HQ 555734: Quilted bedspreads created by sewing fabric pieces together with various types of stitches.Assembly; incidental operations; cutting to length; Mast; L'Eggs; substantial transformation

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 555734

                         March 20, 1991

CLA-2 CO:R:C:S  555734 KCC

CATEGORY:  Classification

TARIFF NO.:  9802.00.80

F. Gordon Lee, Esq.
O'Connor & Hannan
1919 Pennsylvania Avenue, N.W.
Suite 800
Washington, D.C.  20006-3483

RE:  Quilted bedspreads created by sewing fabric pieces together
     with various types of stitches.Assembly; incidental
     operations; cutting to length; Mast; L'Eggs; substantial
     transformation

Dear Mr. Lee:

     This is in response to your letters dated August 20, and
October 31, 1990, on behalf of Max Kahn Curtain Corporation,
requesting a ruling on the applicability of subheading
9802.00.80, Harmonized Tariff Schedule of the United States
(HTSUS), to quilted bedspreads from Haiti.

FACTS:

     Max Kahn intends to ship U.S.-origin material to Haiti for
assembly into quilted bedspreads.  However, you state that Max
Kahn may on occasion use foreign fabric on bolts in varying
widths imported into the U.S.  In the U.S., Max Kahn will dye or
print the fabric and then slit the bolts to a required width.
This fabric will then be shipped to Haiti where it will be
incorporated into the quilted bedspread.  The operations
performed in Haiti are:

     1.   layering and sewing together spreads of 100% polyester
          tricot backing, 100% polyester fiberfill and 100%
          polyester or polyester/cotton blend fabric (now known
          as quilted fabric);
     2.   cutting to length quilted fabric;
     3.   a.   sewing an overedge safety chain or overlocking
               stitch onto one edge of two different quilted
               fabrics to prevent unraveling; and
          b.   sewing these two pieces of quilted fabric
               together to form desired size bedspread (only when
               necessary);

     4.   sewing an overedge safety chain or overlocking stitch
          onto all four edges of the quilted fabric to prevent
          unraveling;
     5.   sewing a finishing stitch or handkerchief hem onto the
          single ply top layer of fabric imported on bolts to
          prevent unraveling;
     6.   sewing the single ply fabric onto three sides of the
          quilted fabric;
     7.   cutting to length single ply fabric in between each
          bedspread;
     8.   folding and hemming the one side of single ply fabric
          which has not been attached to the quilted fabric (care
          and law labels are sewn into the hem);
     9.   folding the bedspread;
     10.  inserting the bedspread and a printed insert into a
          polyethelene bag; and
     11.  folding, tape sealing, and packaging each bag into
          cartons.

     Upon completion of the foreign operations, the quilted
bedspreads will be imported into the U.S.

ISSUE:

     Whether the quilted bedspreads will 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, 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 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).


     Section 10.16(a), Customs Regulations (19 CFR 10.16(a)), provides
that the assembly operation 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.

     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.
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 HTSUS subheading 9802.00.80 to that component.  See, 19 CFR
10.16(c).

     In United States v. Mast Industries, Inc., 515 F.Supp. 43, 1 CIT
188, aff'd, 69 CCPA 47, 668 F.2d 501 (1981), the court, in examining
the legislative history of the meaning of "incidental to the assembly
process," stated that:

     [t]he apparent legislative intent was to not preclude
     operations that provide an "independent utility" or that are
     not essential to the assembly process; rather, Congress
     intended a balancing of all relevant factors to ascertain
     whether an operation of a "minor nature" is incidental to
     the assembly process.

The court then indicated that relevant factors included:

     (1)  whether the relative cost and time of the operation
          are 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.

