Applicability of partial duty exemption under HTSUS subheading 9802.00.80 to textile telephone holder

HQ 557894 June 7, 1994 CLA-2 CO:R:C:S 557894 MLR CATEGORY: Classification TARIFF NO.: 9802.00.80 Mr. Irvin Snyder Recreation Products, Inc. P.O. Box 483 Breckenridge, CO 80424 RE: Applicability of partial duty exemption under HTSUS subheading 9802.00.80 to textile telephone holder Dear Mr. Snyder: This is in reference to your letter of April 11, 1994, forwarded to us by the Chief, Textile/Plastics Branch, New York Seaport, requesting a ruling regarding the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to textile telephone holders. A sample was submitted with your request. FACTS: The telephone holder at issue will be produced in China utilizing a metal clip, nylon packcloth, velcro strapping, and velcro loop material. The telephone holder is designed to remain on a cordless telephone at all times. The packcloth serves as the backing and support for the velcro strapping which secures the holder to the telephone, and the metal clip is riveted to the packcloth so that the holder may be clipped over a belt, shirt, slacks, etc. The metal clip is stated to be of U.S.-origin, and the packcloth, velcro, and velcro loop material are stated to be of Chinese-origin. ISSUE: Whether the telephone holders will qualify for the duty allowance under HTSUS subheading 9802.00.80, when imported into the U.S. 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 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. See 19 CFR 10.16(a). 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). In this case, the rivetting of the metal clip to the nylon packcloth is specifically enumerated in 19 CFR 10.16(a) as a proper assembly operation. Therefore, allowances in duty may be made for the cost or value of the metal clips, provided the documentary requirements of 19 CFR 10.24 are satisfied. HOLDING: On the basis of the information and sample submitted, we find that riveting the metal clip to the packcloth is a proper assembly operation pursuant to 19 CFR 10.16(a). Consequently, allowances in duty may be made under subheading 9802.00.80, HTSUS, for the cost or value of the fabricated metal clips incorporated into the telephone holders upon their return to the U.S., provided the metal clips are of U.S. origin and the documentary requirements of 19 CFR 10.24 are satisfied. Sincerely, John Durant, Director