Ladies jackets; fur collar; opossum; country of origin;substantial transformation;HRL 557194

HQ 559288 February 1, 1996 CLA-2 RR:TC:SM 559288 KKV CATEGORY: Classification TARIFF NO.: 9802.00.80 Ms. Dorothy E. Irwin Import Manager London Fog Industries 1332 Londontown Boulevard Eldersberg, MD 21784-5399 RE: Ladies jackets; fur collar; opossum; country of origin; substantial transformation; HRL 557194 Dear Ms. Irwin: This is in response to your letter dated June 23, 1995 which requests a binding ruling regarding the eligibility of ladies jackets imported from China for partial duty allowance under subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS). Samples have been submitted. We regret the delay in processing. FACTS: London Fog Industries is currently importing ladies' jackets from China which have collars that you state are produced in the U.S. as follows: Black pelts are imported into the United States from New Zealand already having been dyed and dressed. Other pelts are imported into the U.S. in a raw state and are dressed in New York. As part of the dressing process, the leather of the skins is tanned, and the fur is brushed and cleaned. The pelts then undergo a dyeing process which involves the washing and coloring of the fur of the tails, in either green or brown, and a retanning of the leather of the tails. Thereafter, all the pelts (black, brown and green) are cut and sewn into strips. The leather side is wet with water, then stretched and cut to the length and width of the size strip needed. After drying, a grosgrain ribbon is sewn onto the edge of the fur and the collars are ironed, boxed and shipped to China for assembly to the jackets. In China, the fur collar is sewn to a fabric strip upon which snap caps and buttonholes have already been placed. The detachable collars are then attached to snap posts and buttons which have been placed upon the shell collar by the jacket manufacturer. After the collars have been incorporated, the jackets are returned to the U.S. ISSUE: Whether the foreign-origin opossum pelts are substantially transformed into fabricated components which are the product of the United States. 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 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, lubricating 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 appraised value of the 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 10.12(e), Customs Regulations (19 CFR 10.12(e)), provides generally that an article wholly or partially of foreign components or materials, may be a "product of the United States" if such components or materials are "substantially transformed" by a process of manufacture into a new and different article, or are merged into a new or different article. Section 10.14(b) provides that a "substantial transformation" occurs when, as a result of manufacturing processes, a new and different article emerges, having a distinctive name, character, or use, which is different from that originally possessed by the article or material before being subject to the manufacturing process. If the manufacturing or combining process is merely a minor one which leaves the identity of the article intact, a substantial transformation has not occurred. See, Uniroyal Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026 (CIT 1982), aff'd, 702 F.2d 1022 (Fed. Cir. 1983). In Headquarters Ruling Letter (HRL) 557194 (dated September 9, 1993), Customs determined that foreign-sourced fox tails are substantially transformed into fox trim collars by operations which include dyeing, stretching, splicing and attaching to a fabric base. In the instant case, the opossum pelt is subjected to a manufacturing process in the U.S., which includes dressing and dyeing (in some cases), soaking, stretching, cutting to size and attaching a grosgrain ribbon to the edge of the fur. The finished product, the opossum trim collar, has a character and commercial identity distinct from the raw material from which it was produced, and has been transformed by the U.S. processing from an article with a number of potential uses to an article with a single use as a fur collar, ready to be assembled with other components to create a jacket. As a result, the opossum tail has undergone a substantial transformation, and therefore is considered a fabricated product of the U.S., for purposes of subheading 9802.00.80, HTSUS. We also find that the processing in China constitutes an acceptable assembly operation or operation incidental to the assembly process pursuant to this provision. HOLDING: Foreign sourced opossum pelts are substantially transformed into opossum trim collars by operations which include dressing and dyeing (in some cases), soaking, stretching, cutting to size and attaching a grosgrain ribbon to the edge of the fur. As a result, the exported opossum collars are considered fabricated products of the U.S. Since the processing abroad constitutes acceptable assembly operations, or operations incidental to assembly, the imported ladies' jackets are entitled to entry under subheading 9802.00.80, HTSUS, with allowances in duty for the cost or value of the opossum trim collars. A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer. Sincerely, John Durant Director, Tariff Classification Appeals Division