CLA-2 RR:CR:SM 560744 MLR
Michael A. Roybal, Esq.
Sandler, Travis & Rosenberg, P.A.
1341 G Street, N.W.
Washington, D.C. 20005-3105
RE: Applicability of partial duty exemption under HTSUS
subheading 9802.00.80 to
pants; enzyme-washing
Dear Mr. Roybal:
This is in response to your letters of August 25 and
November 10, 1997, requesting a ruling on behalf of Levi
Strauss & Company ("Levi"), regarding the applicability of
subheading 9802.00.80, Harmonized Tariff Schedule of the
United States (HTSUS), to garments assembled and enzyme-washed in Mexico, the Caribbean and various other countries.
Samples of pants before and after the washing process and
data sheets describing the washing compounds were submitted
with your request.
FACTS:
It is stated that fabric components will be cut in the
U.S. and shipped to Mexico, the Caribbean, and various other
countries for assembly into pants. After assembly in the
respective country, it is stated that the pants will be
subject to certain enzyme-washes, referenced in Exhibits A-D, which do not include the use of sodium perborate or any
type of bleach. Samples of eight pairs of pants are
submitted, two for each enzyme wash showing the pants before
and after the washing process. It is stated that the
enzyme-washes are used to clean and soften the pants and
that there is a slight change in the color of the garments.
The wash in Exhibit A includes the use of amylase enzyme,
acetic acid, and acid stable enzyme and cationic softener;
the total wash cycle lasts 24 minutes; and the temperature
ranges between 120-140 degrees. The wash in Exhibit B
includes the use of acetic acid, acid stable enzyme, soda
ash, non ionic detergent, fixer, a binding agent, cationic
softener, and silicone softener; the total wash cycle lasts
54 minutes; and the temperature ranges between 120-140
degrees. The wash in Exhibit C includes the use of
diatomaceous earth (silica based), acetic acid, acid stable
enzyme, non ionic detergent, cationic softener, and silicone
softener; the total wash cycle lasts 42 minutes; and the
temperature ranges between 120-140 degrees. The wash in
Exhibit D includes the use of the same ingredients and
temperatures as the wash in exhibit C, except that the total
wash cycle lasts 32 minutes.
ISSUE:
Whether the pants assembled and subjected to the enzyme
washing processes described qualify 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:
[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
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).
You do not state if Levi will use U.S.-origin cut fabric
components. However, if Levi uses foreign-origin fabric,
the duty allowance provided under 19 U.S.C. 3592(b)(4)(A) as
implemented by 19 CFR 10.25, may be applicable:
[t]he value of a component that is cut to shape (but not
to length, width, or both) in the United States from
foreign fabric and exported to another country ... for
assembly into an article that is then returned to the
United States -- shall not be included in the dutiable
value of such article.
Section 10.25 incorporates by reference the same
operational, valuation, and documentation requirements
applicable to goods entered under subheading 9802.00.80,
HTSUS. Therefore, Customs will allow entry under subheading
9802.00.8065, HTSUS, to goods assembled abroad from textile
components cut to shape from foreign fabric in the U.S., and
solely for purposes of calculating the duty allowance under
this subheading, Customs will treat these textile components
as if they were "U.S. fabricated components."
This ruling will only address whether the wash process
described above qualifies as an operation incidental to the
assembly. In this regard, 19 CFR 10.14(a), states, in part:
[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.
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. See 19 CFR 10.16(a). Relevant to
the facts in this case, section 10.16(b)(1), Customs
Regulations {19 CFR 10.16(b)(1)}, provides that "cleaning"
is an incidental operation. 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, HTSUS, to that component. See 19 CFR
10.16(c). Section 10.16(c)(4) specifically provides that
the chemical treatment of components or assembled articles
to impart new characteristics, such as shower-proofing,
permapressing, sanforizing, dyeing, or bleaching of
textiles, is not considered incidental to the assembly
process.
You contend that the enzyme washes to which the pants
are subjected are analogous to cleaning operations within
the meaning of 19 CFR 10.16(b)(1) because the pants are give
a softer, smoother feel, but their characteristics or color
of their fabric are not substantially changed.
As support for your position you cite Headquarters
Ruling Letter (HRL) 557195 dated October 14, 1993, where
Customs considered trousers and shorts made from a variety
of fabrics that were washed with a detergent and enzyme
fabric softener to give the garments a softer, smoother
feel. It was found that the addition of an enzyme in fabric
softener did not alter the color of the fabric or change its
texture, and, therefore, was more analogous to those cases
which have held that washing in detergent and fabric
softener are operations incidental to assembly.
