CLA-2 CO:R:C:T 951319 CAB
Mr. Bernard R. Nottling
Rudolph Miles & Sons, Inc.
4950 Gateway East
P.O. Box 144
El Paso, Texas 79942
RE: Classification of Index Tabs; Assembly; Incidental
Operation; Cutting to Length; Cutting to Shape; Packaging
Dear Mr. Nottling:
This letter is in response to your inquiry of January 22,
1992, requesting a tariff classification regarding index tabs,
under the Harmonized Tariff Schedule of the United States
Annotated (HTSUSA).
FACTS:
The tabs in question will be assembled in Mexico from an
impregnated woven cotton fabric tape approximately 1.75 inches
wide (44 cm) and a paperboard strip approximately 7/16 inches
wide (11 cm) by 0.5 cm thick. The fabric tape is composed of 49
percent cotton, by weight, with the remainder being starch,
pigments, and a water soluble glue inner surface. The starch
provides a shiny surface and when the inner glue surface is
moistened, it becomes the adhesive for attaching the tab to the
divider or page, and also captures the paper strip.
The paper strip is a 15 pound manila paper. The paper strip
is inserted between the moistened folded fabric tape and when
glued in place becomes a stiffener to the tab.
The impregnated woven cotton fabric in a finished tab is
approximately 63 percent of the weight of the tab with the
remaining 47 percent being the paper strip. This percentage
varies with the type and style of the tab.
In Mexico, the tabs are produced using high speed semi-
automatic assembly equipment. The fabric tape is moistened and
folded. The paper strip is then inserted between the fold,
closed, and cut to length or trimmed as specified. The tabs can
be purchased in varying lengths (samples 59-105 and 59-118).
Some tabs are trimmed to a circular shape (sample 59-112). Other
tabs are ink stamped with an alphabet letter (sample 59-110).
After assembly the tabs are counted and packaged for retail
sale and shipment. The tabs are packaged and purchased in boxes
of approximately 12 to 27 tabs each. The individual retail
packaging box will be marked with the country of origin (Mexico).
The sample boxes provided are of U.S. origin.
The inquirer contends that the tabs "will be entered under
HTSUSA 9802.00.80 for the value of the fabric tape and the paper
strip." He argues that cutting to length, trimming to shape, and
ink stamping are operations incidental to the assembly process.
These operations are all performed on the same equipment during
the assembly process and are "concomitant" with the assembly
process.
ISSUES:
I. Whether the fabric tape and paper strips are classifiable in
Heading 6307, HTSUSA?
II. Whether U.S. origin fabric tape and paper strips which are
exported to Mexico where they are moistened, folded, ink stamped,
cut to specification, and then assembled into index tabs are
entitled to a duty allowance under subheading 9802.00.80, HTSUSA,
upon importation into the United States?
LAW AND ANALYSIS:
I. Tariff Classification
Classification of goods under the HTSUSA is governed by the
General Rules of Interpretation (GRIs). GRI 1 provides that
classification shall be determined according to the terms of the
headings and any relative Section or Chapter notes, taken in
order.
The Explanatory Notes (EN) to the HTSUSA constitute the
official interpretation of the tariff at the international level.
The EN to Heading 6307 provides for other made up articles of any
textile material which are not included more specifically in
other headings of Section IX or elsewhere in the Nomenclature.
In this instance, the index tabs are made up articles of
textile material that are not more specifically included
elsewhere in the tariff. Therefore, classification is
appropriate under Heading 6307, HTSUSA.
II. Applicability of Subheading 9802.00.80
All articles imported into the U.S. are subject to duty
unless specifically exempted therefrom under the HTSUSA.
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, lubricating 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 10.14(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,
lamination, 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, HTSUSA, to that component. See, 19 CFR 10.16(c).
Section 10.14(a), Customs Regulations (19 CFR 10.14),
provides that components will not lose their entitlement to the
exemption under subheading 9802.00.80, HTSUSA, by being subjected
to operations incidental to assembly either before, during, or
after the assembly process. Although the cutting to length of
products exported in continuous lengths is considered an
operation incidental to the assembly process (see 19 CFR
10.16(b)(6)), cutting materials into specific shapes or patterns
renders the materials ineligible for the exemption (see 19 CFR
10.14(a)).
