Eligibility of down-sized garments for subheading 9802.00.80, HTSUS

HQ 557503 November 24, 1993 CLA-2 CO:R:C:S BLS CATEGORY: Classification TARIFF NO.: 9802.00.80 James O. Crawford John S. James Co. P.O. Box 1017 Charleston, South Carolina 29402 RE: Eligibility of down-sized garments for subheading 9802.00.80, HTSUS Dear Mr. Crawford: This is in reference to your letter dated July 22, 1993, on behalf of Sara Lee Knit Products, ("Sara Lee") requesting a ruling that pre-cut fabric components that are sent abroad for down- sizing and assembly will be eligible for the partial duty exemption under subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS). FACTS: Sara Lee has a surplus of extra-large sizes, in a specific line of garments. (Although not specifically stated, we assume that these garments are of U.S. origin.) The company proposes to send these garments abroad, in the form of pre-cut components, where they will be "down-sized" to a smaller size. The "down- sizing" operation involves die-cutting by the foreign processor, and then assembly of the down-sized components. ISSUE: Whether the "down-sized" garments will be eligible for the partial duty allowance under subheading 9802.00.80, HTSUS, upon return to the U.S. LAW AND ANALYSIS: Subheading 9802.00.80, HTSUS, provides a partial duty exemption for: [a]rticles assembled abroad in whole or in part of fabricated component, the product of the United States, which (a) were exported in condition ready for assembly without further fabrication, (b) have not lost their - 2 - 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, HTSUS, 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 value of the imported assembled article, less the cost or value of such U.S. components, 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. Section 10.16(a), Customs Regulations (19 CFR 10.16(a)), provides that the assembly operation 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. Operations incidental to the assembly process are not considered further fabrication operations, as they are of a minor nature and cannot always be provided for in advance of the assembly operations. 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, HTSUS, to that component. See 19 CFR 10.16(c). In this regard, the cutting of garment parts according to pattern is not considered an operation incidental to assembly. (19 CFR 10.16(c)(2).) Rather, such operation is considered a further fabrication of the exported garment. (See also 19 CFR 10.14(a), Example 4, exported uncut textile fabrics not considered fabricated components when cut according to a pattern to form garment parts; and Headquarters Ruling Letter (HRL) 556099 dated July 31, 1991, cutting and shaping of fabric to form belt not acceptable assembly operation or operation incidental to assembly.) - 3 - Clearly, "downsizing" is an operation in which garment components are cut to pattern and shape. Therefore, we do not consider this operation to be incidental to the assembly process, but rather a further fabrication of the components. Accordingly, upon importation, the garments will not be eligible for a duty allowance under subheading 9802.00.80, HTSUS. HOLDING: The process of "downsizing" is not an operation incidental to assembly, but rather constitutes a further fabrication of the exported garment components. Therefore, the garments will not be eligible for the partial duty exemption under subheading 9802.00.80, HTSUS, upon return to the U.S. Sincerely, John Durant, Director Commercial Rulings Division