CLA-2: CO:R:C:S BLS
4811.90.80, 4819.20.0040, 4819.40.0040,
4819.50.4060, 3926.40.00
District Director of Customs
P.O. Box 3130
Laredo, Texas 78044-3130
RE: Applicability of GSP to certain gift wrapping and
packaging articles; subheadings 9801.00.10, 9802.00.50,
9802.00.80; sets
Dear Madame:
This is in reference to a letter dated July 7, 1993, from V.
Alexander & Co., Inc., ("Alexander"), concerning the tariff
treatment of certain gift wrapping and packaging articles
imported from Mexico by Artfaire-C.P.S. Corporation ("CPS"). The
inquirer requests a ruling as to the applicability of the
Generalized System of Preferences (GSP), and subheadings
9801.00.10, 9802.00.50 and 9802.00.80, Harmonized Tariff Schedule
of the United State (HTSUS), to the imported articles as well as
the classification of the items.
The request pertains to 1993 entries only which remain
unliquidated pending our decision. Alexander has advised that
CPS is no longer doing business in Mexico, and accordingly, the
request for our opinion regarding country of origin marking has
been withdrawn. While photographs of the various ensembles and
other items were included with the request, no actual samples
have been received by this office.
We would also note that since Mexico's designation as a BDC
for purposes of the GSP expired on the date that the North
American Free Trade Agreement (NAFTA) became effective (January
1, 1994), our analysis of GSP entitlement applies only to entries
filed prior to that date. Articles imported on or after January
1, 1994, will receive duty-free treatment only if they qualify as
"originating goods" under the NAFTA. A discussion of this issue
is beyond the scope of this ruling.
FACTS:
1) 2-Roll Gift Wrap Ensemble
The 2-roll gift wrap ensemble is presented in a paperboard
gift box that can be used as such after purchase. As imported,
it contains the following components: 2 rolls of gift wrapping
paper; gift tags; pull-out bows; 3 spools of ribbon; ribbon
hanks; printed and solid tissue sheets; gift cards; and a bow-
tying instruction sheet. All of the components for this
ensemble, with the exception of the gift wrap, are furnished
ready for repackaging.
The materials used to produce the gift wrap consist of 830
feet reams of gift wrap paper (in various widths), liquid
adhesive, adhesive tape, and spools of cardboard which produce
the finished rolls of gift wrap paper for the ensemble. In
Mexico, the spool of 3-inch wide cardboard is placed on a spindle
and pulled through a section of machinery that applies adhesive
to one side of the cardboard and then is spiral-wound at an angle
onto an iron rod in one continuous motion. The cardboard tubing
produced from the process is then cut to a pre-determined length
(the width of the gift wrap paper to be wound onto it). The
cardboard gift wrap tubes are then taken and placed onto the
hopper of the gift wrap paper roll winding machine.
In this process, the gift wrap paper ream is placed onto a
ream rolling machine where the paper is pulled through feed
rollers. A cardboard tube is then systematically lowered in
place from the tube bin where as the gift wrap paper begins to
wind itself onto the cardboard tube, a 1-inch strip of adhesive
tape is applied to the gift wrap paper and cardboard tube to
prevent slippage during the winding process. The gift wrap paper
is then cut after a pre-determined length of the paper has been
wound onto the tube and a second 1-inch strip of adhesive tape is
applied onto the gift wrap paper to prevent unwinding during
packaging. The end product is the gift wrap paper roll which
will be placed in the ensemble. Alexander states that all of the
materials used to produce the gift wrap paper and the other
components in the ensemble are of U.S.-origin.
2) The 3-Roll Gift Wrap Ensemble
The 3-roll gift wrap ensemble is presented in a clear
plastic tray. It contains 3 rolls of gift wrapping paper;
finished bows; ribbon coils; and gift tags. The process used to
create the gift wrap paper in this ensemble is identical to the
process used to create the gift wrap paper for the 2-roll
ensemble.
The importer also supplies 500 yard bolts of ribbon, spools
of stick-on tags, and spools of staple wire which produce the
finished bows for the ensemble. The bolt of ribbon is placed on
a spindle and pulled through a section of machinery that will
pierce the ribbon through the "U-shaped" staple wire and continue
to pull, rotate and pierce the ribbon until a gift bow is formed.
The machine then completes the process by applying the sticky tag
through the staple wire, closing the staple ends off and cutting
off the completed bow from the continuous strand of ribbon. The
completed bow is then mechanically tossed into an awaiting box to
be manually placed into the ensemble.
The ribbon coils are produced from the same bolts of ribbon
that have been placed on a coil winding machine. The ribbon is
pulled from the bolt and run through a series of spindles which
winds the ribbon into a coil of a pre-determined length. The
ribbon is then cut and a strip of adhesive tape is mechanically
applied onto the ribbon coil to prevent the ribbon from unwinding
during packaging. Alexander states that all of the components
used in producing the 3-roll gift wrap ensemble are of U.S-
origin.
3) Gift Bag
The gift bag is made of wrapping paper. Some are made with
what looks like (from the photograph) a textile cord handle;
others do not have handles.
In Mexico, a gift wrap paper ream is placed onto a ream
rolling machine where the paper is pulled through feed rollers.
The gift wrap paper is systematically shaped, creased, folded,
and cut to the length of the desired gift bag. The completed
folded and shaped gift bag continues through the machine where
liquid adhesive is placed onto the bottom end of the bag and
compressed to secure the folds that enclose the bag. In a
separate process involving some of the bags, handles will be
glued onto the inside of the bag and a peel-off paper backer will
be applied on top of the glued handle and also on the inside of
the bag to provide stability to the handle.
The gift bags will be imported in bulk or as part of a gift
bag ensemble presented in a clear polyester bag that contains, in
addition to the bag, gift cards, ribbon hanks, and an instruction
booklet. Alexander states that all of the components used in
producing the gift bags are of U.S.-origin.
(4) Treasure Chest Box
The treasure chest box is a pre-wrapped gift box. It is
made of paperboard in two parts. The external part of the box,
covered with wrapping paper, is open at one end, into which the
internal sleeve part of the box that holds the box's contents is
inserted. According to the photograph provided, the gift box
appears to be the size required to hold a dress shirt or blouse,
or perhaps a sweater. For this purpose, these boxes fold up for
convenient packaging.
In producing the box, cardboard sheets are manually fed into
a machine which has been fitted with die press/die cut plates
which crease and cut to size and shape the inserted sheet. The
box cutout is then taken to a separate area of the facility to
have it manually removed from the sheet, where it will be seam
glued with liquid adhesive on one side to form an open ended box.