In Headquarters Ruling Letter (HRL) 555201 dated April 11,
1990 (which is similar to the instant case and was submitted by
the same inquirer), rolls of polyester plastic and rolls of
pressure sensitive paper tape were exported to Mexico to make
index tabs. In that case, the plastic and paper tape were placed
on a machine which glued the paper tape to the plastic. The
plastic was then bent, beaded and cut to a profile shape. We
held that there was no allowance in duty under subheading
9802.00.80, HTSUSA, for the value of the plastic as it was cut to
a profile shape abroad. However, we held that the pressure
sensitive tape which was merely cut to length before being glued
to the plastic index tab was accorded an allowance in duty under
that subheading. In the instant case, gluing the fabric tape to
the paper is an acceptable assembly operation set forth in 19 CFR
10.16(a). Additionally, the cutting to length of the fabric tape
and paper strips is an incidental operation to the assembly of
the index tabs. See, 19 CFR 10.16b(6); HRL 555201, supra.
Based on the foregoing, we find that the requirements of
subheading 9802.00.80, HTSUSA, are satisfied with regard to the
fabric tape and paper strip utilized to create tab numbers 59-
105 and 59-118. Those materials are exported in condition ready
for assembly without further fabrication. They have not lost
their identity by change in shape, form or otherwise, and have
not been advanced in value or improved in condition in Mexico
except by being assembled and except by operations incidental to
the assembly process (i.e. moistening, gluing and cutting to
length). Therefore, a partial duty allowance under subheading
9802.00.80, HTSUSA, may be allowed for the value of the fabric
tape and paper strips assembled into index tab numbers 59-105 and
59-118. However, the fabric tape and paper strips which are cut
to a circular shape (number 59-112) will not receive a partial
duty allowance because they are not exported in condition ready
for assembly without further fabrication. See, 19 CFR 10.14(a);
HRL 555201, supra.
With regard to the ink stamping operation, we believe that
this is an operation incidental to assembly pursuant to 19 CFR
10.16(b)(7) (marking of assembled articles is incidental to
assembly). Thus, a duty allowance under subheading 9802.00.80,
HTSUSA, may be afforded to the fabric tape and paper strips
assembled into index tab number 59-110.
We have held that U.S.-origin packaging materials which are
not advanced in value or improved in condition while abroad are
separately entitled to duty-free treatment under subheading
9801.00.10, HTSUSA. The act of being filled with their contents
is not considered to be an advancement in the condition of the
container or materials. See, HRL 731806 dated November 18, 1988.
Thus, since the packaging materials in the instant case are of
U.S. origin, they are entitled to duty-free treatment under
subheading 9801.00.10, HTSUSA, upon compliance with the
documentation requirements of 19 CFR 10.1.
HOLDING:
The instant merchandise is classifiable in subheading
6307.90.9480, HTSUSA, which provides for other made up
articles...other: other, other.
A partial duty allowance under subheading 9802.00.80,
HTSUSA, may be allowed for the value of the fabric tape and paper
strips which are moistened, folded, glued, ink stamped with an
alphabet letter and cut to length in Mexico to create index tab
numbers 59-105, 59-118, and 59-110. These operations are
acceptable assembly operations or operations incidental thereto.
However, a partial duty allowance under that subheading is not
allowed for the fabric tape and paper strips which are assembled
into index tabs that are cut to a circular shape (number 59-112)
as cutting material to shape renders the material ineligible for
the exemption. Packaging material of U.S. origin which is
exported to Mexico to be filled with its contents is entitled to
duty-free treatment under subheading 9801.00.10, HTSUSA, when
returned to the United States, upon compliance with the
documentation requirements of 19 CFR 10.1.
Due to the changeable nature of the statistical annotation
(the ninth and tenth digits of the classification) and the
restraint (quota/visa) categories applicable to textile
merchandise, you should contact your local Customs office prior
to importation of this merchandise to determine the current
status of any import restraints or requirements.
The designated textile and apparel category may be
subdivided into parts. If so, visa and quota requirements
applicable to the subject merchandise may be affected. Since
part categories are the result of the international bilateral
agreements which are subject to frequent renegotiations and
changes, to obtain the most current information available, we
suggest that you check, close to the time of shipment, the Status
Report on Current Import Quotas (Restraint Levels), an internal
issuance of the U.S. Customs Service, which is available for
inspection at your local Customs office.
Sincerely,
John Durant, Director
Commercial Rulings Division