CLA-2 CO:R:C:S W557563 RA
Mr. Juan Alvarado
Mercury Forwarding Agency Inc. 14101 Transportation Ave.
Interamerican Distribution Center Laredo, Texas 78041
RE: Applicability of partial duty exemption to rugs braided in Mexico from U.S.-origin yarn
Dear Mr. Alvarado:
This is in response to your letter of August 25, 1993, requesting a ruling on behalf of Burlington Industries, Inc., Greensboro, N.C., regarding the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to braided rugs made from yarn of U.S. origin.
FACTS:
Your client proposes to send polyester yarn to Mexico where it will be transformed into rope by braiding which is then made into a braided rug by sewing. Information is requested as to whether an allowance in duty can be received for the value of the U.S.-made yarn used in fabricating the rugs.
ISSUE:
May a duty allowance be granted under subheading 9802.00.80, HTSUS, for the component yarn of U.S. origin which is utilized in manufacturing the braided rugs?
LAW AND ANALYSIS:
HTSUS subheading 9802.00.80 provides a partial duty exemption for:
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[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 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 documentation requirements of section 10.24, Customs Regulations (19 CFR 10.24).
Section 10.16(a), Customs Regulations (19 CFR 10.16(a)), provides that the assembly operations 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, and may be preceded, accompanied, or followed by operations incidental to the assembly.
However, we have consistently held that braiding of material yarns is a fabricating process similar to weaving or knitting and cannot be considered as a qualified assembly. In Headquarters Ruling Letter (HRL) 554531 of May 29, 1987, it was held that no allowance could be made for yarn that was braided to make ropes as braiding is a manufacturing process that is not within the scope of an assembly under item 807.00, Tariff Schedules of the United States (TSUS) (the predecessor to subheading 9802.00.80, HTSUS). Likewise, in HRL 555006 of November 4, 1988, it was held that rope manufactured by a machine braiding process was not eligible for a duty allowance as the manufacture was analogous to weaving and could not qualify as an assembly. Accordingly, we are of the opinion that the braiding of the yarn into ropes which are sewn together to form a braided rug amounts to a manufacturing process and not an acceptable assembly under subheading 9802.00.80, HTSUS.
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HOLDING:
The braiding of yarn of U.S. origin into ropes in Mexico and the sewing of the ropes to form braided rugs constitute a manufacturing process and not an acceptable assembly operation under the provisions of subheading 9802.00.80, HTSUS, and no allowance in duty can be made for the value of the yarn utilized.
Sincerely,
John Durant, Director
Commercial Rulings Division