Applicability of subheading 9801.00.10, HTSUS, to men's vinyl belts; Anheuser-Busch; substantial transformation

HQ 556273 January 17, 1992 CLA-2 CO:R:C:S 556273 DSN CATEGORY: Classification TARIFF NO.: 9801.00.10 Ms. Denise L. Kelly Sandler, Travis & Rosenberg, P.A. 5200 Blue Lagoon Drive Miami, Florida 33126-2022 RE: Applicability of subheading 9801.00.10, HTSUS, to men's vinyl belts; Anheuser-Busch; substantial transformation Dear Ms. Kelly: This is in response to your letters of September 16, 1991 and January 6, 1992, on behalf of Thomson Company, requesting a ruling on the applicability of subheading 9801.00.10, Harmonized Tariff Schedule of the United States (HTSUS), to men's vinyl belts produced in the U.S., sent to Mexico to be attached to men's pants, and returned to the U.S. FACTS: According to your submissions, vinyl straps and loops of Mexican origin are cut into loops and sections of varying widths abroad. Two sections of vinyl which are matched in widths are thinned at the egdes by a process called "skiving" These matched sections are laminated together and cut to varying sizes. The straps and loops are exported to the U.S. for further processing operations. In the U.S., the straps and loops are subjected to the following operations: 1. five holes are punched into the tip of the strap using specialized machinery; 2. the tip of the strap is cut to a rounded or pointed end; 3. the buckle end of the strap is cut to size; 4. the buckle-tong slot is cut into the buckle-end of the strap; 5. the belt holes, buckle tong slot and buckle end are dyed; 6. the edges are stitched around the entire strap; 7. a U.S.-origin buckle and the imported loop are attached to the strap; 8. any excess material or thread is trimmed; 9. the belts are inspected. You state that these belts will then be exported to Jamaica, along with cut fabric components to be assembled into men's trousers. After assembly of the trousers, the belts will be laced into the belt loops of the trousers and returned to the U.S. ISSUE: Whether the men's vinyl belts will qualify for the duty exemption available under subheading 9801.00.10, HTSUS, when imported into the U.S. as part of wearing apparel. LAW AND ANALYSIS: Subheading 9801.00.10, HTSUS, provides for duty-free entry of U.S. products that are exported and returned without having been advanced in value or improved in condition by any process of manufacture or other means while abroad. Articles satisfying the above conditions of the statute will be afforded duty-free treatment, provided the documentary requirements of section 10.1, Customs Regulations (19 CFR 10.1), are met. According to section 10.12(e), Customs Regulations 19 CFR 10.12(e)), a "product of the United States" is an article manufactured within the customs territory of the U.S. and may consist wholly of U.S. components or materials, of U.S. and foreign components or materials, or wholly of foreign components or materials. If the article consists wholly or partially of foreign components or materials, the U.S. manufacturing process must be such that the foreign components or materials are substantially transformed into a new and different article, or are merged into a new and different article. A substantial transformation occurs when, as a result of manufacturing processes, a new and different article emerges, having a distinctive name, character, or use, which is different from that originally possessed by the article or material before being subjected to the manufacturing process. See, Anheuser- Busch Association v. United States, 207 U.S. 556 (1908), and section 10.14(b), Customs Regulations (19 CFR 10.14(b)). We are of the opinion that the imported vinyl straps and loops which are processed into vinyl belts are substantially transformed into "products of the U.S". The production of the belts add significant value (49%) to the straps and loops. In addition, the vinyl straps and loops undergo a name change during the manufacturing operations. Because the straps, in their condition as imported, are capable of being processed into products other than belts, such as handbag handles and straps and restraining devices, the U.S. processing transforms a multifunctional article into one suited for a particular use. The character of the straps also changes as a result of the hole- punching, cutting, stitching and assembly operations. Clearly, the belts emerge as a new and different article with a distinctive name, character and use different from that possessed by the straps and loops. We note that the lacing of the belts into trousers in Jamaica does not advance in value or improve in condition the belts in any commercial sense. The belts appear to be no more marketable connected to the trousers than if they were sold separately. HOLDING: Based on the information submitted, we are of the opinion that the imported vinyl straps and loops are substantially transformed into products of the U.S. when processed into belts. Accordingly, the men's belts will qualify for the duty exemption under subheading 9801.00.10, HTSUS, when returned to the U.S. as part of men's trousers, upon compliance with the documentary requirements of 19 CFR 10.1. Sincerely, John Durant, Director Commercial Rulings Division