Applicability of partial duty exemption under TSUS item 807.00, as well as visa, quota and country of origin marking requirements, to certain sweat shirts imported from Jamaica.

HQ 555102 November 23, 1988 CLA-2 CO:R:C:V 555102 GRV CATEGORY: CLASSIFICATION TARIFF NO: 9802.00.80; 807.00 Ms. Sharon Morgenstern The Porcelain Horse 13065 New Providence Road Alpharetta, Georgia 30201 RE: Applicability of partial duty exemption under TSUS item 807.00, as well as visa, quota and country of origin marking requirements, to certain sweat shirts imported from Jamaica. Dear Ms. Morgenstern: This ruling letter is in reply to your undated letter-- received in this office on August 11, 1988--concerning: (1) the applicability of item 807.00, Tariff Schedules of the United States (TSUS), to certain sweat shirts to be exported to Jamaica for applique operations; (2) the country of origin marking requirements applicable to the returned sweat shirts; and (3) whether the sweat shirts are subject to quota and visa restrictions. Samples of both the pre-appliqued (for export to Jamaica) and the post-appliqued (for import into the U.S.) sweat shirts were submitted for examination. FACTS: Each of the submitted samples consists of a basic white sweat shirt, presumably of U.S. origin, and three distinguish- able pieces of cloth material of varying size and shape, also presumably of U.S. origin, affixed to the sweat shirts. On the pre-appliqued shirt, the three attachments are provisionally attached to the white sweat shirt by a glue-like substance, presumably to fix their proper ornamental location until the applique-process comtemplated in Jamaica more permanently fixes them to the sweat shirts. On the post-appliqued shirt, the three attachments are more securely attached to the white sweat shirt by a sewing operation. ISSUES: I. Whether the applique operation, as presently contemplated, constitutes an "assembly," thereby entitling the sweat shirts - 2 - to partial duty exemption under TSUS item 807.00 (subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS)) when returned to the U.S. II. Whether the returned sweat shirts must be marked for coun- try of origin purposes as a product of Jamaica. III. Whether the textile articles (sweat shirts) are subject to quota/visa restrictions upon their importation into the U.S. LAW & ANALYSIS: I. "ASSEMBLY ABROAD" TSUS item 807.00 (19 U.S.C. 1202) provides a partial duty exemption for articles: ... 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 with- out further fabrication, (b) have not lost their physi- cal 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 assem- bled and except by operations incidental to the assembly process such as cleaning, lubricating, and painting. Under this tariff provision, there is a duty upon the full val- ue of the imported assembled article less the cost or value of such U.S. components, provided the documentation requirements of section 10.24, Customs Regulations (19 CFR 10.24), are met. Of importance to the sample sweatshirts submitted is the term "assembled." Section 10.16(a), Customs Regulations (19 CFR 10.16(a)), provides that: The assembly operations 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.... (Emphasis added). Court decisions construing the term "assembly" have uniform- ly held that the term "assembly," for purposes of TSUS item 807.00, involves the joining or coming together of solids. See, for example, Sigma Instruments, Inc. v. United States, 565 F. Supp. 1036, 5 CIT 90 (1983), aff'd 724 F.2d 930, (Fed. Cir. 1983). Implicit in this construction of the term "assembly" is that the solid components are physically separate or apart prior to their subsequent joining or coming together. - 3 - The problem presented by the pre-appliqued sweat shirt sam- ple is that the three attachments to be appliqued in Jamaica are already effectively joined to the sweat shirt by a glue- like substance. Therefore, it is clear that the applique operation performed abroad does not consist of the joining or fitting together of separate components and compels a determin- ation that the post-appliqued sweat shirts would not be enti- tled to classification in TSUS item 807.00. However, it ap- pears that if the three attachments are exported in a physi- cally separate state from the sweat shirts, (i.e., the three attachments are in no way effectively joined to the sweat shirts at the time of exportation and are subsequently attached to the sweat shirts abroad by sewing), then the imported sweat shirts would be entitled to classification in TSUS item 807.00. II. COUNTRY OF ORIGIN MARKING REQUIREMENTS With respect to the issue of country of origin marking re- quirements, the sweat shirts constitute textile articles and, as such, are subject to section 204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1854), and section 12.130(c), Cus- toms Regulations (19 CFR 12.130(c)). The latter section pro- vides that, pursuant to headnote 2, part 1, Schedule 8, TSUS: ...any product of the U.S. which is returned after having been advanced in value or improved in condition abroad, or assembled abroad, shall be a foreign article for the purposes of the Tariff Act of 1930, as amended. As the applique process in this case will advance the sweat shirts in value, the country of origin of the returned sweat shirts will be considered to be Jamaica. Therefore, the shirts must be marked accordingly. We should note that section 10.22, Customs Regulations (19 CFR 10.22), provides that, for country of origin marking purposes, if an imported assembled article is made entirely of American-made materials and is entitled to entry under TSUS item 807.00, the article may be marked by using a legend such as "Assembled in ----- from material of U.S. origin," or a similar phrase. III. QUOTA/VISA RESTRICTIONS The returned sweat shirts, processed in Jamaica in the manner described in your letter, will be subject to all applicable visa and quota requirements as products of Jamaica. However, please be advised that pursuant to the 807(a) "Special Access Program," textile products assembled in participating Caribbean Basin beneficiary countries (including Jamaica) from fabric formed and cut in the U.S. are assured - 4 - access to the U.S. market under guaranteed access levels separate from quotas applicable to textile products not assembled solely from U.S. formed and cut fabric. To qualify for 807(a) treatment, assembled textile products must satisfy all requirements for classification in TSUS item 807.00. A copy of Customs Directive No. 3500-12, which details the procedures to be followed under this Special Access Program, is enclosed for your information. HOLDING: The applique operation in Jamaica, as presently contemplat- ed, does not qualify the returned textile articles for the par- tial duty exemption in TSUS item 807.00, because the articles are already effectively "assembled" prior to their exportation to Jamaica. However, if the sweat shirts are modified in ac- cordance with this ruling, prior to their export to Jamaica, then the sweat shirts will be "assembled," within the meaning of the regulation, and qualify, upon their return to the U.S. and compliance with the documentary requirements, for partial duty exemption under TSUS item 807.00. The returned sweat shirts will be considered products of Jamaica for country of origin marking purposes and must be marked accordingly. As products of Jamaica, the returned sweat shirts will be subject to all applicable visa and quota re- quirements. Sincerely, John Durant, Director Commercial Rulings Division Enclosure cc: CLA-2 CO:R:C:V:GRV:MM:FNL 10/6/88