Application for Further Review of Protest No. 2704-86- 000612, protesting denial of subheading 9802.00.80, HTSUS, treatment to polypropylene bows, known as "Bow'n Tie", formed by knotting, folding, cutting notches, and using plastic clips as fasteners. Assembly; further fabrication; Samsonite 555455; 555425

HQ H555600 16 AUG 1990 CO:R:C:V 555600 LS CLA-2 CATEGORY: Classification TARIFF NO.: 9802.00.80 District Director of Customs 300 South Ferry Street Terminal Island, California 90731 RE: Application for Further Review of Protest No. 2704-86- 000612, protesting denial of subheading 9802.00.80, HTSUS, treatment to polypropylene bows, known as "Bow'n Tie", formed by knotting, folding, cutting notches, and using plastic clips as fasteners. Assembly; further fabrication; Samsonite: 555455; 555425 Dear Sir: This is our decision on the above-referenced protest, which was forwarded to our office, through the National Import Specialist in New York, by your memorandum dated January 3, 1990. The protest filed by Castelazo & Associates, on behalf of Harvard Fair Corp. on February 6, 1986, contests your denial of the parti l duty exemption under subheading 9802.00.80, Harmonized Tarif Schedule of the United States (HTSUS), to polypropylene bows imported from the People's Republic of China. FACTS: The following facts are based upon (1) a conversation between a member of my staff and a representative of Castelazo & Associates, and (2) an examination of a sample which was submitted to us on August 7, 1990. These facts differ somewhat from hose in your report. We requested an additional sample because the protest did not describe the processes performed abroad, and the previously submitted sample of the bow had already been manipulated so that we were unable to examine the final product in its condition as exported. Harvard Fair Corp. exported rolls of U.S. origin polypropylene ribbon to China. The rolls consist of ribbon of the allowing widths: 1/8 inch, 3/4 inch, and 1 1/4 inches. In China, all the ribbons are cut to various lengths, depending on the size of the bow to be formed. The sample submitted consists of a bow, known as a "Bow 'n Tie," which is packaged and exported tote U.S. in a folded condition. It consists of the following components: two ribbons, one of which is 1/4 inches in width (hereafter "wider ribbon") and the other 1/8 inch in width (hereafter "narrow ribbon"); and eight small plastic clips. The instructions on the display card of the packaging direct the user to pull the two ends of the narrow ribbon so as to form the completed bow. Once the bow is formed, the narrow ribbon becomes the tie which is used to wrap around a gift box. The components of the sample "Bow 'n Tie" are subjected to the following processes in China. After the two ribbons are cut to lengths of approximately eight feet, the narrow ribbon is placed atop the wider ribbon. At approximately the four foot mark or center of the two ribbons, they are tied together by means of a knot. With the narrow ribbon lying along the wider ribbon, the two ribbons are folded in half at the point where the knot ·stied. They are then folded at every five inch interval in an accordion-style sequence. In this folded condition, the wider ribbon is then cut at either end in av-shape, or notch, so that its ends are pointed. The 1/8 inch wide ribbon, which runs along the inside of the folded wider ribbon, is not cut as a result of the notching operation. At every five inch interval where the 1/8 inch wide notches appear (except at the point where the knot is tied), small plastic clips with narrow slits are slid onto the notch. These clips, which become an integral part of the bow, serve to hold the narrow ribbon in place along the center of the wider ribbon. After the packaged bow is imported into the U.S. in its folded condition, the purchaser forms the loops of the completed bow by pulling each end of the narrow ribbon. The clips, which come together at the center of the bow, hold e bow together. Since the origin of the clips are unknown by the protestant, and there is no indication that they are manufactured in the U.S., we will assume, for purposes of this protest, that they are of foreign origin. When the polypropylene bows were entered into the U.S. on September 24, 1985, they were denied the claimed partial duty exemption under item 807.00, Tariff Schedules of the United Stats, the precursor to subheading 9802.00.80, HTSUS. Your office liquidated the entries on November 8, 1985, under item 774. 585, TSUS, as articles of plastic, not specially provided for. The protestant claims that the polypropylene bows are entitled to the partial duty exemption under subheading 9802.00.80, HTSUS, because the U.S. manufactured ribbon is merely asse led abroad. ISSUE: Whether the polypropylene bows are entitled to the partial duty exemption under subheading 9802.00.80, HTSUS.  