CBP Ruling H113355

HQ H113355 May 18, 2011 CLA-2 OT:RR:CTF:VS H113355 HkP CATEGORY: Classification Port Director Port of San Diego U.S. Customs and Border Protection 9777 Via De La Amistad San Diego, CA 92154 RE: Modification of HQ H047557; Application for Further Review of Protest No. 2506-08-100047; Screen-printed girls' cotton knit pullovers; Subheading 9802.00.80, HTSUS Dear Port Director: This letter concerns Headquarters Ruling Letter (HQ) H047557, issued to you on September 21, 2009, in response to the Application for Further Review of Protest no. 2506-08-100047, filed on behalf of California Concepts, Inc. We have reviewed HQ H047557 and found it to be incorrect as it relates to the denial of a partial duty exemption under subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), for the merchandise described in that ruling. Our decision in HQ H047557 concerning the applicability of subheading 9999.00.60, HTSUS, is not affected by the instant ruling. We note that under San Francisco Newspaper Printing Co. v. United States, 9 Ct. Int'l Trade 517, 620 F. Supp. 738 (1985), the decision on the merchandise which was the subject of Protest 2506-08-100047 was final on both the protestant and U.S. Customs and Border Protection (CBP). Therefore, while we may review the law and analysis of HQ H047557, any decision taken herein would not impact the entries subject to that ruling. Pursuant to section 625(c), Tariff Act of 1930 (19 U.S.C. §1625(c)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act, Pub. L. 103-182, 107 Stat. 2057, 2186 (1993), notice of the proposed modification was published on April 13, 2011, in the Customs Bulletin, Volume 45, No. 16. No comments were received in response to the notice. FACTS: The relevant facts, as set forth in HQ H047557, are as follows: The merchandise at issue is identified as style 258X548M. It is a girls' 100% cotton knit pullover which features screen-printing of a butterfly on the front body. The fabric used to produce the pullover was produced outside the territory of a NAFTA Party. It was imported into the United States where protestant states it was cut into components and exported to Mexico. In Mexico, protestant stated the components were sewn and assembled, screen-printed and packaged. The finished pullovers were exported to the United States. CBP found the screen-printing done in Mexico to be an operation that advanced the value of the garments, such that the garments in their entirety would not qualify for a partial duty exemption under subheading 9802.00.80, HTSUS. ISSUE: Whether the girls' cotton knit pullovers assembled and screen-printed in Mexico are eligible for a partial duty exemption under subheading 9802.00.80, HTSUS. 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, 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 imported assembled article, less the cost or value of the U.S. components assembled therein, upon compliance with the documentation requirements of section 10.24, CBP Regulations. Section 10.14(a), CBP Regulations (19 C.F.R. § 10.14(a)), states in part that: The 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), CBP Regulations (19 C.F.R. § 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, lamination, 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. See 19 C.F.R. § 10.16(a). 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 C.F.R. § 10.16(c). In HQ H047557, we found that the screen-printing of the garments in Mexico, after they were assembled there, was an operation that advanced the value of the garments. Therefore, no components of the garments qualified for a partial duty exemption under subheading 9802.00.80, HTSUS. We concluded that the pullovers, in their entirety, would be dutiable upon the full appraised value of the garments. Subheading 9802.00.80, HTSUS, requires only that "articles ... assembled abroad in whole or in part of fabricated components, the product of the United States" satisfy the three conditions identified in the provision under (a), (b), and (c) (emphasis added). Therefore, the further fabrication, i.e., screen-printing, of one of the components would not preclude the remainder of the garment which otherwise satisfies the requirements of subheading 9802.00.80, HTSUS, from receiving a partial duty exemption under this tariff provision. See HQ 560201 (May 14, 1998). HOLDING: The components of the pullovers that have not been advanced in value by screen-printing are eligible for a partial duty exemption under subheading 9802.00.80, HTSUS, when returned to the United States. The screen-printed component is not eligible for a partial duty exemption under this provision. EFFECT ON OTHER RULINGS: HQ H047557, dated September 21, 2009, is hereby modified with respect to the eligibility of the pullovers for a partial duty exemption under subheading 9802.00.80, HTSUS. The ineligibility of the pullovers for the NAFTA Trade Preference Level under Additional U.S. Note 3(b) to Section XI is unchanged. Sincerely, Myles B. Harmon, Director Commercial and Trade Facilitation Division 4