After the adhesive has dried, a pre-cut sheet of gift wrap
paper is manually wrapped around the box and manually secured
with two 1-inch strips of adhesive tape. The slide-out cardboard
sleeve is then manually placed into the open-ended cardboard box
where it will be manually packaged for shipping in bulk as a pre-
wrapped gift box with an inner box sleeve in a knock-down state.
5) Treat/Treasure Gift Box, Pyramid Gift Box, Gift Box Tote
The identity of these articles is somewhat confused. At the
bottom of page 5 of the July 7, 1993, letter, after describing
the production process, the articles are identified as (a) an
open-ended laminated gift box, (b) laminated treasure/treat box,
and (c) a gift box tote (laminated with wrapping paper). These
three boxes are further described in the next few paragraphs, of
the letter, but the treat/treasure box appears to be identified
as a laminated pyramid box. In any event, these articles are
described together in the letter because they are made from the
same wrapping paper-covered paperboard material that is cut to
shape to form them. The open-ended laminated gift box is not
further described; it is likely capable of folding. The
laminated pyramid box has a cord handle that is made from either
paper or textile material. (It cannot be determined from the
photograph.) It is capable of folding. The gift box tote has
braided rope handles and a removable box top-like cover. Whether
it is capable of folding is unknown.
The lamination machine is equipped to hold a full ream of
gift wrap paper, and a vat of liquid adhesive. It is designed to
apply a thin film of liquid adhesive onto the gift wrap paper as
it is pulled through the rollers. Once the adhesive has been
applied, the paper is cut to a pre-determined length by the
machine and compressed onto the cardboard sheet which is being
manually fed into the unit.
The laminated cardboard sheets are then manually fed into a
second machine which has been fitted with die press/die cut
plates which crease and cut to size and shape the inserted
laminated sheet. The box cutout is then taken to a separate area
of the facility to have it manually removed from the seat, where
it will be seam-glued with liquid adhesive on one side to form
either an open ended laminated gift box, laminated treat/treasure
box or a gift box tote.
The open-ended laminated gift box is imported either in bulk
or as part of an ensemble. The ensemble includes the box, gift
cards, ribbon hanks, and an instruction booklet. The laminated
pyramid box is also imported in bulk or as part of an ensemble,
and includes an assortment of boxes (we assume to mean at least
two or more, in either various sizes or perhaps various colors or
patterns), box handles, gift cards, ribbon hanks, and an
instruction booklet. The handles consist of a piece of cording
cut by hand from a spool to a pre-determined length, and placed
manually into the knock-down pyramid box for assembly by the
ultimate consumer.
The gift box tote is then sent to an area of the facility
where it could undergo further processing for specialty orders
such as foil stamping or die sinking. A pair of holes are
punched on two sides of the gift box tote in a separate process
so that a strand of pre-cut braided rope can be inserted through
the holes and knotted at the ends to create two separate handles.
Upon completion, the tote will be packaged in bulk for import
into the United States. Alexander states that all of the
components used in producing the treasure gift box, the pyramid
gift box, and the gift box tote, are of U.S.-origin.
6) Bow Tube/Candy Tube
The bow/candy tube is a cylinder of paperboard covered with
wrapping paper. It has plastic end covers and a braided rope
handle at the tip end. It is imported either filled with
finished bows and ribbon hanks or empty. The tube could be used
as a gift package after purchase or, if imported empty, to hold
various items for retail sale, such as candy or other products.
In Mexico, wrapping paper is cut to length from the U.S.-
origin reams. Sheets of gift wrap paper are glued by hand onto
the cardboard tubes. Two holes are pierced into the top side of
the tube to create an avenue for the tube handle. A hand-
measured piece of braided rope is cut to length and inserted into
each hole and knotted from the inside to secure the handle in
place. The tube is now prepared to be packaged with bows and
ribbon hanks.
The importer supplies 500 yard bolts of ribbon, spools of
stick-on tags, and spools of staple wire which produce the
finished bows for the ensemble. The bolt of ribbon is placed on
a spindle and pulled through a section of machinery that will
pierce the ribbon through the "U-shaped" staple wire and continue
to pull, rotate and pierce the ribbon until a gift bow is formed.
The machine then completes the process by applying the sticky tag
through the staple wire, closing the staple ends off and cutting
off the completed bow from the continuous strand of ribbon. The
completed bow is then mechanically tossed into an awaiting box to
be manually placed into the ensemble. Finally, the bows and
ribbon hanks are placed into the cardboard tube by hand and then
sealed with the plastic end caps. Alexander states that all of
the components used to produce the bow tube/candy tube are of
U.S.-origin.
ISSUE:
1) What is the proper classification of the above-described
paper and paperboard gift boxes, bags, and wrapping/packaging
ensembles?
2) Whether the GSP, or subheadings 9801.00.10, 9802.00.50, and
9802.00.80, HTSUS, are applicable to the imported articles.
CLASSIFICATION
Classification under the Harmonized Tariff Schedule of the
United States (HTSUS) is governed by the General Rules of
Interpretation (GRI). GRI 1 provides that classification is
determined in accordance with the terms of the headings and any
relative section or chapter notes. Where goods cannot be
classified solely on the basis of GRI 1, the remaining rules will
be applied in sequential order.
The Explanatory Notes (EN'S) to the Harmonized Commodity
Description and Coding System constitute the official
interpretation of the nomenclature at the international level.
While not legally binding, they represent the considered views of
classification experts of the Harmonized System Committee. It
has been the practice of the Customs Service to follow, whenever
possible, the terms of the EN's when interpreting the HTSUS. In
Treasury Decision (T.D.) 89-80, Customs stated that the EN's
should always be consulted as guidance when classifying
merchandise. (See T.D. 89-80, 23 Cust. Bull, 379 (1989), 54 Fed.
Reg. 35,127 (August 23, 1989).) (See also Totes, Inc. v. United
States, No. 91-09-00714, Slip Op. 92-153 (CIT September 4, 1992),
26 Cust. Bull. No. 40, 35, 37 n. 3 (September 30, 1992), citing
T.D. 89-80 and acknowledging the authority of the EN's.)
The above GRI's and EN's are applied to classify the
merchandise at issue, as set forth below.
1) The 2-Roll and 3-Roll Gift Wrap Ensembles
The 2-roll and 3-roll ensembles are not classifiable
according to GRI 1, since both are articles consisting of
multiple components. Under GRI 2(b), goods consisting of more
than one material or substance should be classified according to
the principles of GRI 3. Under GRI 3(b), goods consisting of
different materials or made up of different components, and goods
put up in sets for retail sale, which cannot be classified
according to GRI 3 (a), are to be classified as if they consisted
of the material or component that gives them their essential
character.
