CLA-02 RR:CR:SM 563206 KKV
Mr. Larry Ordet
Sandler, Travis & Rosenberg, P.A.
5200 Blue Lagoon Drive
Miami, FL 33126-2022
RE: Eligibility of certain zippers for duty preference under subheading 9802.00.80, HTSUS; 61 FR 28932; NAFTA Marking Rules applicable only to goods from Canada or Mexico; HRL 556808; HRL 559789; minor assembly operations; no change of essential character; preformed wire
Dear Mr. Ordet:
This is in response to your letter dated February 15, 2005, addressed to the National Commodity Specialist Division, which was forwarded to our office for response, as per your request. In particular, you request a binding ruling regarding the eligibility of certain zippers for duty preference under subheading 9802.00.80 of the Harmonized Tariff Schedule of the United States (HTSUS). No samples were provided for our examination.
FACTS:
You state that Talon International will produce two types of zippers – synthetic coil zippers and base metal zippers – that will be manufactured in the United States from foreign components. The finished zippers will be for assembly into various garments, such as men’s cotton denim jeans and jackets.
The synthetic coil zippers will be produced in the U.S. from the following Chinese components: greige chain, sliders, coil, and, in the case of open end zippers, pin and boxes. In the U.S., the components will be processed in the following manner:
The zipper chain will be dyed.
The zipper chain will be ironed and marked.
The zipper chain will be cut to length.
The slider/pull may be painted.
The stops will be cut from the coil and, in some instances, will be dyed.
The finished sliders and stops and/or pin/box will be assembled onto the finished zipper chain to create the zipper.
The base metal zippers (either brass or aluminum) will be produced in the U.S. from domestic and imported components. The imported components will include brass and aluminum preformed wire from China or Korea, as well as Chinese tape and sliders and, for open end zippers, a Chinese pin and box. In the U.S., the components will be processed in the following manner:
The tape will be dyed.
The preformed wire will be stamped between a pointed punch and recessed die cavity, which simultaneously creates a “crown” on the top of each tooth and a “pocket” below.
The formed wire with teeth will then be crimped to the tape by closing the “legs” of the wire around the polyester cords woven into one edge of the tape, thereby creating zipper chain.
The zipper chain will be ironed and marked.
The zipper chain will be cut to length.
The sliders/pulls will be plated.
For closed end zippers, the stops will be cut from U.S.-origin coil.
For open end zippers, the pin/box will be plated, in some instances.
The finished sliders and stops and/or pin/box will be assembled onto the finished zipper chain to create the zippers.
ISSUE(S):
Whether Chinese zipper components are substantially transformed into a product of the United States when assembled into finished zippers in the U.S.
Whether the zippers will be eligible for duty preference under subheading 9802.00.80, HTSUS, when exported and assembled into clothing.
LAW AND ANALYSIS:
Subheading 9802.00.80, HTSUS, 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, lubrication, and painting.
All three requirements of HTSUS subheading 9802.00.80 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 value of the imported assembled article, less the cost or value of such U.S. components, upon compliance with the documentary requirements of section 10.24, Customs Regulations (19 CFR 10.24).
For purposes of subheading 9802.00.80, HTSUS, a “product of the United States” is an article manufactured within the Customs territory of the U.S. and may consist wholly of U.S. components or materials, of U.S. and foreign components or materials, or wholly of foreign components or materials. If the article consists wholly or partially of foreign components or materials, the manufacturing process must be such that the foreign components or materials have been substantially transformed into a new and different article, or have been merged into a new and different article. See, section 10.12(e), Customs Regulations (19 CFR 10.12(e)). Section 10.14(b), Customs regulations (19 CFR 10.14(b)) provides that a “substantial transformation occurs when, as a result of processing, a new and different article emerges, having a new name, character or use, which is different from that originally possessed by the article or material before being subject to the manufacturing 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, Uniroyal Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026 (CIT 1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983).
In Headquarters Ruling Letter (HRL) 556808, dated December 12, 1992, Customs addressed the issue of whether foreign-made zipper components processed into completed zippers in the U.S. were substantially transformed into products of the U.S. for purposes of subheading 9802.00.80, HTSUS. In that case, the zipper chain was cut to length and then gapped, by removing teeth from the top and bottom. The slider was mounted on the chain and brass stops were attached to the top and bottom, to keep the slider in place. In connection with this operation, the stops were cut to appropriate length and crimped onto the zipper chain where the teeth had been removed. Customs concluded that the assembly of zipper components into a finished zipper was a relatively minor operation which left the identity of the components intact. The essential character of the zipper (i.e., chain and slider) was not substantially changed, nor did it lose its separate identity as a result of the assembly operation in the U.S. In addition, the foreign components were already dedicated for use as a zipper before being assembled. Accordingly, Customs held that the completed zippers assembled from foreign-made components were not “products of” the United States and were not entitled to a duty allowance under subheading 9802.00.80, HTSUS, when returned to the U.S. as a part of an article assembled abroad. In HRL 559789, dated August 22, 1996, zipper chain, in 200-yard rolls, was gapped and bottom stopped to length. A slider was mounted on the gapped material and top stopped, and sheared into individual units. Customs concluded that the components were not substantially transformed into a new and different article as a result of domestic processing, and held that the completed zippers were not a “product of” the U.S. for purposes of subheading 9802.00.80, HTSUS.
With regard to the zippers under consideration here, you assert that Customs should apply the NAFTA Marking Rules to determine whether the finished zippers are a product of the U.S. We note that on June 6, 1996, Customs published in the Federal Register (61 FR 28932), as T.D. 96-28, a document which adopted as a final rule, with some modifications, interim amendments to the Customs Regulations that established the rules for determining when the country of origin of a good is one of the parties to the North American Free Trade Agreement (NAFTA) as required by Annex 311 of the NAFTA. Those final NAFTA Marking Rules apply only to all goods imported from Canada or Mexico other than textile and apparel products, and do not apply to trade with other countries. Therefore, because the zipper components used by Talon International are imported from China, not Canada or Mexico, the NAFTA Marking Rules are inapplicable to the scenario you propose.
Instead, we find the conclusions in HRL 556808 and HRL 559789, supra, are applicable to the zippers at issue. Although additional minor processing operations are also performed, the assembly of the zipper components into either base metal or synthetic coil zippers is a relatively minor operation or combining process which leaves the identity of the components intact. Moreover, the essential character of the zipper (i.e., chain and slider) is not substantially changed, nor does it lose its separate identity as a result of the assembly operation in the U.S. Furthermore, we find that the foreign components, including the pre-formed wire, are already dedicated to use as a zipper prior to their being assembled together. Accordingly, the zippers will not be considered a “product of the United States” and therefore will not be entitled to a duty allowance under subheading 9802.00.80, HTSUS, when returned to the U.S. as part of an article assembled abroad.
HOLDING:
Chinese zipper components assembled into completed zippers in the U.S. are not considered “products of the United States” for purposes of subheading 9802.00.80, HTSUS, as the components are not substantially transformed into a new and different article of commerce as a result of that processing. Therefore, the zippers will not be
eligible for duty preference under subheading 9802.00.80, HTSUS, when exported and assembled into clothing abroad.
A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is 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,
Monika R. Brenner
Chief
Valuation and Special Programs Branch