us-cbp-cross-rulings-hq-555594•HQ 555594: Applicability of partial duty exemption under subheading 9802.00.80, HTSUS, to twisted twine, braided twine, and various types of nets
HQ 555594: Applicability of partial duty exemption under subheading 9802.00.80, HTSUS, to twisted twine, braided twine, and various types of nets
us-cbp-cross-rulings-hq-555594HQ 555594: Applicability of partial duty exemption under subheading 9802.00.80, HTSUS, to twisted twine, braided twine, and various types of netsGuidance
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 555594
May 16, 1990
CLA-2 CO:R:C:V 555594 LS
CATEGORY: Classification
TARIFF NO.: 9802.00.80
Ms. Elaine Jacoby
Miles, Hastings, & Joffroy, Inc.
6403 Avenida Costa Norte
Suite 3000
Otay Mesa, California 92073
RE: Applicability of partial duty exemption under subheading
9802.00.80, HTSUS, to twisted twine, braided twine, and
various types of nets
Dear Ms. Jacoby:
This is in response to your letter of February 13, 1990,
submitted on behalf of Koring Bros., Inc., requesting a ruling on
the applicability of subheading 9802.00.80, Harmonized Tariff
Schedule of the United States (HTSUS), to twisted twine, braided
twine, and various types of nets imported from Mexico. Samples
of both types of twine and a portion of a net were submitted for
examination.
FACTS:
Koring Bros., Inc. is planning to import braided or twisted
twine, fish nets, sports nets, and safety and industrial use nets
from Mexico. You state that U.S. manufactured nylon yarn is
exported to Mexico on U.S. manufactured spools where it is either
braided or twisted to form twine. A small amount of the twisted
or braided twine is then dyed and/or tarred and wound onto spools
to be exported to the U.S. for use in repairing nets. The
remainder of the twine is used in Mexico to make the various
types of nets.
The three types of nets are formed by the following
process. First, the twines are guided onto the appropriate net
making machinery, also known as a net loom, which ties them
together by knotting. In explaining the diagram and photographs
of the net loom, you state that there are spools of twine at the
back of the machine and bobbins toward the bottom of the machine.
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One hundred or more twines run along the top of the machine,
while simultaneously another hundred or more run along the
bottom. The twines from the top are picked up by some hooks
which twist and pull them to form loops. The bobbins then pass
the other twines through the loops, thus creating a row of 100 or
more knots in one motion. The number of knots in each row
depends on the depth of the net. You state that the knotting
serves the purpose of tying the twines together and preventing
them from unraveling when the nets are cut from the machine.
Before being cut from the machine, the nets are inspected and
repaired, if flawed. Some nets are stretched on another machine
to tighten the knots. Lastly, the nets are dyed and/or tarred.
The dyeing serves the purpose of camouflage. It also results in
shrinkage of the nets, which serves the purpose of tightening the
knots. The tarring is accomplished by submerging the net in an
asphalt solution and hanging it up to dry. Tarring is done for
purposes of preservation, i.e., to lessen the effects of sunlight
and sea water, to prevent abrasion, and to decrease the general
wear and tear of the nets.
You state that the smaller nets use twisted twine, whereas
the larger nets use braided twine. The large nets are packaged
in bales and the smaller nets are packaged in boxes.
ISSUE:
Whether the twisted twines, braided twines, and various
types of nets will qualify for the partial duty exemption 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 subheading 9802.00.80, HTSUS, is subject to
duty upon the full value of the imported assembled article less
the cost or value of the U.S. components, upon compliance with
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the documentary requirements of section 10.24, Customs
Regulations (19 CFR 10.24).
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 operation. See Section 10.16(a), Customs Regulations
(19 CFR 10.16(a)). Examples of operations considered incidental
to the assembly process are delineated at 19 CFR 10.16(b).
However, any significant process, operation, or treatment whose
primary purpose is the fabrication, completion, or physical or
chemical improvement of a component, or which is not related to
the assembly process, precludes the application of the exemption
under subheading 9802.00.80, HTSUS. See 19 CFR 10.16(c).
I. Eligibility of twisted twines and braided twines
We must first consider whether the twisting or braiding of
the yarns constitutes an acceptable assembly operation under
19 CFR 10.16(a). This section provides, in part, 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 as illustrated in paragraph (b) of this
section.
Twisting of yarns on a machine to form twines is an acceptable
assembly operation because it is a method used to combine or join
yarns, which are solid components. See Headquarters Ruling
Letters (HRL) 553593, dated May 16, 1985; 554531, dated May 29,
1987; and 555128, dated January 9, 1989. However, passing yarn
through braiding machines to produce braided rope or cordage has
been found to be analogous to weaving fabrics from spun yarn.
