Applicability of partial duty exemption of item 807.00, TSUS, to certain leather shoe uppers to be assembled in the Dominican Republic

HQ 555026 July 7, 1988 CLA-2 CO:R:C:V 555026 DBI CATEGORY: Classification TARIFF NO.: 9802.00.80; 807.00 Mr. James P. McDermott B.B. Walker Company Drawer 1167 Asheboro, North Carolina 27204 RE: Applicability of partial duty exemption of item 807.00, TSUS, to certain leather shoe uppers to be assembled in the Dominican Republic Dear Mr. McDermott: This is in response to your letter of May 11, 1988, to Senator Jesse Helms, requesting information concerning the applicability of item 807.00, Tariff Schedules of the United States (TSUS), to certain leather shoe uppers to be assembled in the Dominican Republic and imported by your company. FACTS: You advise that U.S. made leather, thread, lining material, sewing machines and dies will be shipped to the Dominican Republic where the leather and lining will be die-cut and the components will then be sewn into leather shoe uppers. You indicate that uppers are portions of a shoe or boot that will have the soles attached in a subsequent operation. ISSUE: Whether the described leather shoe uppers, when returned to the U.S., will be eligible for the partial exemption from duty in item 807.00, TSUS (9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS))? LAW AND ANALYSIS: Item 807.00, TSUS, applies to articles assembled abroad in whole or in part of fabricated components, the products of the U.S., with no operations performed thereon except the attachment of the components to form the imported merchandise and operations incidental thereto. An article classified under item 807.00, TSUS, is subject to duty upon the full appraised value of the - 2 - imported article, less the cost or value of such products of the U.S. Section 10.14(a), Customs Regulations (19 CFR 10.14(a)), provides that the components must be in condition ready for assembly without further fabrication at the time of their exportation from the U.S. to qualify for the exemption. We have previously held in a ruling dated February 24, 1988 (HQ 554748), that die-cutting pattern-shaped fabric parts to fit automobile doors was a fabricating, non-assembly step that prepared the fabric for final assembly with the doors. We stated that no allowances could be made under item 807.00, TSUS, since the fabric parts were not in condition ready for assembly. In the present case, the leather and lining exported from the U.S. is not in condition ready for assembly without further fabrication since the die-cutting performed abroad is a further fabrication. Therefore, the die-cutting cannot be considered an acceptable assembly under item 807.00, TSUS. With respect to the sewing operation performed abroad, the sewing of components is an acceptable assembly operation under section 10.16(a), Customs Regulations (19 CFR 10.16(a)). However, the sewing must be performed on a U.S. component that has not been further fabricated. Therefore, the sewing operation performed in the Dominican Republic would not be an acceptable assembly under item 807.00, TSUS. HOLDING: On the basis of the information submitted, we are of the opinion that the die-cutting of the leather and lining and the sewing of the components together into shoe uppers may not be considered an acceptable assembly and therefore, no allowances in duty may be made under item 807.00, TSUS. Sincerely, John Durant, Director Commercial Rulings Division 1cc: CO:R:C:V:DIZZO:LDC:6/28/88 Mr. James P. McDermott B.B. Walker Company Drawer 1167 Asheboro, NC 27204