It is our opinion that the gift wrap ensembles are sets as
contemplated under GRI 3(b). Under the EN's for GRI 3(b), the
concept of "sets" is set forth as follows:
(x) For the purposes of this Rule, the term "goods put
up in sets for retail sale" shall be taken to mean
goods which:
(a) consist of at least two different
articles which are, prima facie, classifiable
in different headings;
(b) consist of products or articles put up
together to meet a particular need or carry
out a specific activity; and
(c) are put up in a manner suitable for sale
directly to users without repacking.
The gift wrap ensembles meet all of the above criteria. As
sets, they will be classified, under GRI 3(b), as if consisting
entirely of the component that imparts essential character. In
each case, we believe that the wrapping paper imparts essential
character to the ensembles. Therefore, both the 2-roll and 3-
roll gift wrap ensembles will be classified under the tariff
provision applicable to the ensemble's wrapping paper.
However, no samples were submitted for laboratory analysis,
and the inquirer's letter does not provide the detailed
information necessary to allow us to classify the wrapping paper.
We note that we previously issued a ruling on behalf of the
importer classifying similar merchandise. In New York Ruling
(NYRL) 879432, dated November 23, 1992, we classified as a set a
gift wrapping ensemble according to the classification of the
wrapping paper component. That set consisted of two rolls of
decorative wrapping paper, six made-up bows of plastic ribbon,
two reels of subheading 4811.90.80, HTSUS, which provides for
other (than certain described) surface decorated paper, in rolls
or sheets, weighing over 30 g/square meter. If the wrapping
paper of the 2-roll and 3-roll ensembles is the same as that
classified in NYRL 879432, then classification of the ensembles
will be under subheading 4811.90.80, HTSUS.
Heading 4811, HTSUS, covers the following kinds of paper:
"Paper, paperboard, cellulose wadding and webs of cellulose
fibers, coated, impregnated, covered, surface-colored, surface-
decorated or printed, in rolls or sheets, other than goods of
heading 4803, 4809, 4810 or 4818." If the wrapping paper of the
ensembles is not the same as that classified in NYRL 879432, but
falls within the description of heading 4811, HTSUS, it will be
classifiable under that heading. Without a sample to analyze, we
cannot be more specific. We suggest that the inquirer submit to
the appraising officer a sample of the wrapping paper from each
ensemble for laboratory analysis and correct classification.
2) The Gift Bag
The gift bags, with or without handles, imported in bulk are
classifiable, under GRI 1, in subheading 4819.40.0040, HTSUS,
which provides for paper bags other than certain described sacks
and bags. The gift bag ensembles appear to qualify as sets. As
sets, they also would be classifiable under that subheading,
since the gift bag, under GRI 3(b), would impart essential
character to the gift bag ensemble.
3) Treasure Chest Box (pre-wrapped Gift Box)
The treasure chest gift box is classifiable, under GRI 1, in
subheading 4819.20.0040, HTSUS, which provides for other (than
certain described) folding cartons, boxes, and cases of non-
corrugated paper or paperboard.
4) Treat/Treasure Gift Box, Pyramid Box, Gift Tote Box
The laminated open-ended gift box, if capable of folding, is
classifiable, under GRI 1, in subheading 4819.20.0040, HTSUS,
which provides for other (than certain described) folding
cartons, boxes, and cases of non-corrugated paper or paperboard.
The gift box ensemble appears to qualify as a set. Thus, under
GRI 3(b), it would be classifiable under the same subheading,
since the ensemble would take its essential character from the
box. If the box is not capable of folding, it would be
classifiable, as an individual article or as a set, under
subheading 4819.50.40.40, HTSUS, which provides for other packing
container, including rigid boxes.
The pyramid gift box is classifiable, under GRI 1, in
subheading 4819.20.0040, HTSUS, which provides for (other than
certain described) folding cartons, boxes, and cases on non-
corrugated paper or paperboard. If the pyramid box is imported
as a component of an ensemble, the ensemble would qualify as a
set under GRI 3(b). Classification would be the same, since the
box would impart essential character to the ensemble.
The gift box tote is made from the same laminated (wrapping
paper-covered) paperboard sheet as the above two boxes. It
appears from the photograph to be box-like in shape, since it is
rectangular with squared corners and it has a box top. However,
with the attached handles at the open end (the end over which the
box top fits), and the top removed, it also appears to be like a
bag. A box does not usually have handles of this sort for
carrying and a bag does not usually have a box-like top. Without
having a sample for a visual examination, and without more
information as to how this article is used, we are unable to
classify it.
5) Bow Tube/Candy Tube
The bow tube is imported both empty and filled with six
made-up bows and six ribbon hanks. Empty, the tube is
classifiable, under GRI 1, in subheading 4819.50.4060, HTSUS,
which provides for other packing containers of paperboard.
Filled with its contents of bows and ribbon hanks, the tube, as a
set under GRI 3(b), is classified according to the classification
of the bows, from which the set takes its essential character.
Assuming that these bows are made from strips of plastic ribbon,
they are classifiable under subheading 3926.40.00, HTSUS, which
provides for other articles of plastic, statuettes, and other
ornamental articles. (See Headquarters Ruling Letter (HRL)
954905, dated September 13, 1993, which classified decorative
plastic bows under that subheading.) Thus, the tube filled with
bows and ribbon hanks would be classifiable under that
subheading. (If not made from plastic ribbon, this
classification decision is not applicable to the filled tube.)
Eligibility for Duty-Free or Partial Duty-Free Treatment
1) 2-Roll and 3-Roll Gift Wrap Ensembles
Under the GSP, eligible articles the growth, product or
manufacture of a designated beneficiary developing country (BDC)
which are imported directly into the Customs territory of the
U.S. from a BDC may receive duty-free treatment if the sum of (1)
the cost or value of materials produced in the BDC, plus (2) the
direct costs of the processing operations in the BDC, is
equivalent to at least 35 percent of the appraised value of the
article at the time of entry. See, 19 U.S.C. 2463(b).
Prior to January 1, 1994, Mexico was a designated BDC. See,
General Note 3(c)(ii)(a), HTSUS, predecessor to General Note
4(a), HTSUS. We will also assume, for GSP purposes only, that
the gift wrap ensembles are classifiable under HTSUS subheading
4811.90.80, a GSP-eligible provision. Therefore, the ensembles
will qualify for duty-free treatment, provided they are "products
of" Mexico, and the 35 percent value-content requirement is
satisfied.
