Applicability of subheading 9802.00.80, HTSUS, to dustcloths hemmed abroad

HQ 555868 May 10, 1991CLA-2 CO:R:C:S 555868 RA CATEGORY: Classification TARIFF NO.: 9802.00.80 Mr. Russell L. Jones Customhouse Broker P.O. Box 488 San Luis, Az 85349 RE: Applicability of subheading 9802.00.80, HTSUS, to dust cloths hemmed abroad Dear Mr. Jones: This is in response to your letter of October 19, 1990, requesting a ruling on behalf of Greg Arthur and Associates, as agents for the Berkshire Corp., concerning the eligibility for free entry under subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), of certain dust cloths made in the U.S. and hemmed in Mexico. FACTS: The merchandise involved is a man-made fiber knit fabric square measuring approximately 7"x7". It is precut to size in the U.S., exported to Mexico for hemming, and then returned to the U.S. The hemmed square after importation into the U.S. will be impregnated with a cleaning preparation and used as a sterilized wiping cloth to clean computers and similar devices. Thread of U.S. origin is used to hem all four sides of the cloth square to prevent fraying. ISSUE: Whether the U.S.-made cloth square which is hemmed abroad with U.S.-origin thread is entitled to a partial duty exemption under subheading 9802.00.80, HTSUS, when returned to the U.S. LAW AND ANALYSIS: Subheading 9802.00.80, HTSUS, provides a partial duty exemption for articles assembled abroad in whole or in part of fabricated components of U.S. origin with no operations performed thereon except the joining of the components and operations incidental thereto. The U.S. components must be exported in condition ready for assembly without further fabrication, and cannot lose their physical identity in the assembled article by change in form, shape or otherwise. Duty is assessed on the full appraised value of the imported merchandise less the cost or value of the U.S.-made components, upon compliance with the documentation requirements of section 10.24, Customs Regulations (19 C.F.R. §10.24). Section 10.16(a), Customs Regulations (19 C.F.R. §10.16(a)), states that the assembly operations may consist of any method used to join or fit together solid components and may be preceded, accompanied, or followed by operations incidental to the assembly process. However, 19 C.F.R. §10.16(a) provides that any significant process, operation, or treatment other than assembly whose primary purpose is the fabrication, completion, or physical or chemical improvement of a component shall not be regarded as incidental to the assembly and shall preclude the application of the exemption to such article. In L'Eqgs Products, Inc. v. United States, 13 CIT __, 704 F. Supp. 1127 (1989), it was held that the joining of a component to itself with thread constitutes an assembly of two components as the thread was a component in addition to the fabric. In view of this judicial precedent, the hemming of the cloth squares with thread can be considered to be an acceptable assembly of two components under subheading 9802.00.80, HTSUS. HOLDING: The hemming of a U.S.-made cloth square with thread of U.S. origin constitutes a valid assembly of two components under the provisions of subheading 9802.00.80, HTSUS, and an allowance in duty for the cost or value of the cloth and thread may be granted upon compliance with the documentation requirements of 19 C.F.R. §10.24. Sincerely, John Durant, Director,Commercial Rulings Division