HQ 087339: Labels; Clothing labels; Paper; man-made fiber; non-woven material; parts of clothing; American goods returned; 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 087339

                           October 2, 1990

CLA-2 CO:R:C:G 087339 KWM

CATEGORY: Classification

TARIFF NO.: 5603.00.90

Ms. Ann M. Williams
A.N. Deringer, Inc.
30 West Service Road
Champlain, New York  12919-9703

RE:  Labels; Clothing labels; Paper; man-made fiber; non-woven
     material; parts of clothing; American goods returned; Substantial
     transformation.

Dear Ms. Williams:

     This will acknowledge receipt of your correspondence dated May
24, 1990, requesting a binding classification ruling of "'Econo' paper
labels" under the Harmonized Tariff Schedule of the United States
Annotated.  After considering your request, we find that the proper
classification is as described below.

FACTS:

     The merchandise presented for classification is as "paper labels
made in Canada with fabric of U.S. origin."  Although your letter
describes the merchandise as "paper", a laboratory analysis of the
sample supplied indicates that the composition is less than 25 percent
chemical wood pulp fibers, more than 50 percent man-made fibers (rayon
and polyester), and less than 25 percent cotton fibers.

     The label material is of U.S. origin.  The merchandise is sent
to Canada, presumably in sheet form, without marking or other working. 
In Canada the material is perforated and holes are punched along the
edges of the material.  The samples provided indicate that the holes
provide a pin-feed capability for printing.  The punched and perforated
sheets are then shipped back to the U.S. where they are printed.  Your
letter emphasizes that no printing is performed in Canada.

     Your first request is for classification of the punched and
perforated merchandise under the Harmonized Tariff Schedule of the
United States Annotated (HTSUSA).  Secondly, you have inquired as to
whether heading 9802, HTSUSA, regarding  articles exported and
returned, advanced or improved abroad, may be applicable to the
importation of the goods.


ISSUES:

     How is this merchandise classified under the Harmonized Tariff
Schedule of the United States Annotated?

     Is heading 9802 of the Harmonized Tariff Schedule of the United
States Annotated applicable in this case?

LAW AND ANALYSIS:

     Classification under the Harmonized Tariff Schedule of the United
States Annotated (HTSUSA) is made in accordance with the General Rules
of Interpretation (GRI's).  The systematic detail of the harmonized
system is such that virtually all goods are classified by application
of GRI 1, that is, according to the terms of the headings of the tariff
schedule and any relevant Section or Chapter Notes.  In the event that
the goods cannot be classified solely on the basis of GRI 1, and if the
headings and legal notes do not otherwise require, the remaining GRIs
may be applied, taken in order.

     In reviewing the HTSUSA, we note the following headings, the
terms of which indicate that they may be eligible for classification
of these goods:

     5603       Nonwovens, whether or not impregnated, coated, covered
                or laminated:
     or:

     5807       Labels, badges and similar articles of textile
                materials, in the piece, in strips or cut to shape or
                size, not embroidered:
     or:

     6217       Other made up clothing accessories; parts of garments
                or of clothing accessories, other than those of heading
                6212:

Your submission of May 24, 1990 suggested classification under heading
4823, HTSUSA.  However, since we have determined that the merchandise
is more properly considered a textile, rather than a paper product, we
do not believe that heading 4823 is eligible for classification in this
case. After reviewing the terms of the headings and accompanying
Explanatory Notes, we find that the instant goods are also not provided
for under either heading 5807 or 6217, HTSUSA, but rather should be
classified as textile materials based on their composition.

Heading 5807, HTSUSA, Labels of Textile Material

     Although your submission refers to both products as "labels",
they are essentially perforated sheets of textile material, they have
not acquired the characteristics of clothing labels, and are not yet
of a size or description suitable for use as clothing labels.  Also,
your submission points out that no printing is performed prior to
importation.  Clothing labels are intended primarily, if not solely,
to convey printed information to a purchaser.  Without such printing,
we cannot say here that the instant merchandise is either a label or
has acquired the essential character of a label.

Heading 6217, HTSUSA, Parts and Made Up Accessories of Garments

     Both parts and accessories must be suitable for use solely or
principally with their primary good.  Parts must be essential or
integral to the use of the good, while accessories are intended to
facilitate or improve the use.  Neither characterization is applicable
here.  Labels are not integral to the use of a garment, nor do they
facilitate its' use.  In addition, without printing which would be
tailored specifically to the garment in which the label was sewn, these
goods are not suited solely or principally with that garment.  Lastly,
these goods are not "made up" as that term is used in the nomenclature. 
Legal Note 7 to Section XI, HTSUSA, indicates that a made up article
may be cut otherwise than into squares or rectangles, or produced in
the finished state, or cut to size having undergone a process of drawn
thread work.  The instant merchandise meets none of these criteria. 
It is not in a finished state, nor has it been 'cut' in the common
sense, merely perforated for separation at a later stage.

Classification as Textile Materials

     Having found that these goods are not made up, are not parts or
accessories, or that they have the essential character of labels, the
remaining eligible headings provide for classification as a textile
material.  

     The item described as "Econo", constructed of more than 50
percent non-woven man-made polyester and rayon fibers is provided for
in subheading 5603.00.90, HTSUSA.  The description of the goods
classified in each of these headings is set out above.

Applicability of Heading 9802.00.5040, HTSUSA

     Your letter also requested a ruling on the applicability of the
partial duty exemption under subheading 9802.00.50, HTSUSA, to the
returned merchandise.  This tariff provision provides for the
assessment of duty on the value of repairs or alterations performed
on articles sent abroad for that purpose.  However, such treatment 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 & Company, Inc. v. United
States, 81 Cust. Ct. 1, C.D. 4755, 455 F.Supp. 618 (1978), aff'd, 66
CCPA 77, C.A.D. 1225, 599 F.2d 1015 (1979).

     As the merchandise in this case clearly is not complete for its
intended use when exported to Canada, it is our opinion that the
perforating and punching operations exceed the meaning of the terms
"repairs" and "alterations."  Therefore, the returned labels will not
be eligible for reduced duty treatment under subheading 9802.00.50,
HTSUSA.

HOLDING:

     The labels referred to as "Econo" labels are classified as
nonwoven textile material of subheading 5603.00.90, HTSUSA, dutiable
at the rate of 12.5 percent ad valorem.  The applicable textile
category is 223.

     The designated textile and apparel category may be subdivided
into parts.  If so, the visa and quota category requirements applicable
to the subject merchandise may be affected.  Since part categories are
the result of international bilateral agreements which are subject to
frequent renegotiations and changes, to obtain the most current
information available, we suggest you check, close to the time of
shipment, the Status Report on Current Import Quotas (Restraint
Levels), an issuance of the U.S. Customs Service, which is updated
weekly and is available at your local Customs office.

     Due to the changeable nature of the statistical annotation (the
ninth and tenth digits of the classification) and the restraint
(quota/visa) categories, you should contact your local Customs office
prior to the importation of this merchandise to determine the current
status of any import restraints or requirements.

     Articles that meet the definition of "goods originating in the
territory of Canada" (see General Note 3(c)(vii)(B), HTSUSA) are
subject to reduced rates of duty under the United States-Canada Free
Trade Agreement Implementation Act of 1988.  If the merchandise
constitutes "goods originating in the territory of Canada," the
applicable rate of duty for the Econo labels would be 10 percent ad
valorem.

                                     Sincerely,


                                     John A. Durant
                                     Director,