HQ 555249: Applicability of subheading 9802.00.50, HTSUS, and country of origin marking requirements to sweatshirts subjected to a chenilling process in Haiti

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                                      HQ 555249

                                    June 16, 1989

          CLA-2  CO:R:C:V 555249 DBI

          CATEGORY:  Classification

          TARIFF NO.:  9802.00.50, HTSUS

          David R. Ostheimer, Esq.
          Lamb and Lerch
          233 Broadway
          New York, New York 10279

          RE:   Applicability of subheading 9802.00.50, HTSUS, and country
                of origin marking requirements to sweatshirts subjected to
                a chenilling process in Haiti

          Dear Mr. Ostheimer:

                This is in response to your letter to the Regional
          Commissioner of Customs, New York, dated August 30, 1988, on
          behalf of Styletek, Inc., requesting a ruling concerning the
          applicability of subheading 9802.00.50, Harmonized Tariff
          Schedule of the United States (HTSUS), and country of origin
          marking requirements to sweatshirts that are shipped to Haiti for
          certain chenilling operations and returned.  Sample sweatshirts
          have been submitted for our examination.  We regret the delay in
          responding to your request.

          FACTS:

                You advise that your client will be exporting U.S.-made
          sweatshirts to Haiti where they will be subjected to a chenilling
          process.  Certain of the sweatshirts arriving in Haiti will have
          a pre-printed, silk-screened design already placed on them.
          Other sweatshirts will be exported to Haiti without a design, and
          the stencilled design will be placed on the sweatshirt in Haiti
          prior to the chenilling.  The chenilling process consists of the
          following steps:

                (1) Buckram or similar material of U.S. origin is used
                as backing.

                (2) The area to be chenilled is outlined by a border
                stitch.

                (3) The area is chenilled using a drop stitch method on a
                sewing machine and then ironed to provide a smooth surface.















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                (4) A mounting stitch is placed on the outside of the
                chenilled area to secure the edge to the buckram.

                (5) Any excess is removed.

                Following the processing, the sweatshirts will be sent back
          to the U.S. to be sold to college and university bookstores and
          other organizations.

          ISSUES:

                (1) Whether the described sweatshirts, when returned to the
          U.S., will eligible for the partial exemption from duty under
          subheading 9802.00.50, HTSUS (formerly item 806.20, Tariff
          Schedules of the United States (TSUS)).

                (2) Whether, for country of origin marking purposes, the
          country of origin of the returned sweatshirts will be the U.S. or
          Haiti.

          LAW AND ANALYSIS:

                As you know, the HTSUS replaced the TSUS, on January 1,
          1989.  Item 806.20, TSUS, was carried over into the HTSUS as
          subheading 9802.00.50.  This provision provides for the
          assessment of duty on the value of repairs or alterations
          performed on articles returned to the U.S. after having been
          exported for that purpose.  However, the application of this
          tariff provision is precluded in circumstances where the
          operations performed abroad destroy the identity of the articles
          or create new or commercially different articles.  See A.F.
          Burstrom v. United States, 44 CCPA C.A.D. 631 (1957);  Guardian
          Industries Corporation v. United States, 3 CIT 9 (1982).
          Treatment under subheading 9802.00.50, HTSUS, also is precluded
          where the exported articles are incomplete for their intended use
          and the foreign processing is a necessary step in the preparation
          or manufacture of finished articles.  Dolliff and Company, Inc.
          v. United States, 66 CCPA 77, C.A.D. 1225, 599 F.2d 1015 (1979).

                In a ruling dated July 27, 1988 (HQ 554974), we held that
          T-shirts that were hand-painted with a design abroad were not
          eligible for item 806.20, TSUS, treatment.  In that case, we
          reasoned that the hand-painting of the exported T-shirts imparts
          substantially new and different characteristics to the shirts,
          resulting in new and different articles of commerce with unique,
          specialized appeal.














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                In a similar ruling dated December 10, 1986 (HQ 554371), we
          held that sweatshirts that were design hand-painted abroad were
          not entitled to item 806.20, TSUS, treatment.  We stated that
          although garments may be worn whether design painted or not,
          hand-painting, like printing, is considered neither a repair nor
          an alteration under the provisions of item 806.20, TSUS.  A
          design hand-painted garment is different from an unpainted one
          and, as such, the foreign hand-painting operations create a
          different article of commerce.  Moreover, we stated that the
          foreign hand-painting operations constitute a finishing of the
          garment performed in the course of manufacture -- the last step
          in the total process of producing hand-painted sweatshirts.  We
          further noted that, depending on customer needs, the garments are
          not considered finished products until they undergo the final
          design painting and become ready for marketing and sale.

                We believe that our holdings in these rulings are
          controlling with respect to the applicability of subheading
          9802.00.50, HTSUS, to the sweatshirts under consideration here.
          The silk-screening and chenilling operations to be performed in
          Haiti on the exported plain sweatshirts clearly will impart
          substantially new and different characteristics to these shirts.
          The placing of a particular logo on a sweatshirt by these
          processes gives it specialized appeal, and is a prerequisite to
          marketing and selling the shirts in the U.S. in the manner
          desired by your client.  Moreover, in regard to both the plain
          sweatshirts to be exported to Haiti and those that will have the
          pre-printed, silk-screened design on them when exported, the
          chenilling operation is the last step in the total process of
          producing finished sweatshirts bearing specific chenilled
          designs.

                With regard to the applicability of country of origin
          marking requirements to the returned sweatshirts, because the
          articles in question are textile products subject to section 204
          of the Agricultural Act of 1956, as amended (7 U.S.C. 1854),
          section 12.130(c), Customs Regulations (19 CFR 12.130(c)),
          provides that any textile or textile product of the U.S. which is
          sent abroad and advanced in value or improved in condition shall,
          upon its return to the U.S., be considered a foreign article for
          the purposes of the Tariff Act of 1930, as amended.



















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                In the case at hand, the chenilling operation to be
          performed in Haiti clearly will advance the value and improve the
          condition of the sweatshirts and render them suitable for a
          specific market.  Consequently, we find that the chenilling
          process to be performed in Haiti satisfies the standard set forth
          in 19 CFR 12.130(c).   Therefore, Haiti will be the country of
          origin and the sweatshirts should be marked accordingly.

          HOLDING:

                On the basis of the information submitted, it is our
          opinion that the chenilled sweatshirts will not be eligible for
          treatment under subheading 9802.00.50, HTSUS, upon return to the
          U.S.  The chenilling process in Haiti will advance the
          sweatshirts in value and improve them in condition.  Thus, for
          country of origin marking purposes, according to 19 CFR
          12.130(c), the country of origin of the returned sweatshirts will
          be Haiti, and they must be marked accordingly.

                                     Sincerely,





                                     John Durant
                                     Director, Commercial
                                     Rulings Division