HQ 557194

September 9, 1993

CLA-2 CO:R:C:S 557194 BLS

CATEGORY: Classification

TARIFF NO.: 9802.00.80

District Director

U.S. Customs Service

10 Causeway Street

Boston, Mass. 02222-1059

RE: Application for Further Review of Protest No.

0401-92-100268; subheading 9802.00.80, HTSUS;

substantial transformation; fox tails; fox trim

collar

Dear Sir:

This is in reference to your memorandum dated February 26,

1993, forwarding an Application for Further Review of Protest No.

0401-92-100268, filed on behalf of Forecaster of Boston

(\"Forecaster\"). The importer is seeking a duty allowance under

subheading 9802.00.80, Harmonized Tariff Schedule of the United

States (HTSUS), for the value of a fox trim collar, a component of

the imported women\'s anorak jackets. Samples of the collar have

been submitted.

FACTS:

Forecaster places orders for fox trim collars with O. Hantman

& Sons, New York, to be exported to the Dominican Republic for

assembly into anorak jackets. In turn, Hantman purchases foreign-

sourced fox tails from domestic sources, and subjects the fox tails

to various processes in the U.S. resulting in the creation of the

fox trim collars as follows:

The fox tails are dyed the appropriate color, and then soaked

in a solution overnight to make the leather soft and pliable. The

tails are then stretched to the desired length, split and sewn.

Because of the natural variations in the length of the fox tails,

situations commonly arise where the fox tails supplied are

incapable of being stretched to the required lengths. In these

circumstances, two or more fox tails will be spliced together to

obtain the specified length necessary for the garment. A textile

fabric base is then attached to the length of leather side of the

split fox tail by means of sewing. The fox trim collars are then

ironed and brushed before being sent to the Dominican Republic for

assembly into the anorak jackets. The operations performed abroad

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are as follows:

1\. Welts

Attach filler to welts, sew out, trim, turn and topstitch.

2\. Fronts

Sew front panels together, cut pockets and set with pocket

flaps. Set breast zipper pockets. Topstitch fronts.

Notch out armhole area to eliminate puckering for sleeve

set and topstitch.

3\. Cuff

Attach filler to cuff, sew out, trim, turn and topstitch.

4\. Hood

Seam hood pieces together and topstitch. Attach hood strip

and sew fur piece to half of the strip, then close with

drawstring inserted by topstitch and edgestitch all

around hood. Mark and buttonhole hood.

5\. Label Bag

Sew out, trim turn and attach label. Will be attached to

neck piece on facing set.

6\. Backs

Join back seams, topstitch, sew in vent and tack. Attach

back yoke. Join fronts to back and topstitch. Tack

shoulder pads covered with selicia.

7\. Sleeves

Set sleeves and topstitch, attach cuffs.

8\. Shell

Close side seam and topstitch. Set outside collar.

attach zipper halves to each front. Attach filler to

facings and collar and set to front. Set lining.

Finish sleeve and bottom of coat, turn and topstitch

collar, fronts and bottom.

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9\. Finish

Brake press. Mark for buttons at neck and snaps. Neck

wrap, tag and bag for shipment.

ISSUE:

Whether the foreign-origin foxtails are substantially

transformed into U.S. fabricated components before they are

exported to the Dominican Republic for assembly into anorak

jackets.

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 U.S. components assembled therein,

upon compliance with the documentary requirements of section 10.24,

Customs Regulations. (19 CFR 10.24). Section 10.12(e), Customs

Regulations (19 CFR 10.12(e)), provides generally that an article

wholly or partially of foreign components or materials, may be a

\"product of the United States\" if such components or materials are

\"substantially transformed\" by a process of manufacture into a new

and different article, or are merged into a new or different

article. Section 10.14(b) provides that 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 than that

originally possessed by the article or material before being

subject to the menufacturing process. If the manufacturing or

combining process is merely a minor one which leaves the identity

of the article intact, a substantial transformation has not

occurred. See, Belcrest Linens v. United States, 573 F. Supp. 1149

(CIT 1983), 741 F.2d 1368 (1984). One of the factors used by the

courts to determine whether there has been a change in character

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and use, is whether the processing transforms the article from a

producer\'s good to a consumer\'s good. See Midwood Industries v.

United States, 313 F. Supp. 951 (1970).

In the instant case, the fox tail is a producer good which is

subjected to a manufacturing process in the U.S., which includes

dyeing, soaking, stretching, perhaps splicing, and attaching to a

fabric base. The finished product, the fox trim collar, has a

character and commercial identity distinct from the raw material

from which it was produced, and has been transformed by the U.S.

processing to a consumer good, ready to be assembled with other

components to create a jacket or coat, as the case may be. As a

result, the fox tail has undergone a substantial transformation,

and therefore is considered a fabricated product of the U.S., for

purposes of subheading 9802.00.80, HTSUS. We also find that the

processing in the Dominican Republic constitutes acceptable

assembly operations or operations incidental to the assembly

process pursuant to this provision.

HOLDING:

Foreign sourced fox tails are substantially transformed into

fox trim collars by operations which include dyeing, soaking,

stretching, splicing and attaching to a fabric base. As a result,

the exported fox trim collars are considered fabricated products

of the U.S. Since the processing abroad constitutes acceptable

assembly operations, or operations incidental to assembly, the

imported anorak jackets are entitled to entry under subheading

9802.00.80, HTSUS, with allowances in duty for the cost or value

of the fox trim collars.

Accordingly, the protest should be granted. A copy of this

decision should be attached to the Form 19, Notice of Action, to

be sent to the protestant.

Sincerely,

John Durant, Director

Commercial Rulings Division