     According to section 10.14(b), Customs Regulations (19 CFR
10.14(b)), foreign-made articles or materials may become products
of the U.S for purposes of subheading 9802.00.80, HTSUS, if they
undergo a process of manufacture in the U.S. which results in
their substantial transformation.  This provision further states
that a substantial transformation occurs when, as a result of
manufacturing processes, a new and different article emerges,
having a distinctive name, character, or use which is different
from that originally possessed by the article or material.  See
also, Anheuser-Busch Association v. United States, 207 U.S. 556,
(1908), and 19 CFR 10.14(b).


     Section 12.130(e)(2)(ii) and (v), Customs Regulations (19 CFR
12.130(e)(2)(ii) and (v)), provides that a textile article or material
usually will not be considered to be a product of a particular country
by virtue of merely having undergone either "cutting to length or width
and hemming or overlocking fabrics which are readily identifiable as
being intended for a particular commercial use," and "dyeing and/or
printing of fabrics or yarn." In this case, the foreign fabric imported
into the U.S. is dyed or printed and then merely slit to a required
width.  It is clear that 19 CFR 12.130(e)(2)(ii) and (v) disqualify the
foreign fabric from consideration as products of the U.S.

     The foreign operations that entail sewing fabric onto itself using
any type of stitch, including a "close out"/finishing stitch, tucking,
shirring, crimping, and hemming are considered acceptable assembly
operations.  See, L'Eggs Products, Inc. v.  United States, Slip Op.
89-5, 13 CIT   , 704 F.Supp. 1127 (CIT 1989).  Sewing two or more
pieces of fabric together, and sewing in care and marking labels are
also considered an acceptable assembly operations pursuant to 19 CFR
10.16(a).

     Pursuant to 19 CFR 10.16(b)(6), cutting the fabric to length is an
appropriate operation incidental to the assembly.  Folding the curtains
after assembly is also considered an operation incidental to the
assembly process pursuant to 19 CFR 10.16(b)(7), which states that
final folding operations are incidental to the assembly process.

     Sewing the closing out/finishing stitches onto the edges of single
ply fabric either before or after the fabric pieces enter into assembly
is not an acceptable assembly operation.  The thread used in sewing the
closing out/finishing stitches onto the edge of single ply fabric does
not serve as a binding agent, but is merely used to prevent the
unraveling of the fabric.  See, L'Eggs, Slip Op. 89-5.  However, upon
reviewing the Mast criteria, we find that sewing the closing
out/finishing stitches is an operation incidental to the assembly
process.  According to your October 31, 1990 letter, a comparison of
the relative cost and time required to perform the operation in
question with the cost and time required to perform the entire assembly
reveals that 16.8% of the cost and a 16.7% of time are necessary to sew
on the closing out/finishing stitches (the time and cost percentages
are an overall average calculated from assembling each of the different
sizes of bedspreads--twin, full, queen or king).  Although the closing
out/finishing stitches may not be necessary to the assembly process, we
believe that the operation is sufficiently related to the assembly so
that it logically is performed concurrently with the assembly.  This
operation can take place either before, after or contemporaneous with a
sewing operation.  However, in any case, sewing the closing
out/finishing stitches is an acceptable incidental operation which will
not preclude the U.S. fabric pieces from receiving the duty exemption
available under HTSUS subheading 9802.00.80.

     Foreign packaging of the curtain is permissible under 19 CFR
10.16(f).

HOLDING:

     From the information presented, it is our opinion that the
foreign operations performed on the U.S.-origin materials are
considered proper assembly operations or operations incidental to
the assembly process.  Therefore, the imported quilted bedspreads
may be entered under subheading 9802.00.80, HTSUS, with
allowances in duty for the cost or value of the U.S.-origin
materials incorporated therein, upon compliance with the
documentary requirements of 19 CFR 10.24.

     The printing or dyeing and cutting to width do not result in
the substantial transformation of the foreign fabric into a
product of the U.S. for purposes of this tariff provision.
Therefore, the foreign fabric used in the Haitian assembly
operation will not receive a duty allowance when returned to the
U.S. incorporated in the quilted bedspread.

                              Sincerely,



                              John Durant, Director
                              Commercial Rulings Division