Prior to August 20, 1990, the GSP program differed from the
Caribbean Basin Economic Recover Act (CBERA) and U.S.-Israeli FTA
programs in that the latter programs included a "product of"
requirement, while the GSP did not. This requirement means that
to receive duty-free treatment, an article either must be made
entirely of materials originating in the beneficiary country or,
if made of materials from a non-beneficiary country, those
materials must be substantially transformed in the beneficiary
country into a new or different article of commerce. In Madison
Galleries, Ltd. v. United States, 688 F. Supp. 1544 (CIT 1988),
aff'd, 870 F.2d 627 (Fed. Cir. 1989), the court concluded that,
under the GSP statute, it is unnecessary for an article to be a
"product of" a GSP country to be eligible for duty-free treatment
under that program. However, section 226 of the Customs and
Trade Act of 1990 (Public Law 101-382) included an amendment to
the GSP statute requiring an article to be a "product of" a GSP
country for it to receive duty-free treatment. This amendment
was effective for articles entered, or withdrawn from warehouse
for consumption, on or after August 20, 1990. See T.D. 91-7
dated January 16, 1991 (25 Cust. Bull. 7).
In T.D. 91-7, Customs held that, as a general rule, a
collection classifiable in one subheading pursuant to the GRI's
will receive CBERA treatment only if all of the items or
components in the collection are considered "products of" the
beneficiary country. To illustrate the application of the
"product of" requirement to sets under the CBERA, we used the
example of a hairdressing set consisting of a comb, brush and
scissors manufactured in Jamaica from materials originating in
Jamaica, and an electric hair clipper manufactured in Taiwan (a
non-BC country) which is imported into Jamaica for packaging with
the other items of the set. We stated that in cases where the
entire imported set is not the "product of" a BDC, as required by
the CBERA statute, neither the set nor any part thereof would be
entitled to duty-free treatment under this program. The above
requirements also exist under the GSP statute with respect to
articles entered on or after August 20, 1990.
In Superscope, Inc. v. United States, 13 CIT 997, 727 F.
Supp. 629 (1989), the court held that certain glass panels of
U.S.-origin that were exported, repacked abroad with certain
foreign components, and returned to the U.S. as part of
unassembled audio cabinets, were entitled to duty-free entry
under item 800.00, Tariff Schedules of the United States (TSUS)
(predecessor to subheading 9801.00.10, HTSUS), since the U.S.
panel portion of the imported article was "not 'advanced in value
or improved in condition. . . while abroad,' but [was] merely
repacked." Id. at 631. Although the Superscope case concerned
the TSUS, not the HTSUS, the decision is believed to be equally
applicable to similar situations arising under the HTSUS, since
item 800.00, TSUS, and relevant Schedule 8, TSUS, headnotes, were
carried over virtually unchanged into the HTSUS.
In Headquarters Ruling Letter (HRL) 556797 (and HRL 556798)
dated September 23, 1993, involving the eligibility for GSP
treatment of certain catheter kits considered to be sets, we
found that based on the decision in Superscope, the U.S.
components which qualified for duty-free treatment under
subheading 9801.00.10, HTSUS, were to be excluded from the set
for purposes of determining whether the kits qualified as
"products of" Mexico under the GSP, provided the documentary
requirements of section 10.1, Customs Regulations (19 CFR 10.1)
were met.
Based on these authorities, we find that the U.S.-origin
items furnished ready for repackaging (gift tags, ribbon spools,
pull-out bows, ribbon hanks, tissue, sheets etc.), which have not
been advanced in value or improved in condition by a process of
manufacture or other means, and which otherwise qualify for duty-
free treatment under subheading 9801.00.10, HTSUS, are excluded
from the gift wrap sets for purposes of determining whether the
imported articles qualify as "products of" Mexico under the GSP.
The subsequent issue to be resolved is whether the imported
ensemble, excluding those items eligible for duty-free treatment
under subheading 9801.00.10, HTSUS, are "products of" Mexico for
purposes of the GSP.
Where, as in this case, the articles are made from materials
imported into the BDC, the article will be considered the
"product of" the BDC only if the materials are substantially
transformed in the BDC into a new or different article of
commerce. Customs has previously held that the test for
determining whether a substantial transformation has occurred is
whether an article emerges from a process with a new name,
character or use, different from that possessed by the article
prior to processing. See Texas Instruments Inc. v. United
States, 69 CCPA 152, 681 F.2d 778 (1982).
In general, Customs has held that cutting or shaping
materials to defined shapes or patterns suitable for use in
making finished articles, as opposed to mere cutting to length or
width which does not render the article suitable for a particular
use, constitutes a substantial transformation. See, e.g., HRL
555702 dated January 7, 1991 (steel plates dedicated to use in
the final article by cutting, folding, binding, scraping, etc.,
considered substantially transformed components) and HRL 553574
dated August 15, 1985 (aluminum strip cut to length, punched
and/or drilled with holes, and notched, which gave strip specific
shape or pattern, was substantially transformed.)
Similarly, in the instant case, (with respect to the gift
wrap paper in both the 2-roll and 3-roll ensembles), the
cardboard component prior to processing is a "generic" material
from which a variety of products may be created. However, after
cutting to length, applying adhesive, and spiral-winding, the
cardboard material is dedicated for use as a holder of wrapping
paper or other paper products. This component has a new name,
character and use distinct from the material from which it was
made, and, in accordance with the cited authorities, has
undergone a substantial transformation.
The next issue which must be addressed is whether the
assembly of the wrapping paper component to the cardboard tube
also substantially transforms this component into a different
article of commerce.
We have held that, for purposes of the GSP, an assembly
process will not work a substantial transformation unless the
operation is "complex and meaningful." See C.S.D. 85-25, 19
Cust. Bull. 544 (1985). Whether an operation is complex and
meaningful depends on the nature of the operation. Some of the
factors that we consider in making this determination are the
time, cost, and skill involved, the number of components
assembled, the number of different operations, the attention to
detail and quality control, as well as the benefit accruing to
the BDC as a result of the employment opportunities generated by
the manufacturing processes performed there.
Applying these principles to the facts in this case, we find
that the process of cutting the wrapping paper to length, and
affixing it to the cardboard tube with 1-inch strips of adhesive
is a simple assembly process requiring little skill, and does not
constitute a "complex and meaningful" operation. Further, in the
final assembly, there is no real integration of the cardboard
tube and the wrapping paper where the latter component loses its
separate identify. Belcrest Linens v. United States, 741 F. 2d
1368, 1373 (Fed Cir. 1984). Accordingly, this assembly does not
constitute a substantial transformation. Therefore since the
imported set is not considered a "product of" Mexico, it will not
be eligible for duty-free treatment under the GSP.
