and softener
in hot water without any bleach constituted a minor procedure
with minimal change in color. It was stated that the washing
process removed sizing and excess pigment from the fabric and
merely constituted a cleaning operation. The same conclusion was
reached in HRL 554497 dated March 18, 1987, which involved
washing assembled garments in a commercial laundry using a
standard detergent and softener, and tumble drying and lightly
pressing them, and in HRL 554582 dated March 12, 1987, which
involved garments washed in an industrial machine utilizing an
alkaline detergent and fabric softener.
Therefore, at issue is whether the classic wash process
resembles a cleaning operation, or an operation which adds new
characteristics to the garments, thereby precluding the fabric
from subheading 9802.00.80, HTSUS, treatment. The classic wash
process consists of 6 cycles. This alone does not appear to
preclude subheading 9802.00.80, HTSUS, treatment, because the
garments are washed with detergents that were deemed acceptable
in HRLs 554497, 554582, 554599, 554676, and 554695. Furthermore,
the addition of a softener in step 10 does not appear to preclude
the partial duty exemption, because the rulings also allowed the
use of a softener in the wash cycle, and whether the water is
drained and refilled automatically by the machine or manually, as
in this case, the effect on the garment is the same.
However, the addition of sodium perborate in the wash cycle
appears to be too substantial to allow subheading 9802.00.80,
HTSUS, treatment. The Random House Dictionary of the English
Language, (1973), defines "sodium perborate" as a white,
crystalline, water-soluble solid, used chiefly as a bleaching
agent and disinfectant. The applicant states that the sodium
perborate is added to kill the enzyme (added in step 1), which
appears to meet the definition of a disinfectant. "Disinfectant"
is defined as a "chemical agent used to inhibit the growth of or
destroy harmful organisms." That organism appears to be the
enzyme which is defined as a complex organic substance
originating from living cells and capable of producing certain
chemical changes in organic substances by catalytic action, as in
digestion. However, although the sodium perborate may be used as
a disinfectant, it also has the effect of bleaching the fabric,
which is obvious from the samples provided. Therefore, we are of
the opinion that the classic wash process is not an incidental
operation because it gives the garments new characteristics.
The applicant also states that the classic wash process
constitutes only 5 percent of the entered value of the finished
garments. According to United States v. Mast Industries, Inc.
515 F. Supp. 43, (CIT 1981), aff'd, 69 CCPA 47, 668 F.2d 501
(1981), the court, in examining the legislative history of the
meaning of "incidental to the assembly process," stated that:
/t/he apparent legislative intent was to not preclude
operations that provide an "independent utility" or
that are not essential to the assembly process; rather,
Congress intended a balancing act of all relevant
factors to ascertain whether an operation of a "minor
nature" is incidental to the assembly process.
The court then indicated that relevant factors included:
(1) whether the relative cost and time
required by the operation are such that
the operation may be considered minor;
(2) whether the operation is necessary to
the assembly process;
(3) whether the operation is so related to
the assembly that it is logically
performed during assembly; and
(4) whether economic or other practical considerations
dictate that the operation be performed
concurrently with assembly.
It would appear that the cost of the classic wash process is
minor; however, regarding the relative cost and time of an
operation, in Samsonite Corp. v. United States, 702 F. Supp. 908,
911 (1988), aff'd, 889 F.2d 1074 (1989), the trial court stated
that "[t]he magnitude of a particular process in terms of time
and cost does not make that process any less one of fabrication,
nor does it make the result thereof any less significant." On
appeal, the court stated "[t]he critical inquiry in determining
whether fabrication rather than mere assembly took place ..., is
not the amount of processing that occurred ..., but its nature."
It is the nature of the classic wash process, which adds new
characteristics to the garments, that is significant.
Furthermore, as the Court of Appeals for the Federal Circuit
noted in General Motors Corp. v. United States, 976 F.2d 716, 719
(Fed. Cir. 1992), the Mast decision is not to be interpreted "as
announcing factors that must invariably be used to the exclusion
of all others, or that all such factors are pertinent in every
case involving [subheading 9802.00.80, HTSUS]." However, even if
we were to strictly apply the Mast factors, we note that the
classic wash process requires a total of 52-62 minutes, hardly an
insignificant amount of time.
HOLDING:
On the basis of the information submitted, it is our opinion
that the classic wash process is more than a mere incidental
operation to assembly. Therefore, the fabric is precluded from
subheading 9802.00.80, HTSUS, treatment, and duty is payable on
the total value of the fabric in accordance with the appropriate
tariff provision.
Sincerely,
John Durant, Director
Commercial Rulings Division