CLA-2 CO:R:C:S 557194 BLS
District Director
U.S. Customs Service
10 Causeway Street
Boston, Mass. 02222-1059
RE: Application for Further Review of Protest No.
0401-92-100268; subheading 9802.00.80, HTSUS;
substantial transformation; fox tails; fox trim
collar
Dear Sir:
This is in reference to your memorandum dated February 26,
1993, forwarding an Application for Further Review of Protest No.
0401-92-100268, filed on behalf of Forecaster of Boston
("Forecaster"). The importer is seeking a duty allowance under
subheading 9802.00.80, Harmonized Tariff Schedule of the United
States (HTSUS), for the value of a fox trim collar, a component of
the imported women's anorak jackets. Samples of the collar have
been submitted.
FACTS:
Forecaster places orders for fox trim collars with O. Hantman
& Sons, New York, to be exported to the Dominican Republic for
assembly into anorak jackets. In turn, Hantman purchases foreign-
sourced fox tails from domestic sources, and subjects the fox tails
to various processes in the U.S. resulting in the creation of the
fox trim collars as follows:
The fox tails are dyed the appropriate color, and then soaked
in a solution overnight to make the leather soft and pliable. The
tails are then stretched to the desired length, split and sewn.
Because of the natural variations in the length of the fox tails,
situations commonly arise where the fox tails supplied are
incapable of being stretched to the required lengths. In these
circumstances, two or more fox tails will be spliced together to
obtain the specified length necessary for the garment. A textile
fabric base is then attached to the length of leather side of the
split fox tail by means of sewing. The fox trim collars are then
ironed and brushed before being sent to the Dominican Republic for
assembly into the anorak jackets. The operations performed abroad
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are as follows:
1. Welts
Attach filler to welts, sew out, trim, turn and topstitch.
2. Fronts
Sew front panels together, cut pockets and set with pocket
flaps. Set breast zipper pockets. Topstitch fronts.
Notch out armhole area to eliminate puckering for sleeve
set and topstitch.
3. Cuff
Attach filler to cuff, sew out, trim, turn and topstitch.
4. Hood
Seam hood pieces together and topstitch. Attach hood strip
and sew fur piece to half of the strip, then close with
drawstring inserted by topstitch and edgestitch all
around hood. Mark and buttonhole hood.
5. Label Bag
Sew out, trim turn and attach label. Will be attached to
neck piece on facing set.
6. Backs
Join back seams, topstitch, sew in vent and tack. Attach
back yoke. Join fronts to back and topstitch. Tack
shoulder pads covered with selicia.
7. Sleeves
Set sleeves and topstitch, attach cuffs.
8. Shell
Close side seam and topstitch. Set outside collar.
attach zipper halves to each front. Attach filler to
facings and collar and set to front. Set lining.
Finish sleeve and bottom of coat, turn and topstitch
collar, fronts and bottom.
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9. Finish
Brake press. Mark for buttons at neck and snaps. Neck
wrap, tag and bag for shipment.
ISSUE:
Whether the foreign-origin foxtails are substantially
transformed into U.S. fabricated components before they are
exported to the Dominican Republic for assembly into anorak
jackets.
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 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, 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 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 10.12(e), Customs
Regulations (19 CFR 10.12(e)), provides generally that an article
wholly or partially of foreign components or materials, may be a
"product of the United States" if such components or materials are
"substantially transformed" by a process of manufacture into a new
and different article, or are merged into a new or different
article. Section 10.14(b) provides that a "substantial
transformation" occurs when, as a result of manufacturing
processes, a new and different article emerges, having a
distinctive name, character, or use, which is different than that
originally possessed by the article or material before being
subject to the menufacturing process. If the manufacturing or
combining process is merely a minor one which leaves the identity
of the article intact, a substantial transformation has not
occurred. See, Belcrest Linens v. United States, 573 F. Supp. 1149
(CIT 1983), 741 F.2d 1368 (1984). One of the factors used by the
courts to determine whether there has been a change in character
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and use, is whether the processing transforms the article from a
producer's good to a consumer's good. See Midwood Industries v.
United States, 313 F. Supp. 951 (1970).
In the instant case, the fox tail is a producer good which is
subjected to a manufacturing process in the U.S., which includes
dyeing, soaking, stretching, perhaps splicing, and attaching to a
fabric base. The finished product, the fox trim collar, has a
character and commercial identity distinct from the raw material
from which it was produced, and has been transformed by the U.S.
processing to a consumer good, ready to be assembled with other
components to create a jacket or coat, as the case may be. As a
result, the fox tail has undergone a substantial transformation,
and therefore is considered a fabricated product of the U.S., for
purposes of subheading 9802.00.80, HTSUS. We also find that the
processing in the Dominican Republic constitutes acceptable
assembly operations or operations incidental to the assembly
process pursuant to this provision.
HOLDING:
Foreign sourced fox tails are substantially transformed into
fox trim collars by operations which include dyeing, soaking,
stretching, splicing and attaching to a fabric base. As a result,
the exported fox trim collars are considered fabricated products
of the U.S. Since the processing abroad constitutes acceptable
assembly operations, or operations incidental to assembly, the
imported anorak jackets are entitled to entry under subheading
9802.00.80, HTSUS, with allowances in duty for the cost or value
of the fox trim collars.
Accordingly, the protest should be granted. A copy of this
decision should be attached to the Form 19, Notice of Action, to
be sent to the protestant.
Sincerely,
John Durant, Director
Commercial Rulings Division