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, lubrication, and painting.
Included among the operations considered incidental to the
assembly process are cutting to length of wire, thread, tape,
foil, and similar products exported in continuous length. (See
19 CFR 10.16 (b)(6).) T.D. 91-7, supra, also provides that
subheading 9802.00.80, HTSUS, is applicable to situations in
which a portion of a set or mixed or composite goods, consists of
components or items assembled abroad in whole or in part of U.S-
origin fabricated components.
In connection with the 2-roll ensemble, we find that the
process of assembling the U.S.-origin fabricated component,
wrapping paper, to the cardboard tube, by cutting to length and
affixing the components to each other by means of adhesive tape,
are acceptable assembly operations or operations incidental to
assembly. Therefore, duties will be assessed pursuant to
subheading 9802.00.80, HTSUS, upon the full value of the set less
the cost or value of the U.S. fabricated components (wrapping
paper, adhesive tape). The 3-inch wide cardboard and the liquid
adhesive are not eligible for the partial duty exemption under
this provision, since they have been further fabricated in
Mexico. (As discussed above, the U.S.-origin items that are
merely repackaged with the set will receive duty-free treatment
under subheading 9801.00.10, HTSUS, provided all documentary
requirements are satisfied.)
Our findings with respect to the applicability of subheading
9801.00.10, HTSUS, and GSP, to the 2-roll ensemble, are equally
applicable to the 3-roll ensemble, since this set also includes
repackaged items of U.S.-origin, and the operations involving
production of the gift paper are identical. Thus, those items of
U.S.-origin which are merely repackaged with the set (gift tags)
will be afforded duty-free treatment under subheading 9801.00.10,
HTSUS, assuming all documentary requirements are satisfied.
Further, since the gift wrap paper has not undergone a
substantial transformation, the imported set is not considered a
"product of" Mexico, and it is not eligible for duty-free
treatment under the GSP.
Similarly, subheading 9802.00.80, HTSUS, will also be
applicable to the imported 3-roll ensemble since the assembly
operations involved in affixing the wrapping paper to the
cardboard tube are identical to the operations performed in
connection with the 2-roll ensemble. Thus, an allowance in duty
will be permitted for the cost or value of the wrapping paper
component and the adhesive tape. However, since two additional
components are included with this ensemble (ribbon bows and
ribbon coils), the issue which must now be addressed is whether
the cost or value of these U.S.-origin components may also be
deducted from the full value of the set under HTSUS subheading
9802.00.80.
We have previously held that cutting U.S. ribbon to
appropriate lengths abroad, forming one or more pieces of ribbon
into the shape of a bow, and then tying the center of the bow
with coated or tinsel wire to secure the bow shape constitutes an
acceptable assembly or operation incidental to assembly under
subheading 9802.00.80, HTSUS, or item 807.00, TSUS (the precursor
provision to subheading 9802.00.80, HTSUS). See, Headquarters
Ruling Letters (HRL) 071450 of September 8, 1983, 553674 of June
14, 1985, 554956 of April 6, 1988, and 554943 of April 18, 1988.
We have also held in HRL 555475 of November 3, 1989, that
ribbon cut to length, wrapped twice around the middle of a coat
hanger bar and base of a hanger hook, and knotted into a bow
qualified as an assembly operation or an operation incidental to
assembly. In each of these cases, the bow formation process
involved the joinder of two or more components. The ribbon's bow
shape was secured either by tying wire around its center or by
wrapping and knotting the ribbon to the hanger.
In addition, in HRL 555357, dated February 16, 1990, we
found that the formation of a single ribbon into a bow by
knotting the ribbon is not, in itself, an assembly operation.
That case involved cut-to-length ribbon which was placed on a bow
maker machine to form a bow which was tied to itself. The bow
was then tacked to certain footwear prior to importation. HRL
555357 is distinguishable from the above-cited rulings as the
single length of ribbon was the sole component which was knotted
to form a bow. There was no joinder of two or more separate
components as required by HTSUS subheading 9802.00.80. However,
we have also held that forming a ribbon into the shape of a rose
and sewing the ribbon rose to itself to retain its shape are
acceptable assembly operations or operations incidental to
assembly. See, HRL 555476 dated February 23, 1990, in which we
cited L'eggs Products Inc. v. United States, 704 F. Supp. 1127
(1989), in support of our decision. In L'eggs, the sewing of
knit tubes or leg blank portions of pantyhose closed by thread
was held to be an acceptable assembly operation. Thread was used
to join the tube to itself by sewing the tube ends closed. The
court held that "[s]ince the tube closing operation joined two
components together, namely thread and fabric, it is an
'assembly'..."
The process in creating the bow under the facts presented
herein is analogous to the operations performed in HRL 555476.
Thus, a 500 yard bolt of ribbon is placed on a spindle, machine-
pulled and rotated through a "U-shaped" staple wire until a gift
bow is formed. The process is completed when a "sticky tag" is
applied through the staple wire, closing off the staple ends and
cutting off the completed bow from the continuous strand of
ribbon. The staple in this case, which holds the bow together,
performs the same function as the thread in HRL 555476, and in
L'eggs. Accordingly, a partial duty exemption will be allowed
under subheading 9802.00.80, HTSUS, for the cost or value of the
U.S. fabricated components comprising the assembled bow.
We also find that the process used to create the ribbon
coils constitute an acceptable assembly operation. During this
process, ribbon is pulled from the ribbon bolt, run through a
series of spindles which winds the ribbon into a coil of pre-
determined length. The ribbon is the cut and a strip of adhesive
tape is mechanically applied onto the ribbon coil to prevent
unwinding during packaging. The ribbon remains a U.S. fabricated
component during this process, and the creation of these items
qualifies as assembly operations or operations incidental to
assembly in accordance with the cited authorities. The adhesive
tape performs a function similar to the staple, above, and the
thread in HRL 555476, and L'eggs. Accordingly, a partial duty
allowance under HTSUS subheading 9802.00.80, will also be allowed
for the cost or value of the components comprising the assembled
ribbon coil. (We also find that the foreign operations involved
in processing the ribbons are alterations within the meaning of
subheading 9802.00.50, HTSUS. See HRL 554179 dated September 10,
1986, where we held that U.S. ribbon exported in spool lengths of
400-500 yards, cut to length, and returned to the U.S. in shorter
lengths, was dutiable upon return only on the cost or value of
the foreign alterations performed abroad. The operations in the
instant case are analogous, as the exported ribbon and adhesive
tape are complete for this intended use prior to the foreign
processing.)
