Applicability of partial duty exemption under subheading 9802.00.80 to unfilled stuffed ball skins from Mexico

HQ 556107 August 13, 1991 CLA-2 CO:R:C:S 556107 SER CATEGORY: Classification TARIFF NO.: 9802.00.80 Mr. Anibal Roges The Toy Works, Inc. Fiddler's Elbow Road Middle Falls, NY 12848 RE: Applicability of partial duty exemption under subheading 9802.00.80 to unfilled stuffed ball skins from Mexico Dear Mr. Roges: This is in reference to your letter of May 17, 1991, requesting a ruling concerning the tariff classification of printed ball skins from Mexico and whether the operations performed in Mexico on the U.S.-origin fabric qualifies the fabric for a duty allowance under subheading 9802.00.80, Harmonized Tariff Schedule of the United States Annotated (HTSUSA). This letter will discuss the eligibility of the product for subheading 9802.00.80, HTSUSA, treatment. The classification of the merchandise will be the subject of a separate letter. FACTS: Rectangular flat fabric of U.S.-origin is silk screened with a pattern in the U.S. The patterns are in an oblong shape which, when cut out and sewn together, form a ball. The printed patterns on the sample provided depict scenes from nursery rhymes. Following the silk screening, the fabric is sent to Mexico where it is cut, sewn and clipped to form the ball. The cutting is performed along the outside of each oblong pattern. After the operations in Mexico are completed, the article is shipped back to the U.S. where it is stuffed to its final form. ISSUE: Whether the sewn ball skins will qualify for the partial duty exemption available under subheading 9802.00.80, HTSUSA, when imported into the U.S. -2- LAW AND ANALYSIS: Subheading 9802.00.80, HTSUSA, 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, lubrication, and painting. All three requirements of subheading 9802.00.80, HTSUSA, 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 cost or value of the imported assembled article, less the cost or value of the U.S. components assembled therein, upon compliance with the documentary requirements of section 10.24, Customs Regulations (19 CFR 10.24). Section 10.14(a), Customs Regulations (19 CFR 10.14(a)), states in part that: [t]he components must be in condition ready for assembly without further fabrication at the time of their exportation from the United States to qualify for the exemption. Components will not lose their entitlement to the exemption by being subjected to operations incidental to the assembly either before, during, or after their assembly with other components. Operations incidental to the assembly process whether performed before, during, or after assembly do not constitute further fabrication, and shall not preclude the application of the exemption. See 19 CFR 10.16(b). 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, HTSUSA, to that component. See 19 CFR 10.16(c). It is our opinion that the U.S.-origin fabric is not exported in a condition ready for assembly without further fabrication. The cutting to shape of the fabric in Mexico constitutes a further fabrication of the fabric which is -3- necessary to create the components to be assembled. According to 19 CFR 10.14(a), materials which are cut into specific shapes or patterns abroad are ineligible for a duty allowance under this tariff provision. See also Headquarters Ruling Letter (HRL) 556099 dated July 31, 1991. HOLDING: Based on the information and sample presented, it is our opinion that the cutting to shape of the U.S. fabric in Mexico constitutes a further fabrication of the material and precludes the sewn ball skins from receiving the benefits of subheading 9802.00.80, HTSUSA. Therefore, the articles will be dutiable on their full value when imported into the U.S. Sincerely, John Durant, Director Commercial Rulings Division