Application for Further Review of Protest No. 1001-7-002717, protesting denial of TSUS item 807.00 treatment to U.S. thread imported from the Dominican Republic

HQ 554953 October 16, 1989 CLA-2 CO:R:C:V 554953 GRV CATEGORY: CLASSIFICATION TARIFF NO.: 9802.00.80 Area Director of Customs JFK Airport Area Jamaica, New York 11430 RE: Application for Further Review of Protest No. 1001-7-002717, protesting denial of TSUS item 807.00 treatment to U.S. thread imported from the Dominican Republic Dear Sir: The above-referenced protest contests your denial of the partial duty exemption under item 807.00, Tariff Schedules of the United States (TSUS) (now subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS)), to U.S. thread assembled with garments imported from the Dominican Republic. FACTS: The record in this matter reflects that thread of U.S. origin was exported in continuous lengths and used abroad to join foreign components into garments. On return to the United States, the assembled garments were denied the partial duty exemption under TSUS item 807.00 by your office based on a distinction implied in a prior ruling letter-- Headquarters Ruling Letter 061402--, which stated that domestic sewing thread when used to assemble American-made fabric components together or to join buttons to fabric components may qualify for allowance under item 807.00. Your office indicated that this language inferred that if U.S. thread was used to join other than American components, an 807.00 allowance would not apply. ISSUE: Whether the thread of U.S. origin qualifies for the partial duty exemption under TSUS item 807.00. LAW & ANALYSIS: TSUS article 807.00 provides a partial duty exemption for: [a]rticles assembled abroad in whole or in part of fab- ricated 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. An article entered under this tariff provision is subject to a duty upon the full value of the imported assembled article, less the cost or value of U.S. components meeting these requirements assembled therein, provided there has been compliance with the documentation requirements of section 10.24, Customs Regulations (19 CFR 10.24). In light of the Court of International Trade's recent decision in L'Eggs Products, Inc., v. United States, Slip Op. 89- 5, 13 CIT ___, 704 F.Supp. 1127 (1989), (holding that, in view of the precedent in the Baylis decision (59 CCPA 9, C.A.D. 1026, 451 F.2d 1026 (1973)), thread is a component for purposes of TSUS item 807.00), and as no issue is presented in this protest as to whether the subject thread is not of U.S. origin, or otherwise ineligible for this tariff provision, we find that the exported thread is qualified for the partial duty exemption under TSUS item 807.00. HOLDING: On the basis of the record presented in this matter, it is our opinion that the thread qualifies as a U.S. component assembled abroad within the meaning of TSUS item 807.00. Accord- ingly, the returned garments assembled with the U.S. thread are entitled to the partial duty exemption under that tariff provision. You are directed to grant the protest in full. Please provide a copy of this ruling to the protestant. Headquarters Ruling Letter 061402 (July 9, 1979) is modified accordingly. Sincerely, John Durant, Director Commercial Rulings Division