Applicability of partial duty exemption of item 807.00, TSUS, to plastic bags assembled in Mexico

HQ 555012 August 26, 1988 CLA-2 CO:R:C:V 555012 DBI CATEGORY: Classification TARIFF NO.: 9802.00.80; 807.00 Mr. Adolfo Loera Twin Plant Customs Consultant 6044 Gateway East Suite 506 El Paso, Texas 79905 RE: Applicability of partial duty exemption of item 807.00, TSUS, to plastic bags assembled in Mexico Dear Mr. Loera: This is in response to your letters dated January 22, and April 28, 1988, in which you request a ruling concerning the applicability of item 807.00, Tariff Schedules of the United States (TSUS), to plastic bags for hazardous waste removal exported to Mexico to be assembled. FACTS: You advise that the sleeve component of the plastic bag will be exported in rolls of double wound sheeting that will be cut and heat sealed. The glove component, which is foreign, will be sewn to the sleeves using American thread and tape. The final assembly of the bag involves the heat sealing of the sleeves and a pre-made tool pouch to the pre-printed bag and simultaneously cutting arm holes in the bag. A pre-printed pressure sensitive reinforcement label will be applied. You indicate that all of the components are of U.S. origin except the glove component. ISSUE: Whether the described plastic bags, when returned to the U.S., will be eligible for the partial exemption from duty in item 807.00, TSUS (9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS)). LAW AND ANALYSIS: Item 807.00, TSUS, applies to articles assembled abroad in whole or in part of fabricated components, the products of the U.S., with no operations performed thereon except the attachment of the components to form the imported merchandise and operations - 2 - incidental thereto. An article classified under item 807.00, TSUS, is subject to duty upon the full appraised value of the imported article, less the cost or value of such products of the U.S. Section 10.14(a), Customs Regulations (19 CFR 10.14(a)), provides that the components must be in condition ready for assembly without further fabrication at the time of their exportation from the U.S. to qualify for the exemption. As stated in E. Dillingham, Inc. v. United States, 60 CCPA 39, C.A.D. 1078, 470 F.2d 629 (1972), the correct starting point for the application of item 807.00, TSUS, is the condition of the components as "exported" from the United States. Fabricating or non-assembly steps performed on exported components between the time of the arrival abroad and the assembly merely show that the exported components were not "in condition ready for assembly without further fabrication." We have previously held that item 807.00, TSUS, does apply to materials exported in continuous lengths that are merely cut to individual lengths abroad prior to assembly. However, it does not apply to materials which are cut into specific shapes or patterns abroad. Cutting parts to pattern shape from exported material is a fabrication and would not be considered an incidental operation under item 807.00, TSUS (HQ 554748, February 24, 1988). In the present case, cutting the double wound sheeting into sleeves would be considered cutting material into a specific shape and, therefore, cannot be considered an acceptable assembly operation under item 807.00, TSUS. Sewing the glove component to the sleeves is an acceptable assembly. However, the sleeves do not qualify for item 807.00, TSUS, treatment for the reasons stated above and the gloves are precluded because they are not U.S.-made. In Rudolph Miles v. United States, 64 CCPA 24, C.A.D. 1178, 545 F.2d 739 (1976), it was held that the burning of slots and holes into Z-beams manufactured in the U.S. did not constitute further fabrication abroad but was incidental to the assembly of the Z-beams into center sills for box cars. In the present case, arm holes will be cut in the bag in order to attach the sleeves. According to the reasoning in Miles, this operation abroad would be incidental to the assembly of the plastic bags. Heat sealing the pre-made tool pouch and printed bag is an acceptable assembly since the pouch and bag are U.S.-made - 3 - components. Heat-sealing these two components to the sleeves is an acceptable assembly. However, the sleeves would still not qualify for the reasons stated above. HOLDING: Based on the information submitted, we are of the opinion that only the cutting of the arm holes in the bags and the heat- sealing of the tool pouch and printed bag are acceptable assembly operations or operations incidental thereto. Therefore, allowances in duty may be made under item 807.00, TSUS, for the cost or value of the tool pouch and printed bag, upon compliance with section 10.16, Customs Regulations (19 CFR 10.16). No allowances may be made under item 807.00, TSUS, for the cost or value of the glove or sleeves. Sincerely, John Durant, Director Commercial Rulings Division 1cc: CO:R:C:V:DIZZO:LDC:8/22/88 Mr. Adolfo Loera Twin Plant Customs Consultant 6044 Gateway East Suite 506 El Paso, TX 79905