CLA-2 RR:TC:SM 559584 DEC
Port Director
P.O. Box 3130
Laredo, Texas 78044-3130
RE: Internal Advice 39/95; eligibility of a cotton denim dress
for duty-free treatment
under subheading 9802.00.90; enzyme washing; 19 CFR
10.16(c)(4);
HRL 555665; HRL 555008; HRL 554232; HRL 557115; HRL 558708;
Nissho-Iwai American Corp. v. United States, 641 F.Supp.
808, 10 CIT 154
(1986)
Dear Sir:
This is in response to a request for internal advice
initiated by Sandler, Travis & Rosenberg on behalf of California
Fashion Industries, Incorporated, concerning the eligibility of
cotton denim dresses subjected to an enzyme washing process for
duty-free treatment under subheading 9802.00.90, Harmonized
Tariff Schedule of the United States (HTSUS). A sample of the
garment was submitted for our examination.
FACTS:
The cotton denim dresses at issue are assembled in Mexico
from fabric components all of which are wholly formed and cut in
the United States. The process at issue, which is performed
after assembly, involves various washing, draining and rinsing
steps designed to create a "stone-washed" appearance to the
garment. During the course of these steps, a desizer is used to
clean the fabric of impurities. Enzymes are used to abrade the
fabric and additional chemicals are used to adjust the pH level.
A cationic softener is used to give the fabric a softer hand.
ISSUE:
Are the imported cotton denim dresses eligible for duty-free
treatment under subheading 9802.00.90, HTSUS, after being
subjected to the wash process described above?
LAW AND ANALYSIS:
Annex 300-B of the North American Free Trade Agreement
("NAFTA") is applicable to textile and apparel goods. Appendix
2.4 of Annex 300-B provides that:
[o]n January 1, 1994, the U.S. shall eliminate customs
duties on textiles and apparel goods that are assembled
in Mexico from fabrics wholly formed and cut in the
United
States and exported from and reimported into the United
States under:
(a) U.S. tariff item 9802.00.80.10; or
(b) Chapter 61, 62, or 63 if, after such
assembly,
those goods that would have qualified for
treatment
under 9802.00.80.10 have been subject to
bleaching,
garment dyeing, stone-washing, acid-washing
or
perma-pressing.
Thereafter, the U.S. shall not adopt or maintain any
customs
duty on textile or apparel goods of Mexico that satisfy
the
requirements of subparagraph (a) or (b) or the
requirements
of any successor provision to U.S. tariff item
9802.00.80.10.
Consequently, subheading 9802.00.90, HTSUS, was created to
provide for the duty-free entry of:
Textile and apparel goods, assembled in Mexico in which
all fabric components were wholly formed and cut in the
United States, provided that such fabric components, in
whole or in part (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; provided that goods classifiable in
chapters 61, 62 or 63 may have been subject to
bleaching,
garment dyeing, stone-washing, acid-washing or perma-
pressing after assembly as provided for herein.
Since subheading 9802.00.90, HTSUS, was intended as a
successor provision to subheading 9802.00.80, HTSUS, with respect
to certain textile and apparel goods assembled in Mexico, the
regulations under subheading 9802.00.80, HTSUS, may be
instructive in determining whether a good is eligible for the
beneficial duty treatment accorded by subheading 9802.00.90,
HTSUS. As distinguished from subheading 9802.00.80, HTSUS,
however, it is noted that the new statute requires only that all
fabric components be formed and cut in the U.S., and that only
such components, in whole or in part, must satisfy the three
conditions set forth in (a) - (c) of the statute. Headquarters
Ruling Letter (HRL) 558708, dated June 14, 1995.
The first issue that we will address is whether the enzyme
washing process is considered to be an operation incidental to
the assembly process. Pursuant to section 10.16(c)(4), Customs
Regulations (19 CFR 10.16(c)(4)), chemical treatments designed to
impart new characteristics to components or assembled articles,
such as permapressing, dying, or bleaching, are not regarded as
operations incidental to assembly and preclude the application of
the partial duty exemption under subheading 9802.00.80, HTSUS.
Counsel has stated in his submission that the enzyme-wash
process at issue provides the same results as stone-washing,
acid-washing, and bleaching of the garment. We have no basis to
disagree with counsel's conclusion that the enzyme-wash at issue
is analogous to a stone-washing, acid-washing, and bleaching.
