Applicability of subheading 9802.00.80, HTSUS, to certainloop tufted fabric made in Mexico

HQ W555344 May 19, 1989 CLA-2-CO:R:C W555344 RA CATEGORY: Classification TARIFF NO.: 9802.00.80, HTSUS (formerly 807.00 TSUS) Ben L. Irvin, Esq. 1330 Connecticut Ave., N.W. Suite 200 Washington, D.C. 20036 RE: Applicability of subheading 9802.00.80, HTSUS, to certain loop tufted fabric made in Mexico Dear Mr. Irvin: Your letter of October 5, 1988, to the Regional Commissioner of Customs, New York Region, on behalf of Camsal Enterprises, has been referred to this office for reply. You request a ruling regarding the applicability of item 807.00, Tariff Schedules of the U.S.,(TSUS) (now subheading 9802.00.80, Harmonized Tariff Schedule of the U.S (HTSUS)), to certain loop pile tufted fabric from Mexico. FACTS: Your client intends to send to Mexico fabric and tufting yarns of U.S. origin for assembly into auto floor covering fabric measuring approximately 72 inches wide. The pile yarn, consisting exclusively of man-made fibers, is shipped to Mexico on cones weighing 7 pounds each, and the backing material is exported in lengths of 600 to 700 yards and in widths of 75 to 84 inches. The tufting process is accomplished by pushing the pile yarn through the backing cloth by a special machine. After leaving the tufting machine, the back of the fabric is coated with a latex solution to anchor the tufts securely. The finished tufted fabric is imported for sale to a U.S. company that manufactures the fabric into replacement automobile floor coverings. ISSUE: Can an allowance in duty be made under the provisions of subheading 9802.00.80, HTSUS, for the value of the U.S.-made yarn and cloth joined together by a tufting machine and then coated with latex?  - 2 - LAW AND ANALYSIS: Subheading 9802.00.80, HTSUS, provides for a partial exemption from duty for articles assembled abroad in whole or in part of fabricated components of U.S. origin. The processing in the foreign country must consist only of assembly operations and operations incidental thereto. Section 10.16(a), Customs Regulations (19 CFR 10.16(a)), includes a description of acceptable and unacceptable assembly operations. The third example set forth in that paragraph provides as follows: The manufacture abroad of cloth on a loom using thread or yarn exported from the U.S. on spools, cops, or pirns is not considered an assembly but a weaving operation, and the thread or yarn does not qualify for the exemption. The production of fabric or carpet by a tufting machine is similar to a weaving operation and constitutes a process of manufacture rather than an assembly. We have consistently treated the manufacture of fabrics as an operation beyond mere assembly. In Headquarters Ruling Letter 058110 of March 2, 1978, we held hat a needlework process, involving the joining of U.S.­ made canvas and yarn, "is of a manufacturing nature and constitutes further fabrication which exceeds the scope of 'assembly' for the purposes of item 807.00, TSUS." Denim fabric woven abroad from U.S.-made cotton yarn was held to be ineligible for tariff treatment under item 807.00, TSUS, in a ruling letter of April 16, 1975 (038784). Likewise, in a ruling dated February 13, 1975 (038312), we stated that the duty exemption under this tariff provision was not applicable to fabrics woven abroad from U.S. raw material fibers as a manufacturing operation, not an assembly process, was involved. The same result was reached in Headquarters Ruling Letter of April 16, 1975 (039351), in the case of fiberglass tape made by a weaving process from U.S. yarn. HOLDING: We are of the opinion that the combining in Mexico of backing cloth and yarn of U.S. origin to create a loop tufted floor covering fabric constitutes a manufacturing process and is not the result of a qualified assembly within the scope of subheading 9802.00.80, HTSUS. Therefore, no allowance in duty may be made for the value of the U.S.-made materials. Sincerely, John Durant, Director Commercial Rulings Division