In HRL 558982 dated March 3, 1995, woven trousers were
subjected to an enzyme wash (consisting of buffer, enzyme,
silicone, and amine softener) which Customs found was
incidental to the assembly process. In HRL 558818/558819
dated March 29, 1995, Customs considered a "silk wash" and a
"pigment wash". The silk wash consisted of the use of
Hyposcour, a non-ionic wetting agent) and Hipchem Silfin, a
cationic amino functional silicon). In contrast to the
pigment wash, Customs found that while the silk wash
produces fading to the fabric, it chiefly served as a fabric
softening process and unlike the pigment wash which produced
an inconsistent fading and streaking in the garment, the
silk wash yielded a garment that was uniformly and mildly
faded from the pre-wash garment and that was slightly softer
to the touch. Therefore, the silk wash was found to be
incidental to the assembly process and did not impart a
significant new characteristic to the garment. In HRL
557115, Customs also considered a "classic wash" which was
intended to soften sueded twill fabric. The wash consisted
of acetic acid, non-ionic neutral detergent, cellulose
enzyme, alkali detergent, sodium perborate, and cationic
softener. It was determined that the addition of a softener
did not preclude subheading 9802.00.80, HTSUS, treatment;
however, the addition of sodium perborate in the wash cycle
was too substantial to allow subheading 9802.00.80, HTSUS,
treatment.
However, in HRL 559584 dated April 2, 1996, Customs
considered denim dresses assembled in Mexico entered under
subheading 9802.00.90, HTSUS, that were subjected to various
washing, draining and rinsing steps designed to create a
"stone-washed" appearance using a desizer to clean the
fabric of impurities, enzymes to abrade the fabric, acetic
acid to adjust the pH level, and a cationic softener to give
the fabric a softer hand. The finished garment emerged
softer and appeared slightly worn. In that case, the ruling
requester indicated that the characteristics imparted by the
enzyme-wash process were basically the same as those
imparted by stone-washing, acid-washing, and bleaching.
Based upon the fact that Customs had no basis to disagree
with the requester's contention in that case, and the fact
that these processes while consistently rejected as
"incidental to the assembly process" under subheading
9802.00.80, were expressly allowed under subheading
9802.00.90, HTSUS, Customs concluded that the denim garments
qualified for duty-free treatment under this tariff
provision.
A visual inspection of the four sets of pants in this
case indicate that there is some fading. Additionally, the
"after" garments are softer to the touch. The Office of
Laboratories and Scientific Services also finds that the
washing processes described are mild cleaning and softening
procedures with minimal fading. That office informs us that
although the diatomaceous earth is a mineral product used
for abrasion to produce a "stonewash" surface effect, the
"after" pants do not exhibit any significant fading or
surface abrasion when compared to the "before" pants. The
lab also informs us that both the "before" and "after" pants
are similar in color, but that the "after" pants are softer
due to the action of the enzymes and other softening agents.
Based upon this information, it is our opinion that
subjecting the pants to the enzyme-washing processes above
constitutes an operation which is incidental to the assembly
process, pursuant to 19 CFR 10.16(b)(1).
We note that as in the rulings above, various enzyme
washing processes have been held to be incidental to the
assembly process. We note that HRL 559584 mainly concerned
whether "enzyme-washing" was per se an allowed operation as
it was not specifically mentioned in subheading 9802.00.90,
HTSUS, and while counsel to support this contention stated
that it was a substitute for stone-washing, Customs did not
confirm that the enzyme wash was the equivalent of stone-washing. In this case, we find based upon the laboratory's
analysis report that the enzyme washes sought to be used
will create only minor abrasion and fading, and therefore,
will be deemed incidental to the assembly process pursuant
to 19 CFR 10.16(b)(1).
HOLDING:
On the basis of the information and samples submitted,
it is our opinion that the washing processes above are
incidental to the assembly process, pursuant to 19 CFR
10.16(b)(1). Therefore, the imported pants may be entered
under subheading 9802.00.80, HTSUS, with allowances in duty
for the cost or value of the U.S. components incorporated
therein, upon compliance with the documentary requirements
of 19 CFR 10.24.
A copy of this ruling letter should be attached to the
entry documents filed at the time the goods are entered. If
the documents have been filed without a copy, this ruling
should be brought to the attention of the Customs officer
handling the transaction.
Sincerely,
John Durant, Director
Commercial Rulings Division