This braiding operation is considered a manufacturing process
that does not qualify as an assembly operation within the meaning
of subheading 9802.00.80, HTSUS. Id.
We must next determine whether the processes of dyeing and
tarring the twisted twine constitute operations incidental to the
assembly process. Among the examples of operations incidental to
the assembly operation listed in 19 CFR 10.16(b) is the
"application of preservative paint or coating, including
preservative metallic coating, lubricants, or protective
encapsulation." An example of an operation not incidental to the
assembly process which is enumerated in 19 CFR 10.16(c) is
"chemical treatment of components or assembled articles to impart
new characteristics, such as . . . dyeing . . . of textiles."
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Applying 19 CFR 10.16(c), we find that the dyeing of the
twisted twine is not an operation incidental to the assembly
process because it imparts a new characteristic, i.e., color, and
constitutes a chemical treatment of the fibers of the yarn.
This finding precludes the application of the exemption under
subheading 9802.00.80, HTSUS, to the twisted twine which is dyed.
The tarring of the twisted twine, on the other hand, does
constitute an operation incidental to the assembly process
because it involves the application of a preservative coating,
i.e., asphalt solution. See 19 CFR 10.16(b). Since the twisted
twine will be used to repair nets, the tarring serves the primary
purpose of preservation, i.e., it lessens the effects of sunlight
and sea water, prevents abrasion, and decreases the general wear
and tear of the twine when attached to the net. The tarring,
unlike the dyeing, does not constitute a chemical treatment. In
HRL 553593, dated May 16, 1985, we found that tarring of
fishnetting for stiffness is not considered an operation
incidental to the assembly process. That ruling can be
distinguished from the facts of the instant case where the
primary purpose of tarring is for preservation.
The winding of the dyed and/or tarred twine onto spools is
a type of packaging operation which readies the twine for retail
sale. An assembled article which otherwise qualifies for the
exemption under subheading 9802.00.80, HTSUS, will not be
disqualified by reason of having been packaged abroad. See
19 CFR 10.16(f).
The yarn which comprises the dyed twisted twine is eligible
for the duty allowance under subheading 9802.00.80, HTSUS,
because it is exported in a condition ready for assembly without
further fabrication, does not lose its physical identity in the
assembly operation, and is not otherwise advanced in value or
improved in condition except by an assembly operation and an
operation incidental thereto.
II. Eligibility of nets
As provided in 19 CFR 10.16(e), "[a]n assembly operation
may involve the joining or fitting of American-made components
into a part or subassembly of an article, followed by the
installation of the part or subassembly into the complete
article." In the instant case, the twisted twine is an
acceptable subassembly. For the reasons discussed in Part I
above, the braided twine is not an acceptable subassembly.
Therefore, we need only consider whether the knotting process
performed on the twisted twine by means of a net loom constitutes
an acceptable assembly within the meaning of subheading
9802.00.80, HTSUS.
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While the knotting operation serves to join the twines
together where they cross one another, it also forms a network of
knots in a pattern to create an openwork fabric known as a net.
We find that the primary purpose of the knotting operation is to
manufacture a net. See I. Wingate, Textile Fabrics 41-42 (1952).
The term "net" is defined in Webster's Third New International
Dictionary, 1519 (1971) as follows:
a meshed arrangement of threads, cords, or ropes that have
been twisted, knotted, or woven together at regular
intervals.
The Encyclopedia Americana, Vol 20, at 117 (1980) states, with
regard to nets:
the open spaces are called meshes, and in order that they
may retain their size and shape, the fibers of which the
net is made must be knotted at the intersections.
In the sense that the netting operation forms a fabric or
an article made of such fabric, it is analogous to a weaving
operation. See HRL 553593, dated May 16, 1985. Weaving is
defined as the "production of fabric by interlacing two sets of
yarns so that they cross each other, normally at right angles,
usually accomplished with a hand- or power-operated loom." The
New Encyclopaedia Britannica, Micropaedia Vol. X, 591 (1975).
See HRL 555116, dated October 16, 1989. The twines involved in
the netting operation are interlaced in that they cross one
another and are tied together at the intersections by a knotting
operation on a net loom.
Customs has consistently held that the weaving process used
to manufacture fabrics is not regarded as an assembly operation.
