CLA-2 RR:TC:SM 559756 BLS
Port Director
511 N.W. Broadway
Portland, Oregon 97209
RE: Reconsideration of NY Ruling Letter 816209; eligibility of a fishing fly for the partial duty exemption under subheading 9802.00.80, HTSUS
Dear Sir:
This is in reference to your memorandum dated March 20, 1996, requesting that we review NY Ruling Letter 816209 dated November 9, 1995, which held that certain fishing flies to be imported from abroad are eligible for the partial duty exemption under subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS).
FACTS:
U.S.-origin chicken capes and saddles (chicken skin) and U.S.-origin thread are exported to Sri Lanka, Thailand, or India. At the country of assembly the feathers are plucked from the capes and saddles, sorted by color and size, and clipped or trimmed to aid in the assembly process. The thread and feathers are wound around a Japanese origin hook and body (fur, rabbit skins or deer hair) to form the completed fly. For some types of flies, a small amount of glue may be added to the thread after completion of the fly to make it more durable.
In NY Ruling Letter 816209, Customs found that the feathers and thread were finished products of the U.S., and that the operations performed abroad were acceptable assembly operations or operations incidental to assembly. See section 10.16, Customs Regulations (19 C.F.R. §10.16). Therefore, Customs held that an allowance in duty will be permitted under subheading 9802.00.80, HTSUS, based on the cost or value of the feathers and U.S.-origin thread, upon compliance with the documentary requirements of 19 C.F.R. §10.24.
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ISSUE:
Whether, under the facts presented, an allowance in duty is permitted under subheading 9802.00.80, HTSUS, for the cost or value of the feathers.
LAW AND ANALYSIS:
Subheading 9802.00.80, HTSUS, provides a partial duty exemption for
Articles, except goods of heading 9802.00.90,
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 HTSUS subheading 9802.00.80 is subject to duty upon the full value of the imported article, less the cost or value of the U.S. components assembled therein, provided there has been compliance with the documentary requirements of section 10.24, Customs Regulations (19 C.F.R. §10.24).
Section 10.14, Customs Regulations (19 C.F.R. §10.14 (a)), states in part that:
The 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 C.F.R. §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, laminating, sewing or the use of fasteners.
Operations incidental to the assembly process are not considered further fabrication
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operations, as they are of a minor nature and cannot always be provided
for in advance of the assembly operations. See 19 C.F.R. §10.16(b). 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, HTSUSA, to that component. See 19 C.F.R. §10.16 (c).
In the instant case, the feathers are hand-plucked from the chicken capes and saddles in the foreign country before assembly with the other components. The primary purpose of this process is completion of the feather component prior to assembly with the hook, thread and other materials. In our opinion, this pre-assembly operation is a significant process which is not incidental to the assembly operation, but constitutes a finishing step in fabrication of the component, i.e., feathers. As a result, a duty allowance may not be granted upon importation of the fishing flies for the cost or value of the feathers. However, since the thread is a fully fabricated component of the U.S. at the time of exportation, an allowance in duty may be granted for the cost or value of this component, upon compliance with the documentary requirements of 19 C.F.R. §10.24.
HOLDING:
Chicken feathers used in making fishing flies abroad are not in condition ready for assembly without further fabrication when exported to Sri Lanka, Thailand, or India, since the feathers must be hand-plucked in the foreign country prior to assembly. Therefore, no allowance in duty may be made for the cost or value of the feathers under subheading 9802.00.80, HTSUS. However, an allowance in duty may be made under this tariff provision for the cost or value of the U.S.-origin thread, provided the documentary requirements of 19 C.F.R. §10.24 are satisfied. NY Ruling Letter 816209 is modified accordingly.
Sincerely,
John Durant, Director
Tariff Classification Appeals Division