HQ 555937: Women's 100% cotton trousers created by sewing U.S. components together. Classification; U.S.-Canada FTA; goods originating in Canada; assembly; incidental operations; over-edge stitch; Mast; L'Eggs; 555525; 555542; 555734

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 555937

                           May 2, 1991

CLA-2 CO:R:C:S 555937 KCC

CATEGORY:  Classification

TARIFF NO.:  6204.62.4020; 9802.00.80

Mr. Paul C. Gentzke
John V. Carr & Son, Inc.
Fourth Floor
560 Delaware Avenue
Buffalo, New York  14202

RE:  Women's 100% cotton trousers created by sewing U.S.
     components together. Classification; U.S.-Canada FTA; goods
     originating in Canada; assembly; incidental operations;
     over-edge stitch; Mast; L'Eggs; 555525; 555542; 555734

Dear Mr. Gentzke:

     This is in response to your letter of February 5, 1991, to
the District Director, Buffalo, New York, on behalf of Gustin-
Kramer Limited, requesting a ruling on the tariff classification
of, and applicability of subheading 9802.00.80, Harmonized Tariff
Schedule of the United States (HTSUS) to, women's 100% cotton
trousers to be imported from Canada.  Samples of the trousers,
before and after assembly, were submitted.  Your letter and
samples were forwarded to this office for a reply.

FACTS:

     U.S.-origin 100% cotton woven fabric will be cut into
pattern pieces in the U.S. and shipped to Canada, along with all
necessary notions, also of U.S.-origin, where they will be
assembled into women's trousers.

     Upon completion of the assembly, the trousers will be
pressed, folded, packaged and then returned to the U.S.

ISSUE:

I.   How are the women's 100% cotton trousers classified under
the HTSUS?

II.  Whether the women's trousers are eligible for preferential
treatment under the United States-Canada Free Trade Agreement
(FTA).



III. Whether the women's trousers will qualify for the partial
duty exemption available under subheading 9802.00.80, HTSUS, when
imported into the U.S.

LAW AND ANALYSIS:

I.   Tariff Classification

     Classification of products under the HTSUS is governed by
the General Rules of Interpretation (GRI's).  GRI 1 provides that
classification is determined according to the terms of the
headings and any relevant section or chapter notes.

     Women's 100% cotton woven trousers are classified in
subheading 6204.62.4020, HTSUS, which provides for women's or
girls' suits, ensembles, suit-type jackets, blazers, dresses,
skirts, divided skirts, trousers, bib and brace overalls,
breeches and shorts (other than swimwear); of cotton:  other: 
other; trousers and breeches:  women's:  other, dutiable at the
rate of 17.7% ad valorem, provided that they are not eligible for
special tariff treatment under the FTA.  The textile category
number is 348.

II.  Eligibility for Preferential Treatment under the FTA

     Articles which meet the definition of "goods originating in
the territory of Canada" are subject to reduced rates of duty
under the FTA, provided they are classified under a tariff
provision which contains the symbol "CA," representing the FTA,
in the "Special" subcolumn.  See, General Note 3(c)(vii)(A),
HTSUS.

     General Note 3(c)(vii)(B), HTSUS, defines "goods originating
in the territory of Canada" for purposes of determining FTA
eligibility.  This note states, in relevant part, that articles
are considered to be "originating goods" for FTA purposes if they
are wholly obtained or produced in Canada and/or the U.S.

     The women's trousers at issue will be assembled in Canada
entirely from U.S.-origin materials and, therefore, are
considered "goods originating in the territory of Canada."  The
women's trousers are classified under subheading 6204.62.4020,
HTSUS, which is an eligible FTA provision, and, therefore, the
articles are dutiable at the FTA rate of 12.3% ad valorem.

III. Applicability of subheading 9802.00.80, HTSUS     

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

     In United States v. Mast Industries, Inc., 515 F.Supp. 43, 
1 CIT 188 (1981), 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 required by 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.

     We are satisfied from the documentation and samples
submitted that the U.S. components meet the requirements of
subheading 9802.00.80, HTSUS, and, therefore, are entitled to the
duty allowance available under this tariff provision.  The
foreign operations that entail sewing fabric onto itself using
any type of stitch, including the tucking, shirring, pleating,
and hemming will be considered acceptable assembly operations. 
See, L'Eggs Products, Inc. v. United States, Slip Op. 89-5, 13
CIT   , 704 F.Supp. 1127 (CIT 1989).  Attaching two pieces of
fabric together by sewing, and sewing the elastic and labels into
the waist band are considered acceptable assembly operations
pursuant to 19 CFR 10.16(a).

     Sewing the over-edge stitch onto the edge of the fabric at
the end of the trousers legs is not an acceptable assembly
operation.  The thread used in sewing the over-edge stitch 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 (CIT 1989).  However, upon reviewing the
Mast criteria and prior rulings, we find that sewing the over-
edge stitch is an operation incidental to the assembly process. 
Although the over-edge stitch may not be necessary to the
assembly process, we believe it is sufficiently related to the
assembly that it is logically performed concurrently with
assembly.  See, Headquarters Ruling Letter (HRL) 555525 dated
June 6, 1990, HRL 555542 dated June 8, 1990, and HRL 555734 dated
March 15, 1991.  Therefore, sewing the over-edge stitch will not
preclude an allowance for the cost or value of the fabric under
HTSUS subheading 9802.00.80.

     Pressing and folding the trousers are also considered
operations incidental to the assembly pursuant to 19 CFR
10.16(b)(7).  Additionally, pursuant 19 CFR 10.16(f), packaging
the trousers will not preclude treatment under subheading
9802.00.80, HTSUS.
     
HOLDING:

     On the basis of the information and samples presented, it is
our opinion that the operations performed abroad to create the
women's 100% cotton trousers are considered proper assembly
operations or operations incidental to the assembly process. 
Therefore, the women's trousers may be entered under subheading
9802.00.80, HTSUS, with allowances in duty for the cost or value
of the U.S. components incorporated therein upon compliance with
the documentary requirements of 19 CFR 10.24.

     The women's trousers are classifiable in subheading
6204.62.4020, HTSUS, and, based on the information provided,
would be dutiable at the rate of 12.3% ad valorem as "goods
originating in the territory of Canada" under the FTA, provided
the requirements of 19 CFR 10.301 through 10.309 are met.
     
                              Sincerely,



                              John Durant, Director
                              Commercial Rulings Division


cc:  District Director, Buffalo
     Chief NIS Division, Branch 3
     860515