CLA-2 CO:R:C:G 085800 HP
Mr. John R. Dowd
General Manager
Contract Sales
MFI International, Inc.
P.O. Box 11010
El Paso, TX 79983
RE: Quilted assembly parts of handbags sewn together in layers
are
not a made up article, but are quilted piece goods. 9802.00.80;
assembly;Mexico
Dear Mr. Dowd:
This is in reply to your letters of September 26, 1989, and
September 28, 1989, concerning the tariff classification and
eligibility for duty reduction of quilted assembly parts,
produced
in the United States and Mexico, under the Harmonized Tariff
Schedule of the United States Annotated (HTSUSA).
FACTS:
The merchandise at issue consists of quilted components
intended for final assembly into handbags. Four components are
cut
to shape (roughly rectangular) in the United States and then
exported to Mexico for assembly: (1) a 100% woven cotton print
cloth; (2) a nonwoven man-made fiber interfacing; (3) foam; & (4)
a woven 50% cotton / 50% polyester backing cloth.
The assembly in Mexico consists of sandwiching the four
components together in the order listed above. The four
components
are then single-needle stitch-locked together (quilted) in a
decorative sewing pattern determined by the type of print on the
face cloth. In the submitted sample, the quilting thread is sewn
in the shape of an equilateral parallelogram, of a contrasting
color to the face cloth. Extensive quilting instructions have
also
been submitted. The cost of labor in Mexico to produce these
panels ranges from 25/panel to 45/panel, depending on size. The
panels are then returned, untrimmed, to the United States.
Once back in the United States, the panel is trimmed and
combined with other components to form a handbag. The returned
panels comprise the center portion of the completed handbags.
The
completed bags will have wholesale costs ranging from $7.50 to
$60.00.
You have also requested we determine the classification of a
strap included with your merchandise. From photographs submitted
,
it appears that this strap will be attached to the handbag and
used
as a carrying strap. In conversations with our New York office,
however, you have stated that the strap will be manufactured
entirely within the United States. As the straps apparently will
not be exported or imported, there is no need to consider clas
sification of this item.
ISSUE:
Whether the instant merchandise is considered quilted goods
under heading 5811, or other made up articles under heading 6307,
HTSUSA? Whether the instant merchandise is entitled to partial
duty exemption under heading 9802.00.8000, HTSUSA?
LAW AND ANALYSIS:
Heading 5811, HTSUSA, provides for quilted textile products
in the piece. The Explanatory Notes (EN) to the HTSUSA
constitute
the official interpretation of the tariff at the international
level. The EN to this heading states that the heading covers:
* * *
(ii)two layers of fabric separated by a layer of
padding.
* * *
The layers of material are usually held
together with an adhesive or by ... stitching
(including stitch-bonding) either with
straight rows of stitches or by stitching in
a decorative pattern, provided the stitches
are used principally to quilt and not to
decorate.
* * *
The heading does not cover:
* * *
(c)Made up goods of this Section (see Section Note 7).
Note 7 to Section XI, HTSUSA, provides, inter alia,
For the purposes of [Section XI], the expression "made
up" means:
* * *
(e)Assembled by sewing, gumming or otherwise (other
than piece goods consisting of two or more lengths
of identical material joined end to end and piece
goods composed of two or more textiles assembled in
layers, whether or not padded).... [Emphasis
added.]
The EN to this Note aids our understanding of "made up" by
stating that "textile products in the piece composed of one or
more layers of textile materials assembled with padding by stitch
ing or otherwise" are NOT regarded as made up. Based upon this,
it is our opinion that the panels are classifiable as quilted
piece goods of heading 5811.
HOLDING:
As a result of the foregoing, the instant merchandise is
classified under subheading 5811.00.2000, HTSUSA, textile category
229, as quilted textile products in the piece, composed of one or
more layers of textile materials assembled with padding by stitch
ing or otherwise, other than embroidery of heading 5810, of cot
ton.
Heading 9802.00.80, HTSUSA, provides a partial duty exemption
for:
Articles 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.
[Merchandise covered by this subheading was
previously covered by item 807.00, Tariff
Schedules of the United States (TSUS).]
All three requirements of HTSUSA heading 9802.00.80 must be
satisfied before a component may receive a duty allowance. An
article entered under HTSUSA heading 9802.00.80 is subject to a
duty upon the full value of the imported article, less the cost or
value of the U.S. components assembled therein, provided there has
been compliance with the documentary requirements of section 10.24,
Customs Regulations (19 C.F.R. 10.24).
It is our opinion that the instant merchandise clearly falls
under the provisions of heading 9802.00.80. The U.S. components
merely undergo an assembly process in Mexico; no further fabrica
tion, advancement in value, or identity change takes place until
the completed panels are once again within the United States. As
a result, the applicable rate of duty is 7.2 percent ad valorem on
the full value of the imported article, less the cost or value of
such products of the United States.
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 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 issuance of the U.S. Customs Service, which is updated
weekly and is available at your local Customs office.
Due to the changeable nature of the statistical annotation
(the ninth and tenth digits of the classification) and the re
straint (quota/visa) categories, you should contact your local
Customs office prior to importing the merchandise to determine the
current applicability of any import restraints or requirements.
Sincerely,
John Durant, Director
Commercial Rulings Division