CLA-2 CO:R:C:S 557618 MLR
Ms. Karen A. Soukiasian
David Dobbs Enterprises/Menu Designs, Inc.
4600 U.S. 1 North
St. Augustine, Florida 32095
RE: Applicability of partial duty exemption under HTSUS
subheading 9802.00.80 and country of origin marking
requirements for menu covers; sewing; trimming
Dear Ms. Soukiasian:
This is in response to your letter of October 6, 1993,
requesting a ruling regarding the applicability of subheading
9802.00.80, Harmonized Tariff Schedule of the United States
(HTSUS), to menu covers. Samples of the menu covers at various
stages of production were submitted with your request.
FACTS:
You state that you are planning to produce clear stitched
menu covers in Mexico in two styles: either a "double single"
(three panel cover), or a "double double" (four panel cover).
You verified in a telephone conversation with a member of my
staff that all of the materials used to produce these covers
(i.e., rigid vinyl, tape, thread, and metal brackets) will be of
U.S.-origin. The machines that are necessary to produce the menu
covers will also be shipped from the U.S. The vinyl will be cut
in the U.S. Basically, the process in Mexico consists of
stitching tape to the edges of the cut vinyl sheets to create a
panel. Small corners are trimmed from each vinyl sheet so that
metal brackets may be pressed on each corner. The requisite
number of panels needed for each design of menu is then stitched
together. The menu covers are then cleaned, packed, and shipped
to the U.S.
ISSUES:
I. Whether the menu covers will qualify for the partial duty
exemption available under subheading 9802.00.80, HTSUS, when
returned to the U.S.
II. What is the proper country of origin marking for the menu
covers?
LAW AND ANALYSIS:
I. Application of Subheading 9802.00.80, 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. 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 the instant case, the operations of stitching the tape to
the edges of the vinyl, stitching the panels together, and
pressing the metal brackets onto the corners of the vinyl sheet
are considered acceptable assembly operations pursuant to 19 CFR
10.16(a), because two solid components are being joined (i.e.,
stitched or pressed) together. Trimming the corners from the
vinyl sheets and cleaning the covers are considered incidental
operations. Packing the telephone handset covers is permissible
pursuant to 19 CFR 10.16(f).
II. Country of Origin Marking
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C.
1304), provides that unless excepted, every article of foreign
origin imported in the U.S. shall be marked in a conspicuous
place as legibly, indelibly, and permanently as the nature of the
article (or its container) will permit, in such a manner as to
indicate to the ultimate purchaser in the U.S. the English name
of the country of origin of the article. Congressional intent in
enacting 19 U.S.C. 1304 was that the ultimate purchaser should be
able to know by an inspection of the marking on the imported
goods the country of which the goods are the product. Part 134,
Customs Regulations (19 CFR Part 134), implements the country of
origin marking requirements and exceptions of 19 U.S.C. 1304.
Among the exceptions to country of origin marking is 19
U.S.C. 1304(a)(3)(D), also provided for in section 134.32(d),
Customs Regulations (19 CFR 134.32(d)). That section provides
that articles for which the marking of their containers will
reasonably indicate the country of origin of the articles may be
excepted from country of origin marking. However, for the
exception to apply Customs must be satisfied that the articles
will reach the "ultimate purchaser" in the original, properly
marked containers in which the articles were imported. Section
134.1(d), Customs Regulations (19 CFR 134.1(d)), defines the
"ultimate purchaser" as generally the last person in the U.S. who
will receive the article in the form in which it was imported.
In HQ 734524 (July 30, 1992), reasoning that the ultimate
purchaser of frozen food meals would be the airline rather than
the passenger, Customs found that such frozen meals would
probably be excepted from individual marking so long as the
ultimate purchaser (the airline) received the meals in bulk with
proper marking on the outermost containers in which they were
imported. See also Information Letter 732988 (May 30, 1990); and
HQ 734635 dated December 17, 1992 (the ultimate purchaser of
airline washcloths is the airline and not the airline passenger).
Consequently, in this case, assuming the menu covers are
sold to restaurants for their own use, the restaurants would be
considered the ultimate purchasers. Therefore, so long as the
restaurants receive the menu covers in properly marked
containers, the individual menu covers may be excepted from
country of origin marking pursuant to 19 CFR 134.32(d).
You asked at which point in the production process, the menu
covers would have to be marked "MADE IN MEXICO", instead of "MADE
IN THE USA." In this case, the menu covers may not be marked
"MADE IN THE USA" because they are assembled in Mexico. However,
Customs has previously determined that the language "ASSEMBLED
IN" constitutes sufficient country of origin marking for articles
subject to section 10.22, Customs Regulations (19 CFR 10.22),
(i.e., articles assembled in whole or in part of fabricated
components, the product of the U.S. and entitled to an exemption
of duty under subheading 9802.00.80, HTSUS). In such cases, the
country of assembly is considered to be the country of origin and
the words "Assembled in" are considered similar in meaning to the
words "Made in" and "Product of." Therefore, since the menu
covers are assembled in Mexico and are eligible for the duty
allowance under subheading 9802.00.80, HTSUS, the country of
origin is Mexico, and either the language "ASSEMBLED IN MEXICO OF
U.S. COMPONENTS", "ASSEMBLED IN MEXICO", or "MEXICO" is
acceptable on each menu cover or their containers.
HOLDING:
I. On the basis of the information and samples submitted, it is
our opinion that the operations performed abroad to create the
menu covers are considered proper assembly operations or
operations incidental thereto. Therefore, the menu covers may
enter the U.S. under subheading 9802.00.80, HTSUS, with
allowances in duty for the cost or value of the U.S. components
therein, provided the documentary requirements of 19 CFR 10.24
are satisfied.
II. For purposes of country of origin marking, the ultimate
purchaser of the menu covers are restaurants. Accordingly,
pursuant to 19 U.S.C. 1304(a)(3)(D), 19 CFR 134.32(d), and
19 CFR 10.22 the menu covers are excepted from individual country
of origin marking so long as the ultimate purchaser, the
restaurants, receive the menu covers in containers which are
marked with either "ASSEMBLED IN MEXICO OF U.S. COMPONENTS",
"ASSEMBLED IN MEXICO", or "MEXICO."
Sincerely,
John Durant, Director