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 tree requirements of subheading 9802.00.80, HTSUS, must be satisfied before a component may receive a duty allowance. An artic e entered under subheading 9802.00.80, HTSUS, is subject to duty on the full value of the imported assembled article less the cost or value of the U.S. components, upon compliance with the documentary requirements of section 10.24, Customs Regulations (19 CFR 10.24). The assembly operations performed abroad may consist of any metho used to join or fit together solid components, such as welding, soldering, riveting, force fitting, gluing, laminating, sewing, or the use of fasteners. See section 10.16(a), Customs Regulations (19 CFR 10.16(a)). 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 operation. See 19 CFR 10.16(a). Examples of operations considered incidental to the assembly process are delineated at 19 CF 10.16(b). However, any significant process, operation, or treat ent whose primary purpose is the fabrication, completion, or physical or chemical improvement of a component precludes the application of the exemption under subheading 9802.00.80, HTSUS. See 19 CFR 10.16(c). The assembly operations involved here consist of (1) joining the narrow ribbon and wider ribbon together by means of knotting, see Headquarters Ruling Letter (HRL) 555455 dated September 18, 1989 (a knotting operation which serves to securely attach solid components is an acceptable method of assembly); and (2) attaching the plastic clips onto the notches of the wider ribbon by sliding them on through a narrow slit in the clip. The second, operation serves to securely join the two ribbons together at each notch juncture along the entire length of the ribbons by utilizing the clips as fasteners. The clips also allow the narrow ribbon to be held in place and to slide along the wider  ribbon when, after importation into the U.S., the user pulls the ribbon to create the finished bow. Both steps constitute able assembly operations within the meaning of 19 CFR 10.16 (a). The operation of cutting the polypropylene ribbons to length prior to the assembly is considered to be incidental to the assembly process pursuant to 19 CFR 10.16(b)(6). However, we find that cutting the notches at the ends of the folded wider ribbon does not constitute an operation incidental to the assembly process, but rather is considered a further fabrication or completion of the component ribbon, within the meaning of 19 CFR 10.16(c). The formation of notches by cutting does not qualify as an operation incidental to the assembly process under 19 CFR 10.16(b)(5) since it does not constitute a mere adjustment "in the shape or form of a component to the extent required by the assembly being performed abroad." See Samsonite Corp. v. United States, 12 CIT___, 702 F. Supp. 908 (t988), aff'd, 8 CAFC__, 889 F.2d 1074 (1989) (bending of steel strips into rectangular shapes constituted a further fabrication because it created the component to be assembled, the essence of which was its configuration, and it was necessary before assembly could take place). The primary purpose of the notching, which occurs between the two steps in the assembly process, is the further fabrication or completion of the wider ribbon in a particular configuration. This configuration becomes the essence of the component ribbon because it is essential to the completion of the assembly process. Without the notches, the clips could not be joined to the ribbon and would not serve their essential function of placing the ribbons in a position relative h other so that the purchaser of the "Bow 'n Tie” could ultimately form the finished bow. See also HRL 555425 dated October 16, 1989 (no allowance in duty permitted under subheading 9802. 0.80, HTSUS, for ribbon material of "quick bow" because notching of exported ribbon to a narrow width resulted in the creation of the component to be assembled and had to be performed before the assembly with the clip and drawstring could take place to form a bow; notching constituted a further fabrication). HOLDING: We find that the polypropylene bows were eligible for the l duty exemption under subheading 9802.00.80, HTSUS, when ed to the U.S., only to the extent that an allowance should have been permitted for the cost or value of the 1/8 inch wide which is a U.S. component not subject to the notching ion. This ribbon was exported in condition ready for assembly without further fabrication and was advanced in value  or improved in condition only by processes which constitute assembly operations or operations incidental to assembly, such as cutting rolls of the ribbon to length. No allowance is permitted for t e cost or value of the U.S. origin ribbon of 1 1/4 inches in width (and the 3/4 inch wide ribbon, in the case of a different size "Bow 'n Tie"), because they have been advanced in value or improved in condition by a notching operation which is neither an assembly operation nor an operation incidental thereto. The clips are also not eligible for an allowance because they are presumed to be of foreign origin. ln accordance with this decision, the protest should be granted in part, and denied in part. A copy of this decision should be attached to the Form 19, Notice of Action, to be sent to the protestant. Sincerely, John Durant, Director Commercial Rulings Division