HQ 557875

May 4, 1995

CLA-2 CO:R:C:S 557875 BLS

CATEGORY: Classification

TARIFF NO.: 9802.00.90

Mr. William D. Outman, II

Baker & McKenzie

815 Connecticut Avenue, N.W.

Washington, D.C. 20006-4078

RE: Applicability of subheading 9802.00.90, HTSUS, to soft-sided

luggage; Special Regime Program; findings; Article 509

Dear Mr. Outman:

This is in reference to your letter dated April 7, 1994, and

other correspondence, on behalf of Samsonite Corporation

(\"Samsonite\"), requesting a ruling that certain soft-sided

luggage to be imported from Mexico will be eligible for duty-free

treatment under subheading 9802.00.90, Harmonized Tariff Schedule

of the United States (HTSUS).

FACTS:

Samsonite sends various components comprised of different

materials to Mexico to be used in assembling soft-sided luggage.

These components include the following:

1\) Fabric components of 100 percent nylon used for the

shell of the suitcase and the internal linings; and of

50 percent nylon and 50 percent polyester used to make

carrying straps. These fabric components are wholly

formed and cut in the U.S.

2\) Other fabric components wholly formed in the U.S. that

will be exported to Mexico on reels or spools. In the

assembly process, these materials will be unspooled,

stitched to another textile article (e.g., side panel)

and then cut to length.

3\) Fabric and non-fabric components used in the assembly

process, traditionally considered \"findings and

trimmings\", such as zippers and articles for decorative

purposes. These items may be both of U.S. and foreign

manufacture.

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4\) Other non-fabric components such as plastic, metal, or

wood. In the subject suitcase, these non-fabric

components include metal frames, metal or plastic

wheels, metal handle rings, metal rivets, plastic

webbing, vinyl washers, and wood bases. These

components may be both of U.S. and foreign manufacture.

You state that vinyl components used in the assembly process

are cut to shape in the U.S. from vinyl sheet sourced from Asia.

These components have a variety of uses, including handle covers

and straps, shoulder strap reinforcements, zipper pulls, and

decorative trim. The largest vinyl components cut to shape are

used as reinforcement on the bottom rail of the suitcase.

The assembly operation in Mexico is as follows:

Work Center A10

The various components are bundled and inspected.

Work Center B10

The cap and socket are installed on the interior back panel;

vinyl reinforcements are sewn to the back panel; vinyl supports

are sewn to the rail handle; loose threads on the rail are cut.

Work Center Bll

The primary operations at this center include cutting to

length of ribbon, elastic, and zippers. Other operations

include the installation of grommets on sliders, and buckles on

ribbons by sewing.

Work Center B13

The metal strip used as the frame for the luggage is warmed

and bent, and the ends are cut and leveled. The frame is then

perforated. The other primary operations involve the assembly of

the wheels, puller, polys, springs and stud with the frame by

riveting, stapling, and gluing.

Work Center B14

Tasks related to the frame and welt assembly are performed at

this work center. The operations include cutting the handle to

length and sewing on the covering, sewing the vinyl reinforcement

to the webbing, and stapling the handle with rings.

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Work Centers C10, C36

At these Centers, the tasks involve various sewing

operations, including sewing accents to the front lower pocket,

sewing zippers and bindings to the front netting, and the liner

to the central panel. Additional tasks include cutting the

elastic cord and webbing to length, and riveting a plastic hook

to the webbing.

Work Centers Dll, El0, G10, H10 and K10

At these Centers, sewing operations are performed which involve

attaching the various components.

Work Center Lll

Stapling and riveting operations of certain components to the

frame and base are performed at this Center.

ISSUE:

Whether the soft-sided luggage will be eligible for duty-free

treatment under subheading 9802.00.90, HTSUS, upon importation

into the U.S.

LAW AND ANALYSIS:

Annex 300-B of the North American Free Trade Agreement

(\"NAFTA\") is applicable to textile and apparel goods. Appendix

2.4 of Annex 300-B provides that:

\[o\]n January 1, 1994, the U.S. shall eliminate customs

duties on textiles and apparel goods that are assembled

in Mexico from fabrics wholly formed and cut in the

United States and exported from and reimported into the

United States under:

\(a\) U.S. tariff item 9802.00.80.10; or

\(b\) Chapter 61, 62, or 63 if, after such assembly,

those goods that would have qualified for treatment

under 9802.00.80.10 have been subject to bleaching,

garment dyeing, stone-washing, acid-washing or perma-pressing.

Thereafter, the U.S. shall not adopt or maintain any

customs duty on textile or apparel goods of Mexico that

satisfy the requirements of subparagraph (a) or (b) or

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the requirements of any successor provision to U.S.

tariff item 9802.00.80.10.

Consequently, subheading 9802.00.90, HTSUS, was created to

provide for the duty-free entry of:

Textile and apparel goods, assembled in Mexico in which

all fabric components were wholly formed and cut in 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; provided the goods

classifiable in chapters 61, 62, or 63 may have been

subject to bleaching, garment dyeing, stone-washing,

acid-washing or perma-pressing after assembly as

provided for herein.

\"Textile and Apparel Goods\"

The initial question we must address is whether the subject

luggage is considered a \"textile and apparel good\" under

subheading 9802.00.90, HTSUS.