Customs has consistently held that such operations are not
incidental to the assembly process, and U.S. components subjected
to such operations are precluded from receiving subheading
9802.00.80, HTSUS, treatment. For example, see 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) and HRL 555008, dated March
24, 1989 (U.S.-origin cloth assembled into pants and stonewashed
were precluded from item 807.00, Tariff Schedules of the United
States (TSUS) (the precursor provision of subheading 9802.00.80,
HTSUS), treatment because the process added characteristics that
did not exist prior to assembly). 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. See also HRL 557115, dated May 28, 1993
(garments subjected to a "classic wash" process in which sodium
perborate, a bleaching agent and disinfectant, was added to the
wash cycle was too substantial to be considered an acceptable
operation incidental to the assembly process pursuant to
subheading 9802.00.80, HTSUS).
Based on our analysis of the sample submitted and the
statement by counsel that the processing described in this case
is considered to have the same results as a stone-washing or
acid-washing, the enzyme-washing may not be considered to be an
operation incidental to assembly.
The second issue concerns whether the processes specifically
provided for in subheading 9802.00.90, HTSUS (bleaching, garment
dyeing, stone-washing, acid-washing or perma-pressing)
necessarily exclude other processes such as enzyme-washing that
have the same effect on the textile articles as those processes
that are expressly mentioned in the tariff provision. In support
of his contention that these processes are not all-inclusive,
counsel contends that, similar to eo nomine provisions in the
tariff schedule, the post-assembly finishing operations
enumerated in subheading 9802.00.90, HTSUS, allow Customs to
consider other forms of processing provided they are similar in
kind, function, and purpose to the processes expressly provided
for in subheading 9802.00.90, HTSUS. In addition, the U.S. Court
of International Trade (CIT) has stated that the canon of
construction, ejusdem generis, which means literally, of the same
class or kind, teaches that "[a]s applicable to customs
classification cases, ejusdem generis requires that the imported
merchandise possess the essential characteristics or purposes
that unite the articles enumerated eo nomine in order to be
classified under the general terms." Nissho-Iwai American Corp.
v. United States, 641 F.Supp. 808, 10 CIT 154, 157 (1986).
Counsel indicates that the characteristics imparted by the
enzyme-wash process are basically of the same kind as those
imparted by stone-washing, acid-washing, and bleaching. The
enzymes used in the enzyme-wash process abrade the garment,
resulting in a softer, more worn look and feel. In addition, the
enzyme-wash process has evolved into an alternative to stone-washing because it causes less damage to the washing machines and
avoids the need to mine the stones needed for the stone-washing.
Additionally, enzyme-washed garments do not contain any of the
stone sediment that remains after stone-washing.
For purposes of determining the eligibility of articles for
duty-free treatment under subheading 9802.00.90, HTSUS, we see no
reasonable justification, from either a legal or policy
standpoint, for garments which have been subjected to one of the
processes specified in this provision to be treated any
differently from garments which have been subjected to an
unspecified process which imparts essentially the same
characteristics to the fabric. It is the position of the Customs
Service that the processes expressly referred to in subheading
9802.00.90, HTSUS, were not intended to constitute an all-inclusive list. Accordingly, in addition to the processes
enumerated in subheading 9802.00.90, HTSUS (bleaching, garment
dyeing, stone-washing, acid-washing or perma-pressing after
assembly), other processes, such as enzyme-washing designed to
reproduce the essential characteristics of stone-washing, acid-washing, or bleaching, may also be performed after assembly to
goods classifiable in Chapter 61, 62, and 63 for the purpose of
this subheading.
HOLDING:
The cotton denim garments that are sent to Mexico for
assembly and the enzyme-wash described above may be entered free
of duty under subheading 9802.00.90, HTSUS, since the enzyme-wash
process is sufficiently analogous to the processes expressly
provided for in subheading 9802.00.90, HTSUS.
This decision should be mailed by your office to the
internal advice requester no later than 60 days from the date of
this letter. On that date the Office of Regulations
and Rulings will take steps to make the decision available to
Customs personnel via the Customs Rulings Module in ACS and the
public via the Diskette Subscription Service, Freedom of
Information Act and other public access channels.
Sincerely,
John Durant
Director
Tariff Classification Appeals
Division
cc: Office of Strategic Trade - Dick Crichton
NIS #360.