CLA-2 CO:R:C:S 555663 DSN
Mr. Jorge E. Veitia
Pronto Cargo Brokers, Inc.
7330 N.W. 66 Street
Miami, Florida 33166-3009
RE: Applicability of partial duty exemption under HTSUS
subheading 9802.00.80 to totebags from Columbia. Assembly;
incidental operations; cutting to length, 555565,555525
Dear Mr. Veitia:
This is in response to your letter dated May 2, 1990, on
behalf of Bag Specialists, Inc., requesting a ruling concerning
the applicability of subheading 9802.00.80, Harmonized Tariff
Schedule of the United States (HTSUS), to totebags assembled in
Columbia from U.S. and Japanese components. Samples were
provided for examination. We regret the delay in responding.
FACTS:
Your client intends to ship zippers, cloth straps and
rubber strips in continuous lengths from the U.S. to Columbia
where they will be cut to length and attached to the fabric to
form the finished totebags. The zippers, which are of Japanese
origin, are first sewn onto the fabric comprising the totebag and
then cut to length according to the particular size of the
totebag. The U.S.-origin straps are measured and cut to length
before being sewn to the fabric. The U.S.-origin rubber strips
are attached to the fabric and then cut to length once the seams
have been covered by the strips.
ISSUE:
Whether the cutting to length of certain components is
considered an incidental assembly operation, thereby qualifying
the totebags for the partial duty exemption available under
subheading 9802.00.80, HTSUS, when returned to the U.S.
LAW AND ANALYSIS:
Subheading 9802.00.80, HTSUS, provides a partial duty
exemption for articles assembled abroad in whole or in part of
U.S.-origin fabricated components provided the components meet
the following three conditions imposed by the statute:
(a) are exported ready for assembly without further
fabrication;
(b) do not lose their physical identity by change in form,
shape or otherwise; and
(c) are not advanced in value or improved in condition
abroad except by being assembled and except by
operations incidental to the assembly process.
Articles entitled to entry under this provision are dutiable on
their full value less the cost or value of the U.S. components
incorporated therein. The duty rate to be applied is the rate
applicable to the article under the appropriate Chapter 1-97,
HTSUS, tariff provision.
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 promary purpose is the fabrication,
completion, physical or chemical improvement of a component
precludes the application of the exemption under HTSUS subheading
9802.00.80 to that component. See, 19 CFR 10.16(c).
Examples of operations considered incidental to the assembly
process are set forth in 19 CFR 10.16(b). Cutting to length of
materials exported in continuous lengths is specifically
enumerated in the examples as an operation incidental to
assembly. Therefore, allowances in duty may be made under
subheading 9802.00.80, HTSUS, for the cost or value of the U.S.-
origin cloth straps and rubber strips incorporated into the
totebags. See, Headquarters Ruling Letter (HRL) 555565 of May
14, 1990, and HRL 555525 of June 5, 1990. However, as stated
previously, allowances in duty under subheading 9802.00.80,
HTSUS, are made only to U.S.-origin components assembled abroad.
Therefore, as the zippers are of Japanese origin, they are not
entitled to the partial duty exemption under this tariff
provision.
HOLDING:
On the basis of the information presented, it is our opinion
that the cutting to length of the U.S.-origin straps and strips
is considered incidental to the assembly process and, therefore,
the imported totebags may be entered under subheading 9802.00.80,
HTSUS, with allowances in duty for the cost or value of these
U.S.-origin components incorporated therein. No duty allowance
under this tariff provision may be made for the Japanese-origin
zippers.
Sincerely,
John Durant, Director
Commercial Rulings Division