2) Gift Bag
As provided above, the gift bags are classifiable under
subheading 4819.40.0040, HTSUS, a GSP-eligible provision. The
operations used to produce this item involve placing the wrapping
paper ream through the feed roller, shaping, creasing, folding,
cutting to length, and securing the folds that enclose the bag by
gluing. In some cases, a handle will be attached also by gluing.
We believe that for purposes of determining GSP eligibility,
the involved operations are "complex and meaningful" as that term
is used in C.S.D. 85-25. See above. In making this
determination, we note that the finished item is a new and
different article of commerce with a name, character and use
clearly distinguishable from the material (wrapping paper) from
which it was made. Accordingly, we find that the gift bag is the
result of a substantial transformation of the wrapping paper (and
glue), and therefore is considered a "product of" Mexico. The
guestion which must now be addressed is whether the cost or value
of the materials used to produce the bag may be included in
calculating the 35% value-content requirement under the GSP.
If an article is comprised of materials that are imported
into the BDC, the cost or value of those materials may be
counted toward the 35% value-content minimum only if they undergo
a double substantial transformation in the BDC. See section
10.177, Customs Regulations (19 CFR 10.177), and Aztec Milling
Co. v. United States, 703 F. Supp F. Supp. 949 (CIT 1988), aff'd,
890 F.2d 1150 (Fed. Cir. 1989). That is, the cost or value of
the imported materials used to produce the gift bag may be
included in the GSP 35% value-content computation only if they
are first substantially transformed into a new and different
article of commerce, which is itself substantially transformed
into the final product.
In the instant case, an article of commerce is not produced
until the gift bag is completed. Therefore, the required
operations do not result in an intermediate article of commerce.
The addition of a handle, in some cases, to the bag, does not
change this result, since we consider the bag with or without the
handle to be essentially the same article of commerce. Thus, the
bags are entitled to GSP treatment only if the direct costs of
processing incurred in Mexico represents at least 35% of the
bags' appraised value.
We also find that the gift bags imported without the handles
do not qualify for the partial duty exemption under subheading
9802.00.80, HTSUS, since the wrapping paper is the sole solid
component used to form the item. (Glue is not considered a solid
component.) The creation of the gift bag without handles does
not involve a joinder of two or more separate components as
required by subheading 9802.00.80, HTSUS. See also HRL 555357,
supra. However, the bags imported with handles do qualify for
the exemption, as two separate components are involved, and the
process otherwise constitutes an acceptable assembly operation or
an operation incidental to assembly under the statute. (Under
section 10.16(a), Customs Regulations (19 CFR 10.16 (a)),
assembly operations may consist of any method used to join or fit
together solid components, such as welding, soldering, riveting,
force fitting, gluing, etc. In this regard, we assume for these
purposes that the handles are made of cord or rope of U.S.-
origin, are cut from a spool of either of these materials, and
are attached to the bag in this condition by gluing.)
Accordingly, an allowance in duty may be made for the cost or
value of the cord or rope -- the U.S. fabricated component
advanced in value or improved in condition only by the assembly
process or by an operation incidental to assembly. (The gift bag
component is not eligible for the allowance since it has been
fabricated in Mexico.)
When imported as part of an ensemble, those items sent
abroad for repackaging only with the imported gift bag will be
eligible for duty-free treatment under subheading 9801.00.10,
HTSUS, provided the documentary requirements are satisfied. (See
2-Roll and 3-Roll Gift Wrap Ensembles, above.)
Further, in accordance with our analysis, above, in
connection with the gift wrap ensembles, the items qualifying for
HTSUS subheading 9801.00.10 treatment, will not be considered in
determining whether the gift bag ensemble qualifies as a "product
of" Mexico. However, the gift bag ensemble will be eligible for
GSP treatment only if all of the remaining items or components in
the set are considered "products of" Mexico. An allowance in
duty may be made under subheading 9802.00.80, HTSUS, for the cost
or value of the U.S. fabricated cord or rope used as the handle
for the gift bag, as described above.
3) Treasure Box (GSP eligibility)
The operations involved in creating the cardboard box
component of this article (classified under subheading
4819.20.0040, HTSUS, a GSP-eligible provision), i.e., creasing
and cutting the cardboard sheets into specific shapes, open-
ended boxes, and seam-gluing with liquid adhesive, are analogous
to the operations performed in connection with the production of
the gift wrap cardboard cylinder which we held was the result of
a substantial transformation. In both cases, the cardboard
material is cut and shaped, through bending, creasing, or
otherwise, to form an article with a new name, character and use
distinct from the material from which the article was made. (See
GSP-eligibility analysis in connection with gift wrap ensembles,
above, and HRL 553878 dated October 28, 1985 (raw dimension
lumber and plywood sheets cut and shaped into various components,
i.e., cabinet doors, drawers, draw fronts, etc, for assembly into
cabinets.))
However, we are also of the opinion that the subsequent
assembly of the wrapping paper component to the box, by means of
2 one-inch adhesive tape strips, does not constitute a
substantial transformation of this item. Rather, these
operations are "minimal, simple, assembly-type operations" which
were not intended to constitute a substantial transformation for
GSP purposes. See C.S.D. 85-25, above. Accordingly, we find
that the imported treasure box is not a "product of" Mexico, and
therefore is not eligible for duty-free treatment under the GSP.
We also find that a partial duty allowance under subheading
9802.00.80, HTSUS, will not be permitted for the cost or value of
the U.S.-origin cardboard, since it is further fabricated in
Mexico by creasing and cutting to form specific shapes. See 19
CFR 10.14(a) (materials undefined in final dimensions and shapes
which are cut into specific shapes or patterns are not considered
U.S. fabricated components). For example, uncut textile fabrics
exported in bolts, or other materials such as lumber, leather,
sheet metal or plastic sheeting exported in basic shapes and
forms to be fabricated into components for assembly are not
considered fully fabricated when exported. See also HRL 556715
dated August 19, 1992 (cutting pencil slats to hexagonal shapes
constitutes further fabrication of slats).
However, we find that cutting the wrapping paper component
to length, and affixing it to the cardboard box with U.S.-origin
adhesive tape cut to length are acceptable assembly operations,
or operations incidental to assembly. Therefore, the treasure
box may be entered under subheading 9802.00.80, HTSUS, with an
allowance in duty for the cost or value of the wrapping paper and
adhesive tape.
