Eligibility of ladies jackets for partial duty exemptionunder subheading 9802.00.80, HTSUS; hood trim; fox tails; substantialtransformation; HRL 559623; HRL 558916

HQ 559862 July 29, 1996 CLA-2: RR:TC:SM 559862 BLS CATEGORY: Classification TARIFF NO.: 9802.00.80 Port Director 200 St. Paul Place Baltimore, MD 21202 RE: Eligibility of ladies jackets for partial duty exemption under subheading 9802.00.80, HTSUS; hood trim; fox tails; substantial transformation; HRL 559623; HRL 558916 Dear Sir: This is in reference to a letter dated May 16, 1996, from London Fog Industries, requesting a ruling that certain ladies' jackets produced abroad are eligible for a duty allowance based in part on the value of hood trim fur processed in the U.S. We understand that importations of these articles are currently being made through your port and claims are being made under subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), for the value of the trim. Samples have been submitted. FACTS: Fox tails produced in Finland are imported into the U.S. where they brushed and cleaned ("dressed"), soaked (when required to make the tails more pliable), cut open, stretched, and "drop-cut" to make them look longer and thinner. Two 14" tails are then joined to make the 28" trim, and ribbon is attached by sewing to complete the fur piece. The importer states that the tails may be dressed either in Finland or New York. All other operations to produce the trim piece occur only in the U.S. The trim is then sent abroad where it is attached to a finished hood. This operation may be accomplished by permanently sewing the trim to the hood, and is used when the hood is detachable. The second method is to attach buttons to the ribbon when the hood is permanently attached to the coat. Buttonholes are then made on the hood. - 2 - ISSUE: Whether the operations required to produce the hood trim fur substantially transform the fox tails into fabricated components of 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 components, the product of the United State, 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 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 consisting 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 than 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 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) 559623 dated February 1, 1996, we held that foreign sourced beaver and coyote pelts (skins) were substantially transformed in the U.S. into detachable hood trim by operations which included dressing, - 3 - soaking, stretching, cutting to size and sewing a grosgrain ribbon onto the strips and adding polyfill. In that case, we found that the finished product had a character and commercial identity distinct from the raw material from which it was produced, and had been transformed by the U.S. processing from an article with different potential uses to an article with a single use as fur trim, ready to be assembled with other components to create a jacket. See also HRL 557914 dated September 9, 1993, where Customs determined that foreign-sourced fox tails were substantially transformed in the U.S. into fox trim collars by operations which included dyeing, stretching, splicing, and attaching to a fabric base. In the instant case, the fox tails are subjected to a manufacturing process in the U.S. which includes cutting, stretching, "drop-cutting", joining two tails together, and attaching ribbon by sewing. The operations may also include dressing and soaking. The finished product, hood trim fur, has a character and commercial identity distinct from the fox tails from which it was made. The raw material, fox tails, has been transformed by the U.S. processing from an article with multiple uses to an article with one specific use, i.e., as hood trim fur to be assembled to a hood for ladies' jackets. As a result, the fox tails have 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 foreign processing operations constitute acceptable assembly operations or operations incidental to the assembly process pursuant to this provision. HOLDING: Foreign sourced fox tails which are processed in the U.S. by operations which include stretching, cutting, joining two tails together, and attaching ribbon by sewing, are substantially transformed as a result of the U.S. operations. As a result, the exported hood trim fur pieces are considered fabricated components of the U.S. Since the processing abroad constitutes an acceptable assembly operation, the imported ladies' jackets are entitled to an allowance in duty for the cost or value of the U.S.-origin hood trim fur under subheading 9802.00.80, HTSUS. Sincerely, John Durant, Director Tariff Classification Appeals Division