CLA-2 CO:R:C:S BLS
James O. Crawford
John S. James Co.
P.O. Box 1017
Charleston, South Carolina 29402
RE: Eligibility of down-sized garments for subheading 9802.00.80,
HTSUS
Dear Mr. Crawford:
This is in reference to your letter dated July 22, 1993, on
behalf of Sara Lee Knit Products, ("Sara Lee") requesting a ruling
that pre-cut fabric components that are sent abroad for down-
sizing and assembly will be eligible for the partial duty exemption
under subheading 9802.00.80, Harmonized Tariff Schedule of the
United States (HTSUS).
FACTS:
Sara Lee has a surplus of extra-large sizes, in a specific
line of garments. (Although not specifically stated, we assume
that these garments are of U.S. origin.) The company proposes to
send these garments abroad, in the form of pre-cut components,
where they will be "down-sized" to a smaller size. The "down-
sizing" operation involves die-cutting by the foreign processor,
and then assembly of the down-sized components.
ISSUE:
Whether the "down-sized" garments will be eligible for the
partial duty allowance under subheading 9802.00.80, HTSUS, upon
return to the U.S.
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 component, the product of the United States,
which (a) were exported in condition ready for assembly
without further fabrication, (b) have not lost their
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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, 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 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).
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.
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 welding, soldering, riveting, force fitting, gluing, laminating,
sewing, or the use of fasteners.
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. 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). In this regard, the
cutting of garment parts according to pattern is not considered an
operation incidental to assembly. (19 CFR 10.16(c)(2).) Rather,
such operation is considered a further fabrication of the exported
garment. (See also 19 CFR 10.14(a), Example 4, exported uncut
textile fabrics not considered fabricated components when cut
according to a pattern to form garment parts; and Headquarters
Ruling Letter (HRL) 556099 dated July 31, 1991, cutting
and shaping of fabric to form belt not acceptable assembly
operation or operation incidental to assembly.)
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Clearly, "downsizing" is an operation in which garment
components are cut to pattern and shape. Therefore, we do not
consider this operation to be incidental to the assembly process,
but rather a further fabrication of the components. Accordingly,
upon importation, the garments will not be eligible for a duty
allowance under subheading 9802.00.80, HTSUS.
HOLDING:
The process of "downsizing" is not an operation incidental to
assembly, but rather constitutes a further fabrication of the
exported garment components. Therefore, the garments will not be
eligible for the partial duty exemption under subheading
9802.00.80, HTSUS, upon return to the U.S.
Sincerely,
John Durant, Director
Commercial Rulings Division