4) Laminated Gift Box
As described, above, this item (classifiable under
subheading 4819.20.0040, HTSUS, a GSP-eligible provision),
undergoes a process of lamination, which involves the application
of an adhesive to the gift wrap paper roll, cutting the paper to
length, and compressing it onto a cardboard sheet. The now-
laminated paper is then creased by machine and cut to size and
shape. The final steps involve removal of the box cut out from
the sheet and seam gluing, to form the open ended gift box. An
ensemble may also be created which could include gift cards,
ribbon hanks, and an instruction booklet, packaged in a poly bag.
In accordance with previously-cited authorities, supra, we
believe that cutting the wrapping paper to length, gluing,
compressing it onto a cardboard sheet, creasing, cutting and
shaping the laminated sheet, and seam-gluing, substantially
transforms the U.S.-origin wrapping paper and cardboard sheet
into an article, a laminated gift box, with a character, use and
identity distinct from the materials from which it was made.
Accordingly, we find that the laminated gift box is a "product
of" Mexico for purposes of determining whether it is eligible for
duty-free treatment under the GSP.
However, we do not find that during these operations an
intermediate article of commerce has been produced, which in turn
is itself substantially transformed into the final product.
Accordingly, we find that the cost or value of the U.S.-origin
components use to create the laminated gift box cannot be use in
calculating the 35% value-content requirement under the GSP.
Thus, the box is entitled to GSP treatment only if the direct
cost of processing operations incurred in Mexico represents at
least 35% of the box's appraised value.
We also conclude that a partial duty allowance under
subheading 9802.00.80, HTSUS, will not be allowed for the cost or
value of the U.S.-origin cardboard and wrapping paper. As these
components are further fabricated in Mexico, this provision will
not be applicable. (See 19 CFR 10.14(a), and our analysis,
above, concerning the Treasure Box.)
Under our previous discussion regarding classification, we
stated that it appeared this ensemble would qualify as a set. We
also found in connection with the gift bag ensemble, that whether
or not the ensemble was considered a set, the U.S.-origin
components merely repackaged with the set would qualify for duty-
free treatment under subheading 9801.00.10, HTSUS. Similarly, we
find that the U.S.-origin components merely repackaged with the
laminated gift box, will qualify for duty-free treatment under
subheading 9801.0010, HTSUS, assuming all documentary
requirements are satisfied.
5) Laminated Pyramid Box
As heretofore described, the operations involved in the
fabrication of this item (classifiable under subheading
4819.20.0040, HTSUS) are similar to the operations involved in
creating the laminated gift box. Accordingly, for the reasons
discussed above, we find that only a single substantial
transformation occurs in Mexico. Therefore, while the imported
article is considered a "product of " Mexico, the cost or value
of the U.S.-origin wrapping paper and cardboard sheet cannot be
included in calculating the 35% value-content requirement under
the GSP. Thus, the box is entitled to GSP treatment only if the
direct costs of processing incurred in Mexico represents at least
35% of the box's appraised value.
Additionally, since the components comprising this article
are further fabricated in Mexico, a partial-duty allowance under
sub-heading 9802.00.80, HTSUS, will not be available. However,
those items that are merely repackaged with the pyramid box
ensemble are entitled to duty-free treatment under subheading
9801.00.10, HTSUS, upon compliance with all documentary
requirements. No allowance in duty may be permitted under HTSUS
subheading 9802.00.80, for the cost or value of the cording cut
to length from a spool and manually placed in the box, since no
assembly operations are involved in this process. It is further
noted that subheading 9802.00.50, HTSUS, is also inapplicable to
the cording since it is incomplete for its intended use upon
exportation, and the foreign processing constitutes a finishing
step in the production of the product. See e.g., HRL 554736
dated February 16, 1988 (cutting to length of rolls of tissue
paper constitutes a finishing step in the manufacture of the
merchandise, resulting in usable facial tissue products.)
6) Laminated Tote Box
As previously discussed, we cannot rule on the
classification of this bag without examining a sample. However,
we will assume for purposes of the following discussion, that,
whether the item is classified as either a "bag" or a "box", it
is a GSP-eligible article.
The processing of this item is essentially similar to the
operations performed in connection with the other laminated
articles. Accordingly, while the wrapping paper and cardboard
sheet components undergo a substantial transformation, and the
completed article is a "product of" Mexico for GSP purposes, we
find that no intermediate article of commerce is produced, and
that as a result, the required double substantial transformation
has not taken place. Therefore, while the imported article is
eligible for GSP treatment, the cost or value of the wrapping
paper and cardboard sheet components cannot be counted in
calculating the 35% value-content requirement under this
provision. Thus, the value requirement must be satisfied by
direct processing costs alone.
Furthermore, since the U.S.-origin components have been
further fabricated abroad, a duty allowance representing their
cost or value will not be allowable under HTSUS subheading
9802.00.80. However, where pre-cut braided rope is inserted
through punched holes in the "box" and knotted, subheading
9802.0080, HTSUS, may be applicable. Thus, a duty allowance will
be available for the cost or value of the U.S.-origin rope if it
is merely cut to length abroad and is not further fabricated.
These operations are considered acceptable assembly operations or
operations incidental to assembly.
7) Bow Tube/Candy Tube
This item is either filled with finished bows and ribbon
hanks or empty. (Pursuant to our discussion, above, regarding
classification, the tube will be classifiable under HTSUS
subheading 4819.50.4060, if imported empty, and HTSUS subheading
3926.40.00, if imported with plastic bows and ribbon hanks. In
the latter case, the imported item will be considered a set and
the set will reflect the classification of the bows, from which
the set takes its essential character. In either case, the
imported items are GSP-eligible articles.
While the description of the processing in Mexico in
connection with this item appears to be somewhat incomplete, we
have been orally advised by Alexander that the operations
involved in producing the cylinder of paperboard covered with
wrapping paper are identical to the operations used to create the
gift wrap paper component of the gift wrap paper ensemble, above.
Therefore, our analysis with respect to GSP eligibility of those
components are equally applicable to the subject items.
Accordingly, we find that while the cardboard cylinder is the
result of a substantial transformation, the subsequent assembly
of the wrapping paper to the tube by means of adhesive tape
strips and assembly to the tube of the plastic end covers and
braided rope handle, does not effect a substantial transformation
of these U.S.-origin components. Under the circumstances, the
imported (empty) bow tube is not considered to be a "product of"
Mexico, and is not eligible for duty-free treatment under the
GSP. (This analysis is equally applicable where the bow tube is
imported as part of a set.)