See HRL 038196, dated January 20, 1975; see also HRL 039351,
dated April 16, 1975. We have extended this finding to processes
which are similar to weaving. For example, in HRL 058110, dated
March 2, 1978, we found that a needlework process, involving the
joining of U.S. manufactured canvas and yarn "is of a
manufacturing nature and constitutes further fabrication which
exceeds the scope of `assembly` for the purposes of item 807.00,
TSUS [precursor of subheading 9802.00.80, HTSUS]." Another
example is HRL 555344 dated May 19, 1989, in which we found that
the combining of backing cloth and yarn to create a loop tufted
floor covering fabric "is similar to a weaving operation and
constitutes a process of manufacture rather than an assembly."
HRL 555344 further states "[w]e have consistently treated the
manufacture of fabrics as an operation beyond mere assembly."
This ruling cites to example 3 set forth in 19 CFR 10.16(a),
which states, in part:
The manufacture abroad of cloth on a loom using thread or
yarn exported from the United States on spools, cops, or
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pirns is not considered an assembly but a weaving opera-
ation, and the thread or yarn does not qualify for the
exemption.
In applying these rulings to the instant case, we find that
the creation of the net from the twisted twine on a net loom is a
manufacturing process rather than a mere assembly. Cf. Zwicker
Knitting Mills v. United States, C.D. 4786, 82 Cust. Ct. 34, 41-
44, 469 F. Supp. 727 (1979), aff'd, C.A.D. 1240, 67 CCPA 37, 613
F.2d 295 (1980) (knitting glove shells on a knitting machine is a
manufacturing process; "assembly does not include the
manufacture, production, or fabrication of the essential parts to
be used in the assembly process").
Clause (c) of subheading 9802.00.80, HTSUS, provides that
the U.S. fabricated components cannot have "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." Therefore, the next step
is to determine whether the process of creating the net on the
net loom constitutes an operation incidental to the assembly
process of twisting the yarns to form twisted twine.
In United States v. Mast Industries, Inc., 515 F. Supp 43,
1 CIT 188, aff'd, 69 CCPA 47, 668 F.2d 501 (1988), the court
considered the legislative history of the phrase "incidental to
the assembly process," and found that Congress intended a
balancing of all relevant factors to ascertain whether an
operation of a "minor nature" was incidental to the assembly
process. The court stated that relevant factors included:
(1) whether the cost of the operation relative to the cost
of the affected component and the time required by the
operation relative to the time required for assembly
of the whole article were such that the operation may
be considered minor;
(2) whether the operation is necessary to the assembly
process;
(3) whether the operation is so related to the assembly
that it is logically performed during assembly; and,
(4) whether economic or other practical considerations
dictate that the operation be performed concurrently
with assembly.
None of these factors appear to be present here. The netting
operation is a process separate from the assembly of the yarns to
form twisted twine. This is demonstrated by the fact that the
netting is performed on a different machine and some of the twine
is exported on spools as a finished product without entering into
the netting process. Thus, the netting operation is neither
necessary to the assembly process nor so related to the assembly
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that it is logically performed concurrently with it. We assume
that the cost and time required to create the net on the net loom
is greater than that required in the assembly of the yarns to
form twine. Thus, the netting operation is not of a minor nature
and, therefore, not incidental to twisting the yarns to form
twine.
Based upon our finding that the netting process has
advanced the twines in value or improved them in condition by an
operation which is neither an assembly in itself, nor incidental
to the assembly of the yarns to form twine, we conclude that the
nets formed from the twisted twine are not eligible for the
partial duty exemption under subheading 9802.00.80, HTSUS. We,
therefore, need not address the question of whether the
stretching of the nets on a machine constitutes an operation
incidental to assembly.
HOLDING:
The braided twine will not be eligible for the partial duty
exemption under subheading 9802.00.80, HTSUS, when returned to
the U.S., because the braiding operation is not an acceptable
assembly within the meaning of the statute. However, the process
of twisting the twines is an acceptable assembly operation. The
twisted twine which is dyed is not eligible for the allowance
under subheading 9802.00.80, HTSUS, because the dyeing is an
operation which is not incidental to the assembly process. The
twisted twine which is tarred will be eligible for the allowance
when returned to the U.S., upon compliance with the documentary
requirements of 19 CFR 10.24, because tarring twine for purposes
of preservation qualifies as an operation incidental to the
assembly.
The nets made of braided twines will not be eligible for
the partial duty exemption under subheading 9802.00.80, HTSUS,
because the braiding operation is not an acceptable subassembly.
The nets made of twisted twines are also not eligible because the
netting operation by which the twines are knotted on a net loom
constitutes a manufacturing process rather than a mere assembly.
Further, the netting operation does not constitute an operation
incidental to the assembly process of twisting the yarns to form
twine.
Sincerely,
Jerry Laderberg
Acting Director
Commercial Rulings Division
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