Eligibility for a partial duty exemption of garments assembled and ornamented in Haiti

HQ W557076 April 23, 1993 CLA-2 CO:R:C:S W557076 RAH CATEGORY: Classification TARIFF No.: 9802.00.50; 9802.00.80 Mr. William E. Kentor President Fashion House LDT. 1255 Crofton Avenue Highland Par, Illinois 60035 RE: Eligibility for a partial duty exemption of garments assembled and ornamented in Haiti Dear Mr. Kentor: This is in response to your letter of December 28, 1992, requesting a ruling on the eligibility of certain garments for a partial duty allowance under subheading 9802.00.80, Harmonized Tariff Schedule of the United states (HTSUS), or a partial duty exemption under subheading 9802.00.50, HTSUS. You also ask whether the garments are eligible for classification as original art. We have forwarded a copy of your letter to the Textile Classification Branch for a determination as to the correct tariff classification of the garments. That response will be mailed to you under separate cover. FACTS: u.s.-origin, 100 percent cotton yarn which is knitted, preshrunk and cut to shape in the United States is exported to Haiti, where it is sewn and hand painted (airbrushed). You state that all art work is original design and is hand painted by local artists. No prints or transfers are used to enhance or direct the art. No two garments are identical in decoration. Colors vary according to the interpretation of the individual artists. The garments are also embellished with hand sewn sequins, beads and acrylic jewels.  ISSUE: Whether the garments will be entitled to a partial duty exemption under subheading 9802.00.50, or 9802.00.80, HTSUS, upon importation into the United States from Haiti. LAW AND ANALYSIS: All articles imported into the U.S. are subject to duty unless specifically exempted therefrom under the HTSUS. 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 cost or value of the imported assembled 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 10.14(a), customs Regulations (19 CFR 10.14(a)), states in part that: [t]he 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), Customs Regulations (19 CFR 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. 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 CFR 10.16(c). According to 19 CFR 10.16(c)(3), "Painting primarily intended to enhance the appearance of an article or to impart distinctive features or characteristics" is an example of an operation not considered incidental to assembly. In the instant case, sewing the precut fabric components together is an acceptable assembly pursuant to 19 CFR 10.16(a). However, the components which are hand painted will not qualify for a duty allowance under subheading 9802.00.80, HTSUS, since the hand painting operations are not considered incidental to the assembly of the garments, pursuant to 19 CFR 10.16(c)(3). The painting is intended to enhance the appearance of the garments and imparts distinctive features and characteristics thereto. Subheading 9802.00.50, HTSUS Subheading 9802.00.50, HTSUS, provides a partial duty exemption for articles returned to the United States after having been exported to be advanced in value or improved in condition by means of repairs or alterations. Such articles are dutiable only upon the value of the foreign repairs or alterations, provided the documentary requirements of section 10.8, Customs Regulations (19 CFR 10.8), are satisfied. However, entitlement to this tariff treatment is precluded in circumstances where the operations performed abroad destroy the identity of the articles or create new or commercially different articles. See A.F. Burstrom v. United States, 44 CCPA 27, C.A.D. 631 (1956); Guardian Industries Corp. v. United States, 3 CIT 9 (1982). Tariff treatment under subheading 9802.00.50, HTSUS, is also precluded where the exported articles are incomplete for their intended use prior to the foreign processing. Guardian; Dolliff & Company, Inc. v. United States, 81 Cust. Ct. 1, C.D. 4755, 455 F. Supp. 618 (1978), aff'd, 66 CCPA 77, C.A.D. 1225, 82, 599 F.2d 1015, 119 (1979). In Headquarters Ruling Letter (HRL) 555516 dated January 30, 1990, we held that hockey jerseys exported to Canada for silk screening were not entitled to a partial duty exemption under subheading 9802.00.50, HTSUS. We stated that although garments may be worn whether a design is imprinted by silk screening or not, silk screening, like printing and hand painting, is  ... - 4 - considered neither a repair nor an alteration, since the process creates a different article with unique, specialized appeal. Moreover, the silk screening process constitutes a finishing step in the manufacture of the hockey jerseys. Under the facts presented, the U.S. components are incomplete articles (unassembled pattern pieces) prior to the foreign processing in Haiti. Moreover, even after the components are sewn together they are incomplete articles. Like the silk screening process on the hockey jerseys, the hand painting operation constitutes a finishing step in the manufacture of the garments. Accordingly, the garments will not be entitled to a partial duty exemption under subheading 9802.00.50, HTSUS. HOLDING: The garments in question will not be entitled to a partial duty exemption under subheading 9802.00.50, HTSUS, as they are incomplete articles when exported to Haiti. However, allowances in duty may be made under subheading 9802.00.80, HTSUS, for the cost or value of the U.S. fabric components which are merely sewn together, upon compliance with the documentary requirements of 19 CFR 10.24. The components which are hand painted are not entitled to a duty allowance because hand painting is not an operation incidental to the assembly of the garments. Sincerely,  John Durant, Director Commercial Rulings Division