However, for purposes of HTSUS subheading 9802.00.80,
assembling the U.S.-origin wrapping paper to the cardboard tube
by cutting to length and affixing the components to each other by
means of adhesive tape, force-fitting U.S.-origin plastic end
covers onto the tube ends, and securing the pre-cut braided rope
by knotting after inserting it through two holes cut on the top
side of the tube, are acceptable assembly operations or
operations incidental to assembly. Accordingly, duties will be
assessed pursuant to HTSUS subheading 9802.00.80, HTSUS, upon the
full value of the imported article less the cost or value of the
U.S.-origin fabricated components (wrapping paper, adhesive tape,
plastic covers, and rope).
When imported as a set, the bow tube will include ribbon
hanks and bows, the latter to be produced in the exact manner as
described above, with respect to the 3-roll ensemble. For the
reasons discussed above under our analysis in connection with the
production of the bows, we find that a partial duty exemption
will be allowed under HTSUS subheading 9802.00.80, for the cost
or value of the U.S. fabricated components constituting the
assembled bow, which comprises part of the set.
We are further advised that the ribbon hanks consist of a
length of U.S.-origin ribbon, folded over, packaged in plastic,
and sent abroad in this condition to be repackaged in the bow
tube. As a result, in accordance with our prior analysis, above,
upon importation of the set this item will receive duty-free
treatment under subheading 9801.00.10, HTSUS, assuming applicable
documentation requirements are met.
HOLDING:
Classification
The wrapping paper gift bag and the gift bag ensemble are
classifiable under subheading 4819.40.0040, HTSUS, dutiable at a
rate of 5.3% ad valorem. The treasure chest (pre-wrapped) gift
box, the laminated open-ended gift box (capable of folding ) and
gift box ensemble, and the laminated pyramid box and gift box
ensemble are classifiable under subheading 4819.20.0040, HTSUS,
dutiable at a rate of 2.8% ad valorem. If the laminated open-
ended box is not capable of folding, classification is under
subheading 4819.50.4060, HTSUS, dutiable at a rate of 5.3% ad
valorem. The bow tube, when imported with its contents of bows
(made from plastic ribbon) and ribbon hanks, is classifiable
under subheading 3926.40.00, HTSUS, dutiable at a rate of 5.2% ad
valorem. The bow tube, when imported with its contents of bows
(made from plastic ribbon) and ribbon hanks, is classifiable
under subheading 3926.40.00, HTSUS, dutiable at a rate of 5.3% ad
valorem. The 2-roll and 3-roll gift wrap ensembles cannot be
classified because of insufficient information concerning the
wrapping paper. The gift box tote cannot be classified because
of insufficient information.
Eligibility for Duty-Free and Partial Duty-Free Treatment
a) 2-Roll and 3-Roll Gift Wrap Ensemble: The 2-roll and 3-
roll gift wrap ensembles are not considered "products of" Mexico.
Therefore, these articles are not eligible for duty-free
treatment under the GSP. However, an allowance in duty under
subheading 9802.00.80, HTSUS, will be permitted for the cost or
value of the U.S.-origin components that have been assembled but
not further fabricated abroad. The U.S.-origin components that
are merely repackaged as part of the ensembles will be entered
duty-free under subheading 9801.00.10 HTSUS, upon compliance with
all documentation requirements.
b) Gift Bag: The gift bag is considered a product of
Mexico; however, since the operations performed abroad do not
result in a double substantial transformation, the cost or value
of the exported materials may not be included in calculating the
35% value-content requirement under the GSP. The value
requirement must be satisfied by direct processing costs alone.
If the gift bag does not meet all of the requirements for
receiving GSP treatment, an allowance in duty under subheading
9802.00.80, HTSUS, will be available for the cost or value of the
U.S. fabricated rope handle, when imported with the gift bag.
Items which are merely repackaged with the gift bag will be
eligible for duty-free treatment under subheading 9801.00.10,
HTSUS, provided all documentation requirements are satisfied
c) Treasure Box: The treasure box is not considered to be
a "product of" Mexico, and therefore is not eligible for duty-
free treatment under the GSP. However, an allowance in duty
under subheading 9802.00.80, HTSUS, will be permitted for the
cost or value of the assembled U.S. components which have not
been further fabricated abroad.
d) Laminated Gift Box: The laminated gift box is
considered to be "product of " Mexico. However, the operations
performed abroad do not result in a double substantial
transformation of the U.S. exported materials. Therefore, the
cost or value of these materials cannot be used in calculating
the 35% value-content requirement under the GSP. The value
requirement must be satisfied by direct processing costs alone.
HTSUS subheading 9802.00.80 will not be applicable to the
imported article since the exported components are subject to a
process of fabrication in Mexico. Those U.S-origin items that
are merely repackaged with the gift box will qualify for duty-
free treatment under subheading 9801.00.10, HTSUS, assuming all
documentation requirements are satisfied.
e) Laminated Pyramid Box: The pyramid box is considered to
be a "product of" the BDC. However, since a double substantial
transformation does not result from the operations in Mexico, the
cost or value of the U.S. components will not be included in
determining the 35% value-content requirement under the GSP. The
value requirement must be satisfied by direct processing costs
alone. An allowance in duty under HTSUS subheading 9802.00.80,
will not be available since the U.S.-origin components used in
creating this item are further fabricated in Mexico. Further, an
assembly operation does not occur with respect to the U.S.-origin
cording cut to length and manually placed in the box. However,
the U.S. components merely repackaged with the gift box will
qualify for duty-free treatment under subheading 9801.00.10,
HTSUS, upon compliance with all documentation requirements.
f) Laminated Tote Box: Assuming GSP eligibility, this
article is considered a "product of" Mexico. However, since a
double substantial transformation does not occur, the cost or
value of the U.S.-origin components cannot be counted in
determining the value-content requirement under the GSP. The
value requirement must be satisfied by direct processing costs
alone. A duty allowance will not be allowed under HTSUS
subheading 9802.00.80, for the cost or value of the U.S.-origin
components that are further fabricated abroad. However, a
partial duty exemption will be allowed under this provision for
the U.S.-origin assembled rope if merely cut to length and not
further fabricated abroad.
g) Bow Tube/Candy Tube: Whether imported in bulk or as a
set, this article is not considered to be "product of" the BDC.
Therefore, it is not eligible for duty-free treatment under the
GSP. However, a partial duty exemption will be allowed under
HTSUS subheading 9802.00.80, for the cost or value of the U.S.-
origin components that have not been further fabricated abroad.
This will include the components comprising the bow, when
imported as part of the bow tube set. The repackaged ribbon
shanks will receive duty-free treatment under HTSUS subheading
9801.00.10, assuming applicable documentation requirements are
satisfied.
Sincerely,
John Durant, Director
Commercial Rulings Division
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