\"Textile and apparel goods\" eligible for duty-free treatment

under subheading 9802.00.90, HTSUS, are listed in Appendix 1.1 of

Annex 300-B of the NAFTA. Chapter 42 of Appendix 1.1 includes

among such goods \"ex 4202.12 (Luggage, handbags and flatgoods

with an outer surface predominantly of textile materials)\". Thus,

the subject luggage will qualify as a \"textile and apparel good\"

if it is classified under subheading 4202.12.80, HTSUS, and has

an outer surface predominantly of textile materials. After

inspection of the submitted sample, we find that the article

possesses an outer surface predominantly of textile materials,

and is classifiable under subheading 4202.12.80, which provides

in part for \"Trunks, suitcases, vanity cases\...With outer surface

of textile materials\...\". Therefore, the subject soft-sided

luggage is a \"textile and apparel good\" eligible for duty-free

treatment under subheading 9802.00.90, HTSUS.

Findings and Trimmings

The enactment of subheading 9802.00.90, HTSUS, was intended

to extend duty-free and quota-free status to all goods assembled

in Mexico, which previously were eligible for entry under the

Special Regime Program administered under subheading

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9802.00.8010, HTSUS. As a result, it is Customs view that all

of the policy directives implementing this program should be

considered applicable for the administration of subheading

9802.00.90, HTSUS. One such policy under the Special Regime

Program included the allowance of \"findings, trimmings, and

certain elastic strips of foreign origin\" to be incorporated into

the assembled good \"provided they do not exceed 25 percent of the

cost of the components of the assembled product.\" Examples of

findings and trimmings are sewing thread, hooks and eyes, snaps,

buttons, \"bow buds,\" lace trim, zippers, including zipper tapes,

and labels. See 53 Fed. Reg. 15726 (May 3, 1988).

It is unclear from your submissions the extent of the

findings and trimmings that are of foreign origin. However,

the imported article will be eligible for duty-free treatment

under subheading 9802.00.90, HTSUS, provided the cost of such

components, including any elastic strips, do not exceed 25

percent of the cost of the components of the assembled luggage.

FABRICATION AND ASSEMBLY

Since subheading 9802.00.90, HTSUS, was intended as a

successor provision to subheading 9802.00.80, HTSUS, with respect

to certain textile and apparel goods assembled in Mexico, the

regulations under subheading 9802.00.80, HTSUS, may be

instructive in determining whether a good is eligible for the

beneficial duty treatment accorded by subheading 9802.00.90,

HTSUS. (In this regard, however, as distinguished from

subheading 9802.00.80, HTSUS, it is noted that the new statute

requires only that all fabric components be formed and cut in the

U.S., and that only such components need be exported from the

U.S. in condition ready for assembly without further

fabrication.)

Under section 10.14(a), Customs Regulations (19 CFR

10.14(a)), components will not lose their entitlement to the

benefits of subheading 9802.00.80, HTSUS, by being subjected to

operations incidental to the assembly before, during, or after

the assembly with other components. Pursuant to section

10.16(a) of the Regulations (19 CFR 10.16(a)), the assembly

operations performed abroad may consist of any method used to

join or fit solid components, such as welding, soldering,

riveting, force fitting, gluing, laminating, sewing, or the use

of fasteners, and may be preceded, accompanied, or followed by

operations incidental to the assembly process. Examples of

operations incidental to the assembly process include trimming,

filing, or cutting off of small amounts of excess materials, and

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cutting to length of wire, thread, tape, foil and similar

products exported in similar length. (19 CFR 10.16(b)(4) and

(b)(6).)

In the instant case, the sewing operations used to join

fabric components, or to join fabric components to other items,

are acceptable assembly operations. The other methods of assembly

employed, e.g., riveting, gluing, and stapling, which to some

extent may also involve fabric components, are similarly

considered acceptable assembly operations. Cutting various

fabric components to length and cutting off excess thread are

operations incidental to the assembly process, and therefore will

not disqualify the article from eligibility under subheading

9802.00.90, HTSUS.

Accordingly, the luggage assembled in Mexico may be entered

free of duty, provided all fabric components are U.S.-formed

(i.e., the fabric is woven or milled in the U.S.), the fabric is

cut in the U.S. (except for cutting to length), and foreign

findings, trimmings, and elastic strips do not exceed 25 percent

of the cost of all components.

HOLDING:

1\) Soft-sided luggage with an outer surface predominantly of

textile materials is classifiable under subheading 4202.12.80,

HTSUS, which provides in part for \"Trunks, suitcases, vanity

cases\... With outer surface of textile materials\...\".

Therefore, the article is considered a \"textile and apparel good\"

for purposes of determining its eligibility under subheading

9802.00.90, HTSUS.

2\) Since the operations performed in Mexico in connection

with the fabric components are acceptable assembly operations or

operations incidental to such assembly, the imported luggage will

qualify for duty-free treatment under subheading 9802.00.90,

HTSUS, provided all such components are cut and formed in the

U.S., and the cost of all foreign findings, trimmings, and

elastic strips do not exceed 25 percent of the cost of the

components of the assembled article.

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A copy of this ruling letter should be attached to the entry

documents filed at the time this merchandise is entered. If

the documents have been filed without a copy, this ruling should

be brought to the attention of the Customs officer handling the

transaction.

Sincerely,

John Durant, Director

Commercial Rulings Division